United Kingdom – Social Security Agreement with the Republic of India

• Persons covered: The DCC is not limited to nationals of the UK or India; it applies to anyone engaged in employed activity who is, or has been, subject to the social security legislation of either or both States;
• Equality of Treatment: A person subject to the legislation of one State will enjoy the same rights and be subject to the same obligations under that legislation as the nationals of that State;
• Voluntary Contributions: A person subject to the legislation of one State will not be entitled to pay voluntary contributions in the other State for any corresponding period; and
• Certificates of Coverage: Employees falling within the scope of the DCC, or their employer, should apply for a certificate of coverage from the competent authorities. This certificate serves as confirmation that social security contributions are being paid in the home country.

General principles

Individuals to whom the DCC applies shall be subject to the social security legislation of a single State only; specifically, a person pursuing an employed activity in a State shall be subject to the social security legislation of that State (lex loci laboris – pay where you work), and such legislation shall apply as if they were resident and ordinarily resident in that State.

Detached worker

An individual who is employed in one State by an employer normally operating there and is posted by that employer to the other State to perform work on their behalf, shall remain subject to the social security legislation of the State where the activities are normally carried out, provided the anticipated duration of such work does not exceed 36 months.

This provision also extends to an individual posted from the territory of a third country not party to the DCC, provided that the individual pays, or is liable to pay, contributions under the legislation of the State where their employer was established immediately before being posted. Additionally, it encompasses an individual who pursues an employed activity in the other State due to personal choice, so long as this activity is undertaken with the employer's agreement.

An individual who has completed a period of employed activity in the other State while remaining subject to the legislation of the State where their employer is established shall not be eligible to commence a new period under this provision until a waiting period of six months has elapsed since the end of the previous period.

Exceptions to the general rules

The competent authorities of the UK and India may, by common agreement, provide for exceptions to the general principles and the detached worker provisions, provided this is in the best interest of the individual or categories of individuals. This could allow for continued coverage in the home State, even for periods of work in another State exceeding 36 months, in exceptional circumstances.

Specific provisions are available for mariners, aircraft crew, government employees and armed forces.

• Aggregation of periods of contributions: The DCC is not a totalisation agreement and, therefore, it does not stipulate that periods of insurance under the legislation of one State shall be taken into account by a competent State as though they were completed under the legislation of that State;
• Exportability of benefits: The DCC does not include provisions for rights to cash benefits for the person or their families;
• Work in both States: The DCC does not contain provisions for individuals working simultaneously or in an alternating manner in both States (multi-state workers);
• Self-employed individuals: The DCC only applies to employed persons and contains no provisions for self-employed individuals; and
• Grandfathering provisions: Neither the DCC nor the explanatory memorandum published by the UK Government specifies any grandfathering provisions for workers already in a cross-border situation at the date of entry into force of the DCC.

The DCC will enter into force the day after both parties have exchanged written confirmation of compliance with their domestic statutory and constitutional requirements. Employers should review their workforce and planned assignments between the UK and India to ascertain the impact of the DCC. For further updates, please get in touch with the authors or your usual KPMG point of contact.

For further information please contact:

• Mike Lavan
• Dario DiCapua