B-40872, MARCH 29, 1944, 23 COMP. GEN. 733

B-40872, MARCH 29, 1944, 23 COMP. GEN. 733

APPLICABILITY OF SOCIAL SECURITY LAWS TO EMPLOYMENT BY UNITED STATES OF NATIVES IN FOREIGN COUNTRIES IN THE ABSENCE OF A STATUTE OR TREATY TO THE CONTRARY, PAY ROLL DEDUCTIONS MAY NOT BE MADE PURSUANT TO BRAZILIAN SOCIAL SECURITY LAWS FROM THE SALARIES OF BRAZILIAN NATIONALS WHO ARE CIVILIAN EMPLOYEES OF THE NAVY DEPARTMENT IN BRAZIL, NOR MAY EMPLOYER CONTRIBUTIONS BE MADE BY THE NAVY DEPARTMENT FOR SUCH EMPLOYEES UNDER SAID LAWS.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF THE NAVY, MARCH 29, 1944:

I HAVE YOUR LETTER OF MARCH 20, 1944 (FILE JAG:III:1JAR:LH), REQUESTING DECISION UPON TWO QUESTIONS THEREIN STATED, AS FOLLOWS:

* * * (1) IN THE CASE OF BRAZILIAN NATIONALS WHO ARE CIVILIAN EMPLOYEES OF THE NAVY IN BRAZIL, MAY PAY ROLL DEDUCTIONS BE MADE PURSUANT TO BRAZILIAN SOCIAL SECURITY LAWS? AND (2) MAY THE NAVY MAKE CORRESPONDING EMPLOYER CONTRIBUTIONS IN THE CASE OF SUCH EMPLOYEES UNDER SAID LAWS?

WITH YOUR LETTER THERE WAS ENCLOSED A COPY OF LETTER OF JANUARY 22, 1944, FROM THE COMMANDER FOURTH FLEET, TO THE ASSISTANT SECRETARY OF THE NAVY, READING AS FOLLOWS:

REFERENCE: (A)ASSISTANT SECNAV ST ENDORSEMENT SOSED-4HLS; ( SC) NB/EF12 DATED 17 APRIL 1943.

(B) BUDOCKS CONF. LTR. NB213/A1-1, SERIAL Y AND D 8251 DATED 29 APRIL 1943.

ENCLOSURE: (A), F.C.E. LTR. OF INSTRUCTION TO PUBLIC WORKS OFFICERS IN BRAZIL--- SERIAL 95 DATED 19 JANUARY 1944.

1. REFERENCE (A) STATED THAT THIS COMMAND HAS BEEN GRANTED AUTHORITY REQUESTED FOR BLANKET AUTHORITY TO EMPLOY AND DISCHARGE CIVILIAN PERSONNEL AS NECESSARY. REFERENCE (B) ESTABLISHED CERTAIN FUNDS FOR CARRYING OUT MAINTENANCE WORK UNDER THE APPROPRIATION," MAINTENANCE BUREAU OF YARDS AND DOCKS IN BRAZIL," BUT DID NOT INCLUDE INSTRUCTIONS WITH REGARD TO THE EMPLOYMENT OF BRAZILIAN CIVILIAN PERSONNEL.

2. SINCE THE DATE OF THE REFERENCES, THIS COMMAND HAS GREATLY INCREASED ITS EMPLOYMENT OF BRAZILIAN NATIVE LABOR IN ORDER TO ACCOMPLISH THE MAINTENANCE WORK LOAD OCCASIONED BY THE GREATLY INCREASED NAVAL ACTIVITY IN BRAZIL. IT IS EXPECTED WITH THE CONCLUSION OF PRESENT FIXED FEE CONTRACTS THAT THE DIRECT EMPLOYMENT OF BRAZILIAN LABOR FOR PUBLIC WORKS PROJECTS AS WELL AS MAINTENANCE WILL TOTAL WELL OVER 2,000 EMPLOYEES, ALL OF WHOM WILL BE BRAZILIAN NATIONALS. THIS COMMAND HAS ASSUMED THAT THESE EMPLOYEES ARE TO BE EMPLOYED UNDER THE SAME RULES AND REGULATIONS AS GOVERN OTHER CIVIL SERVICE EMPLOYEES OF THE UNITED STATES. THIS VIEW WAS CONFIRMED BY THE ASSISTANT SECRETARY OF THE NAVY'S OFFICE AT THE TIME OF THE VISIT OF THE FLEET CIVIL ENGINEER TO WASHINGTON IN NOVEMBER, 1943.

