The government has announced that the UK and India have signed a side letter to the UK-India trade deal (the Comprehensive Economic and Trade Agreement, or CETA) containing an agreement to negotiate a reciprocal DCC for social security purposes. 

What is a DCC? 

A DCC is type of social security agreement which deals with the coordination of liability to pay social security only. It is based on the International Labour Organisation model agreement and mimics several other agreements both the UK and India have in place with other countries. It does not include provisions for access to social security benefits or aggregation of any pension entitlement but allows workers to continue to pay into their home country social security scheme for a specific period. 

Current position 

Currently, there is no social security agreement between the UK and India and as such the domestic rules apply. From a UK perspective, this means UK outbound employees (and their UK employers) remain liable to class 1 national insurance (NI) on all earnings for the first 52 weeks they are working in India. After this point, the UK mandatory liability ceases, although for many the option to pay voluntary contributions is available.   

For UK inbound employees of an India-based employer, there is an exemption from UK NI for the first 52 weeks, after which both employee and employer (provided there is a UK place of business or UK host employer) become liable to UK NI. 

What will change? 

Under the terms of the DCC, employees of India-based employers who are sent to work temporarily in the UK (‘detached workers’) will remain liable to Indian Provident Fund contributions for periods of up to 36 months, provided they remain employed by the Indian employer. Likewise, employees of UK-based employers will remain liable to class 1 NI in accordance with the Social Security Contributions and Benefits Act 1992. The liability of the employer typically follows that of their employees.   

Once this agreement comes into force (at the same time as the CETA), the 52-week exemption and liability periods for UK NI under the UK domestic legislation will no longer apply to those who fall within the scope of the UK-India DCC. 

There is no provision to extend this agreement beyond 36 months and so employees who expect to be working in the UK for more than 36 months from the outset should be liable to class 1 NI from day 1. Employees from India who are employed locally in the UK by a UK employer will also be liable to UK NI from day 1. 

The implementation of this DCC will not impact the current UK immigration regime and all the existing immigration criteria will still need to be met.   

Further information 

• Prime Minister secures thousands of British jobs and £6 billion in investment and export wins as historic trade deal with India signed - GOV.UK