The European Court of Justice has issued an important ruling that modifies how social security coverage is determined for employees who work across several EU Member States. The decision, delivered on 4 September 2025, brings stricter interpretation to a key test under EU social security coordination rules: what counts as performing a “substantial part” of one’s work in the State of residence. This clarification will have practical consequences for employers, HR teams, and workers engaged in cross-border roles.

A clearer, stricter 25% threshold

Under the EU Regulation governing social security for mobile workers, the system of the State of residence applies if a worker performs a “substantial part” of their activities there. Until now, Member States have often assessed this broadly, taking into account various personal or professional links.

The ECJ has now confirmed that only one test applies: a worker must perform at least 25% of their working time or earn at least 25% of their remuneration in their country of residence. No additional indicators may be considered, even if they appear relevant.

This ruling arose from a case involving a Dutch boat captain who worked in several EU countries. Only 22% of his activity took place in the Netherlands, yet Dutch authorities issued an A1 certificate applying Dutch social security rules, relying on factors such as the vessel’s registration and the employer’s establishment. The ECJ rejected this broader approach, stating that the 25% threshold is strict and non-negotiable.

Forward-looking assessment

The Court also clarified how the 25% rule should be assessed in practice. The evaluation should not look backwards but instead consider the expected situation over the following twelve months from the moment the worker begins their activities in two or more Member States. This forward-looking interpretation is meant to bring consistency and predictability, particularly for new cross-border arrangements.

Implications for employers and HR teams

The ruling has several immediate consequences for organisations employing multi-state workers.

First, employers will need to review current A1 certificates and ensure they align with the clarified criteria. Workers who do not truly meet the 25% threshold in their country of residence may need to be registered in another Member State’s social security system.

Second, HR teams must reassess how they plan and document working time for mobile staff. Accurate forecasting of work patterns over the next twelve months will become essential. Employers may need to adjust cross-border schedules to ensure compliance, especially in industries where activity fluctuates seasonally or unpredictably.

Third, administrative coordination between employers, payroll teams, and social security authorities will become more complex. Organisations operating across borders should expect more rigorous scrutiny from national authorities applying the ECJ’s stricter standard.

Entry/Exit System (EES) now operational

In parallel, another major EU development relevant to cross-border workers and business travellers has come into force. On 12 October 2025, the EU’s Entry/Exit System began operating and will be introduced over six months across the external borders of 29 European countries.

The EES replaces manual passport stamping with an automated IT system that records the name, travel document type, biometric data, and entry and exit details of third-country nationals entering the Schengen area for short stays. The system will automatically calculate the duration of each stay to ensure travellers do not exceed the 90-days-in-180-days rule. It applies to both visa-exempt and visa-required travellers.

This new infrastructure strengthens border management but also offers clearer records for companies whose non-EU employees frequently travel for short-term assignments, meetings, or project work within the Schengen Zone.

Preparing for compliance in a changing landscape

The ECJ’s ruling and the launch of the EES reflect a broader trend: the EU is tightening its regulatory architecture for mobile work and travel. Employers with cross-border staff must prioritise accurate workforce planning, ensure precise documentation of working patterns, and stay alert to shifts in social security rules and technological border controls.

By strengthening oversight and clarifying obligations, the EU is moving towards a more transparent system for both authorities and employers. For businesses operating internationally, understanding these developments is essential to maintaining compliance and supporting mobile workers effectively.

At Access Financial, we not only mitigate compliance risks for recruiters, end-clients, and contractors, but also provide a comprehensive suite of services designed to remove administrative burdens — from work permits to payroll management. You can learn more about our services and solutions on our website: www.accessfinancial.com.