A Major Step Against Social Dumping in Air Transport

Under a new set of EU-wide rules adopted by the European Parliament, on April 18, unscrupulous airlines will no longer be able to evade social security obligations in the countries where they base their air crew. The new law will open the way for all European pilots and cabin crew to pay their social security in the Member State where they have their ‘home base’, independently of the airline they work for. By doing so, the EU closes a legal loophole which distorted competition and led to social dumping.

Today, the vast majority of pilots pay social security in the country where they are based. However, some airlines have been using, for many years, a loophole in the law allowing them to place air crews all over Europe and to pay social security, not where the crews actually work, but in the place where the company has its headquarters.  Hence, pilots working in the same base (airport) pay different social security: the majority paying it in the country they are based, but some in a different country – typically where such social contributions are much lower.

The new law will put all pilots, employed or self employed, working for a low cost or a traditional carrier, on the same footing. They will all pay social security in the place from where they usually start and end their duties, i.e. in their home base.

At the same time, the new law does not prevent labour mobility. Crews can move – as before – from one EU country to another. What changes is that when an employee moves to work in another country, there are now procedures and deadlines to be respected, the social security authorities have to be notified, and the rights are transferred. This is how it works for “normal” employees and how it will work for all pilots from now on.

The new law is expected to be approved by EU Ministers tomorrow, and will enter into force in summer 2012. Labour contracts signed before that date may continue to apply the “old rules” for a maximum of 10 years, but an employer or employee can request changing to the new system at any moment. The new rules will then automatically apply.

Although this new law brings some coherence to the employment laws for air crews in Europe (with the ‘home base’ now being the single reference point for the application of safety rules, labour law and social security), not all issues are resolved. There are no harmonised taxation rules and numerous abuses occur under the various rules on temporary work and self-employment, resulting in unfair competition and social dumping. A lot still remains to be done!