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Up to half of all new expatriate assignments within Europe could be impacted by changes to EU social security legislation according to analysis by Deloitte, the business advisory firm.

Although the legislation behind these changes was enacted a number of years ago, the regulations which actually implement the new rules were only passed earlier this month, beginning the six month process of launching the new legislation on 1 May 2010. This is the first major change to EU social security legislation for more than 35 years, when the now well-established processes for obtaining E101 certificates were introduced.

The background to the changes is a desire to simplify the regulations by shortening them - however it remains to be seen if this objective is actually met. Many rules relating to specific employee types - for example aircrew and transport workers - have been removed altogether, and the rules affecting new short-term and long-term expatriates, as well as cross-border workers, will change substantially. Short term assignees will have to keep contributing to their home countries if they are assigned to work in another EU country for two years or less.

An important aspect of the new regulations is also their increased focus on pan-European compliance. For the first time, foreign social security authorities will be able to enforce liabilities via their UK counterparts, and vice versa. New rules regarding the exchange of electronic data between authorities will also support a general tightening up of cross-border compliance, and the introduction of an EU-wide social security database enhances the possibility of enforcement action being taken against those companies who have - perhaps inadvertently - either not paid social security contributions or have paid them in the wrong location.

Robert Hodkinson, lead partner on social security issues in the Global Employer Services group at Deloitte, comments: "These changes will have a significant impact on both UK employers sending assignees to work in other parts of the EU, and on UK companies which host inbound assignees. Thousands of UK businesses will need to act promptly to adapt to the new rules to ensure that they do not inadvertently incur higher social security costs."

30 November 2009