3. ENCLOSURE (A) IS A SUMMARY OF THE POLICY ADOPTED BY THIS COMMAND FOR THE EMPLOYMENT OF BRAZILIAN LABOR. AS WILL BE NOTED, IT REFUSES COGNIZANCE OF ANY BRAZILIAN LAWS RELATIVE TO THE EMPLOYMENT OF LABOR AND DOES NOT PROVIDE FOR SOCIAL SECURITY DEDUCTIONS IN ACCORDANCE WITH THE BRAZILIAN LAW.

4. ON THE OCCASION OF THE VISIT OF THE FLEET CIVIL ENGINEER TO WASHINGTON, IT WAS LEARNED THAT A LETTER OF POLICY WAS BEING ISSUED BY THE ASSISTANT SECRETARY OF THE NAVY'S OFFICE COVERING THE EMPLOYMENT OF NATIVE LABOR IN THE SOUTHWEST PACIFIC AREA AND PARTICULARLY AUSTRALIA. THE CONTENTS OF THIS LETTER, WHICH HAD NOT BEEN SIGNED, COULD NOT BE ASCERTAINED BUT IT WAS INDICATED THAT A COPY WOULD BE FORWARDED FOR THE GUIDANCE OF THIS COMMAND. THIS LETTER HAS NOT YET BEEN RECEIVED.

5. IN THE INTEREST OF CONTINUING PRESENT HIGHLY AMICABLE RELATIONS BETWEEN THE BRAZILIAN GOVERNMENT AND THE UNITED STATES, IT IS THE VIEW OF THIS COMMAND THAT THE PRESENT POLICY WITH REGARD TO THE EMPLOYMENT OF BRAZILIAN LABOR MAY NOT BE TO THE BEST INTERESTS OF BOTH GOVERNMENTS. THIS POLICY WHICH IS BASED PURELY ON AMERICAN LAW IGNORES ALL REQUIREMENTS OF BRAZILIAN LAW WITH REFERENCE TO SOCIAL SECURITY DEDUCTIONS, LEAVE, NOTICE IN ADVANCE OF DISCHARGE, ETC. WHILE IT IS RECOGNIZED THAT THE QUESTION OF LEAVE IS PURELY AN ADMINISTRATIVE MATTER WHICH MAY BE MADE TO CONFORM WITH BRAZILIAN LAW IN GENERAL AND WHICH IS ALSO TRUE OF THE ADVANCE NOTICE REQUIRED ON DISCHARGE, THE FAILURE TO ALLOW SOCIAL SECURITY DEDUCTIONS UNDER THE BRAZILIAN LAW HAS BEEN THE SOURCE OF A CERTAIN AMOUNT OF DISSATISFACTION ON THE PART OF BRAZILIAN EMPLOYEES. IT IS CONSIDERED DESIRABLE THAT THIS COMMAND BE PERMITTED TO DEPART WHENEVER IT CONSIDERS NECESSARY, FROM AMERICAN CIVIL SERVICE REGULATIONS ESPECIALLY WITH REGARD TO ALLOWING PAY ROLL DEDUCTIONS.

6. IT IS REQUESTED THAT A FULL DESCRIPTION OF THE POLICY THE DEPARTMENT DESIRES TO BE FOLLOWED IN THE CASE OF EMPLOYMENT OF NATIVE EMPLOYEES, BE FURNISHED THIS COMMAND. THERE IS AVAILABLE AND WILL BE FORWARDED IF DESIRED, A COMPENDIUM OF ALL BRAZILIAN LAWS RELATING TO THE EMPLOYMENT OF LABOR.

IN NUMEROUS MATTERS PERTAINING TO THE PAYMENT OF FOREIGN HEALTH, OLD AGE, AND SOCIAL SECURITY TAXES WITH RESPECT TO THE EMPLOYMENT BY THE UNITED STATES IN ITS SOVEREIGN CAPACITY OF NATIVES IN FOREIGN COUNTRIES, THERE HAS BEEN FOLLOWED CONSISTENTLY BY THIS OFFICE THE RULING CONTAINED IN 6 COMP. GEN. 746, WHICH HELD (SYLLABUS):

THE UNITED STATES IN THE CAPACITY OF EMPLOYER OF SUBJECTS OF FOREIGN COUNTRIES IN ITS CONSULATES, EMBASSIES, ETC., ABROAD, IS NOT REQUIRED TO COMPLY WITH THE LAWS OF CERTAIN FOREIGN GOVERNMENTS REQUIRING EMPLOYERS TO PAY PREMIUMS ON OLD AGE AND HEALTH INSURANCE FOR EMPLOYEES, AND CONSEQUENTLY THE APPROPRIATIONS UNDER THE DEPARTMENT OF STATE ARE NOT AVAILABLE FOR THE PAYMENT OF SUCH PREMIUMS. SEE, ALSO, DECISIONS OF DECEMBER 3, 1926, A-16355; MAY 1, 1928, A-22050; AND APRIL 13, 1932, A- 41696.

