Skip to content The Court of Justice of the European Union (CJEU) has issued its judgment in Freistaat Bayern (C‑357/24), clarifying the extent to which employers can recover salary costs paid to employees incapacitated following accidents in another EU Member State.
Background
An employee of the German state of Bavaria was injured in a road traffic accident in Croatia. During the employee’s absence, the employer continued to pay remuneration and subsequently sought to recover those costs from the liable party’s insurer under German law.
However, Croatian law did not recognise such a claim by the employer. The referring Croatian court asked whether Regulation (EC) No 883/2004 on social security coordination required recognition of the employer’s recovery rights across borders.
The Court’s ruling
In its judgment of 26 March 2026, the CJEU held that:
- Employers are not “institutions” under the Regulation: The Court found that an employer paying continued remuneration does not qualify as an “institution providing benefits” within the meaning of EU social security coordination rules ;
- Continued salary is not treated as a social security benefit: Payments made by an employer during sick leave are not considered “sickness benefits” under Regulation 883/2004 ;
- No automatic EU right of recovery: As a result, EU law does not require Member States to recognise an employer’s right to recover such costs from third-party insurers in cross-border situations.
The judgment leaves the question of recovery to national law, rather than harmonising it at EU level.
Implications for global mobility
The decision has immediate relevance for multinational employers managing mobile workforces across the EU.
1. Increased cost exposure : Employers may be unable to reclaim salary costs incurred during an employee’s incapacity abroad unless the host country’s legal system explicitly allows it. This creates potential unrecoverable cost risks for cross-border assignments and business travel.
2. Fragmentation across Member States : The ruling confirms that recovery rights will vary depending on local law, adding complexity to assignment planning, risk allocation models, and insurance structuring
3. Greater reliance on insurance solutions : With no EU-level recovery mechanism, employers may need to:
- Reassess employer liability and accident insurance coverage ;
- Ensure policies explicitly address cross-border incidents ;
- Align mobility policies with jurisdiction-specific risks ;
- Strategic considerations for employers.
Impact
The CJEU’s ruling in C-357/24 confirms that employers cannot rely on EU law to recover salary costs paid during cross-border sickness absence. For global mobility programmes, this marks a shift toward greater financial risk retention and the need for proactive risk management strategies.
If you need assistance with similar issues regarding labour law, social security, or tax issues, feel free to visit our Global Mobility page for more information and contact us via the dedicated forms.