This short text aims to provide its readers with a simplified introduction into the theory of social security co-ordination and the co-ordination instruments of the European Union. It describes the basic philosophies behind social security co-ordination; especially the aims of social security co-ordination, why it is needed and how it is achieved. This paper provides as well an overview of the principles of co-ordination and basic co-ordination.

The rules, the European Court of Justice (ECJ) and selected national case law related to these coordination rules can be found under resources.

Why is co-ordination needed ? The territoriality of social security and migrants

Social security is essentially a creation of national law. The amounts of benefit, conditions of entitlement and duration of payment within social security schemes are determined by national law. These schemes are administered by national bodies governed by national rules and regulations. The scope of social security schemes is therefore traditionally confined to the nationals or the territory of that particular state.

The territorial nature and diversity of social security can cause problems when people migrate from one state to another.

The goals of the European Union

From the beginning of the European Economic Community (EEC) in 1957, the free movement of persons was considered to be one of the basic principles of the Treaty of Rome. Together with the free movement of capital, goods and services, it still forms the foundations of the European Union.

Free movement of persons implies that within an internal European market each citizen has the right to go and work or to look for work or to study or just go on holiday in another country of the European Union.

The free movement of persons knows however some impediments. Apart from some “natural" limitations, as cultural problems or linguistic problems, differences in standard of living, people can also be confronted with obstacles, which are the result of differences in national legislations, in particular in the field of social security.

When enacting the Treaty of Rome, one was pretty aware of the fact that social security systems in the Member States of the European Union not only differed to a big extent but also that the rules governing social security where only applicable on the territory of each Member State and that this situation was in order to lead to impediments for the free movement of persons. Mobility of persons should be encouraged.

This cannot be the case, when the worker, who leaves his country to go and work in another country of the European Union, loses – completely or partly – his social security rights of the State he is leaving or when he is not able to get benefits in the State where he arrives. In addition, one has also to take into account the recent developments where every EU citizen has the right to freely move and reside, under certain conditions, on the territory of other member states of the European Union.

The legal instruments available: the European co-ordination of social security rules

The European Treaty foresees for these reasons since its origins in 1958 that the Council of Minister, the legislative body of European union law, with unanimity of votes, takes those measures necessary in the field of social security for improvements of the free movement of persons. This was definitely one of first measures ever taken in the European Union.

Already on the first of January 1959 Regulations Nrs. 3 and 4 on social security for migrant workers entered into force.

On 1 October 1972 these regulations were completely revised and replaced by the actual Regulations Nrs. 1408/71 and 574/72 (hereafter "the Regulations"). The necessary administrative measures for the application of Regulation 1408/71 are dealt with in Regulation 574/72. Since 1971 this Regulation was the subject of several amendments in order to accommodate trends in national legislation and progress resulting from the rulings of the Court of Justice of the European Communities.

A new Regulation Nr. 883/2004 aiming at a simplification and rationalisation of these Regulations has also already been adopted by the European Council, but is not yet applicable as no implementing Regulation has been adopted.

The objectives of these regulations is to install a co-ordination of the various social security systems in the European Union. The final goal of these rules do not look for a harmonisation of the different national regulations, which would mean an uniform common European system of social security throughout the Union.

The intention is through regulations to allow a concerted action of different national legislations that are in conflict with each other. These regulations therefore leave intact the liberty of the national Member States to determine principals and rules of their own national social security systems. This means that the different national legislators remain competent to determine who is insured, which benefits they provide and under which conditions, how benefits are calculated, the duration of a benefit, the amount, as long as there is no discrimination between citizens of the European Union. This means that national rules will, in principle, not be substituted by the European rules in these domains. As an example the level of pensions and the formula to calculate it will remain of the competence of the national legislator.

These co-ordinating instruments only apply in situations where there is some cross border element. Through co-ordination one only wants to guarantee that someone, who wants to go to work in another Member State , does not lose his social security rights due to provisions valid in other social security systems. In addition one wants to take care that a migrant worker is not unfairly treated in the field of social security in comparison with a person, who has worked all his life in one Member State .

The four basic principles of social security co-ordination

Four basic principles are used by co-ordination law in order to protect the social security situation of migrants and rectify the problems created by the territoriality and diversity of national social security systems.

These four basic principles are:

Persons concerned

These co-ordinating instruments are only concerned with migrants. Originally, Regulation 1408/71 only covered workers but with effect from 1 July 1982 its scope was extended to cover the self-employed too. The Regulation also covers members of workers' and self-employed persons' families and their dependents, as well as stateless persons and refugees. In 1998, the Council extended the scope of Regulation 1408/71 so that also special schemes for civil servants would fall under the field of application of the Regulation. In 1999, the scope of the Regulation was extended to include all insured persons, particularly students and others not in gainful employment. Since, 1 June 2003 third country nationals as well as the members of their families and their survivors can rely on the EU provisions on co-ordination of social security, provided they are legally resident in the territory of a Member State and are in a situation which is not confined in all respects within a single Member State.

Nationals from Iceland, Liechtenstein and Norway are also covered via the European Economic Area (EEA) Agreement. On 1 June 2002, the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons was signed, so that in general the provisions of Regulations 1408/71 and 574/72 apply also in relation to Switzerland.

Risks covered

Regulation 1408/71 lists the social security benefits covered by the Regulation. These are the general traditional risks of social security:

Note that:

In general, social assistance does not fall within the scope of Regulation 1408/71. What should be understood under social assistance is not very clear. One could however conclude that a benefit is social assistance and therefore excluded from the application of the Regulation if:
• it is discretionary; or
• it is a benefit which is general in nature, which implies that it covers a general need and grants a minimum income to all citizens.

Specific co-ordination rules

Apart from these four big principles Regulation 1408/71 also knows an important number of provisions that take into account the specific needs of certain categories of persons, as seasonal workers, frontier workers, seafarers or international transport drivers. They also contain an important number of provisions taking into account the different characteristics and peculiarities of national legislation.

Some provisions are also dealing with particular rules for certain sectors of social security. Think about the yearly by millions of people used rights on the basis of which persons, who are insured in a certain country, can obtain medical care in another country, when they are on holiday and need necessary care. This seems “natural” today, but it is a direct consequence of the application of coordination rules.

The co-ordination is a difficult and technical matter and will remain as such. The basic reason is in particular the important number of differences between the national legislations and the complexity of these national rules to be taken in account each time there is an international situation. However, the Regulation managed to take away the most important impediments for migrant persons in the field of social security and as such to help guaranteeing the free movement of persons. As such, they improve those aspects of national legislation that could impede cross-border movement. In this sense they guarantee to the migrant workers a continuous social protection on its trip throughout Europe.