A SIMILAR POSITION HAS BEEN MAINTAINED BY THE DEPARTMENT OF STATE WITH RESPECT BOTH TO SUCH PAYMENTS IN FOREIGN COUNTRIES GENERALLY, AND TO THE DEDUCTION OF THE EMPLOYEE'S SHARE UNDER SOCIAL SECURITY PLANS. THERE IS QUOTED FOR YOUR INFORMATION THE FOLLOWING DIPLOMATIC INSTRUCTION BY THE ASSISTANT SECRETARY OF STATE TO THE AMERICAN AMBASSADOR IN POLAND, AS APPEARS IN VOLUME IV OF HACKWORTH'S DIGEST OF INTERNATIONAL LAW, AT PAGE 798:

IT IS STATED BY THE FOREIGN OFFICE THAT SOCIAL INSURANCE IN POLAND IS BASED UPON THE GENERAL PRINCIPLE OF THE PAYMENT OF INSURANCE PREMIUMS BY THE EMPLOYEE AND THE EMPLOYER WITH THE RESERVATION THAT INSURANCE AGAINST ACCIDENTS IS EXCLUSIVELY FOR THE ACCOUNT OF THE EMPLOYER. THE EMPLOYER IS OBLIGATED TO PAY TO THE INSURANCE INSTITUTION THE FULL AMOUNT OF HIS OWN AND THE EMPLOYEE'S CONTRIBUTION, BUT HAS THE RIGHT TO DEDUCT THE EMPLOYEE'S SHARE OF THE CONTRIBUTION AT THE TIME OF PAYMENT OF SALARY.

THE EMPLOYER OF THE POLISH EMPLOYEES IN THE AMERICAN DIPLOMATIC AND CONSULAR OFFICES IN POLAND IS THE GOVERNMENT OF THE UNITED STATES. THE POLISH GOVERNMENT CANNOT OF COURSE IMPOSE UPON THE GOVERNMENT OF ANOTHER SOVEREIGN STATE ANY OBLIGATION WITH RESPECT TO THE PAYMENT OF SOCIAL INSURANCE PREMIUMS OF THE NATURE INDICATED EITHER ON ITS OWN ACCOUNT OR ON BEHALF OF ITS POLISH EMPLOYEES.

THE QUESTION OF WHETHER THE DEPARTMENT WAS AUTHORIZED, WITH RESPECT TO THE CZECHOSLOVAK EMPLOYEES IN ITS LEGATION AND CONSULATES IN CZECHOSLOVAKIA, TO PAY SOCIAL INSURANCE PREMIUMS OF A SIMILAR NATURE STIPULATED IN THE LAWS OF CZECHOSLOVAKIA, WAS TAKEN UP WITH THE COMPTROLLER GENERAL, WHO IN REPLY STATED IN PART THAT THE APPROPRIATIONS UNDER THE DEPARTMENT'S CONTROL ARE NOT AVAILABLE FOR SUCH EXPENDITURE.

IN THE CIRCUMSTANCES THE DEPARTMENT WOULD NOT BE IN A POSITION EVEN VOLUNTARILY TO OBSERVE THE PROVISIONS OF THE POLISH LAWS IN QUESTION REGARDING THE PAYMENT OF SOCIAL INSURANCE PREMIUMS. NOT ONLY WOULD IT NOT BE IN A POSITION TO MAKE PAYMENT FOR THE SHARE ATTRIBUTED TO EMPLOYERS, BUT IT WOULD BE UNABLE TO MAKE PAYMENT ON BEHALF OF THE POLISH EMPLOYEES. THERE WOULD BE NO OBJECTION, HOWEVER, TO THE MAKING OF ARRANGEMENTS FOR THE EMPLOYEES THEMSELVES VOLUNTARILY CONTRIBUTING DIRECTLY TO THE INSURANCE INSTITUTION NOT ONLY THEIR OWN SHARE OF THE PREMIUMS BUT ALSO, SHOULD THEY FEEL THAT BY SO DOING THEY WOULD GAIN A BENEFIT, THE SHARE ATTRIBUTED UNDER POLISH LAW TO THE EMPLOYER.

THE DEPARTMENT WOULD HAVE NO OBJECTION TO AMERICAN DIPLOMAT AND CONSULAR OFFICERS VOLUNTARILY FURNISHING FROM TIME TO TIME, UPON REQUEST FROM THE COMPETENT POLISH AUTHORITIES, INFORMATION REGARDING CHANGES IN PERSONNEL AND THE AMOUNT OF SALARIES PAID. HOWEVER, NO OBLIGATION SHOULD BE UNDERTAKEN IN THIS CONNECTION SINCE AMERICAN DIPLOMATIC AND CONSULAR OFFICERS CANNOT APPROPRIATELY BE MADE AGENTS OF THE POLISH GOVERNMENT AND BE REQUIRED TO ASSUME AFFIRMATIVE DUTIES TO THAT GOVERNMENT.

WITH REGARD TO THAT PHASE OF THE POLISH COMPULSORY INSURANCE WHICH IS WHOLLY FOR THE ACCOUNT OF THE EMPLOYER, THAT IS, INSURANCE AGAINST PERSONAL INJURIES, IT MAY BE POINTED OUT THAT UNDER THE FEDERAL COMPENSATION ACT, OF THE UNITED STATES, THIS GOVERNMENT ALREADY PROVIDES FOR ITS CIVIL EMPLOYEES, BOTH AMERICAN AND FOREIGN, WITHOUT COST TO THEM, BENEFITS PAYABLE IN CASES OF DISABILITY OR DEATH RESULTING FROM INJURIES SUSTAINED IN THE PERFORMANCE OF DUTY. IN THAT CONNECTION, THERE WOULD APPEAR TO BE CONTROLLING THE FOREIGN SERVICE REGULATIONS OF THE UNITED STATES, NOTE 12 TO SECTION I-6, STATING---

WITH REFERENCE TO FOREIGN LAWS RELATIVE TO SOCIAL INSURANCE AND CONTRACTS OF EMPLOYMENT, THE DEPARTMENT OF STATE HOLDS THAT ONE GOVERNMENT CANNOT IMPOSE UPON ANOTHER SOVEREIGN STATE ANY OBLIGATION IN THIS RESPECT AND THAT SUCH LAWS ARE, THEREFORE, INAPPLICABLE TO FOREIGN SERVICE ESTABLISHMENTS OF THE UNITED STATES. THIS FACT SHALL BE MADE CLEAR TO PERSONS ENGAGED ABROAD FOR SERVICE IN A FOREIGN SERVICE OFFICE.

BASED, IN PART, UPON THE RECIPROCAL IMMUNITY FROM SUCH OBLIGATIONS WHICH IS GRANTED BY INTERNATIONAL LAW, THE CONGRESS OF THE UNITED STATES HAS SPECIFICALLY EXEMPTED EMPLOYMENT IN THIS COUNTRY IN THE SERVICE OF A FOREIGN GOVERNMENT FROM THE PURVIEW OF THE SOCIAL SECURITY AND UNEMPLOYMENT COMPENSATION TAXES. ACT OF AUGUST 10, 1939, 53 STAT. 1383, 1385; 26 U.S.C. 1426 (B).

ACCORDINGLY, NO STATUTE OR TREATY HAVING BEEN NOTED JUSTIFYING ANY OTHER CONCLUSION, BOTH QUESTIONS PRESENTED MUST BE ANSWERED IN THE NEGATIVE. WITH RESPECT TO THE FIFTH PARAGRAPH OF THE ABOVE-QUOTED LETTER FROM THE COMMANDER FOURTH FLEET, IT SHOULD BE CALLED TO ATTENTION THAT THE GOVERNING RULE IS NOT "BASED PURELY ON AMERICAN LAW" BUT, RATHER, IS A RULE OF INTERNATIONAL LAW. WHETHER ANY ACTION SHOULD BE TAKEN TO ESTABLISH ANOTHER RULE IN THE LIGHT OF THE PARTICULAR SITUATION--- AS TO WHICH THIS OFFICE EXPRESSES NO OPINION--- YOUR ATTENTION MAY BE INVITED TO AN OPINION OF THE SECRETARY OF THE TREASURY IN A QUITE SIMILAR MATTER (QUOTING II HACKWORTH'S DIGEST, 483) AS FOLLOWS:

* * * MATTERS OF FOREIGN POLITICAL POLICY ARE PECULIARLY THE FUNCTION OF CONGRESS AND THE TREATY-MAKING BRANCHES OF THE GOVERNMENT TO CONSIDER AND DETERMINE; THE FUNCTION OF THE EXECUTIVE DEPARTMENT IS TO ADMINISTER THE LAW AS IT FINDS IT, THAT IS, SO ENACTED BY CONGRESS OR AS FORMULATED BY TREATY, WITHOUT REGARD TO MATTERS OF POLICY OR EXPEDIENCY.

IF THE DEDUCTION OF THE EMPLOYEES' SHARES, WITH DIRECT PAYMENT TO THE BRAZILIAN GOVERNMENT, BE FELT TO BE A DESIRABLE AND EXPEDIENT END, THE PLAN SHOULD BE REFERRED TO THE STATE DEPARTMENT FOR ITS APPROVAL AND ARRANGEMENT, IF NECESSARY, WITH THE LOCAL AUTHORITIES.