25 minute read 1 Sep 2016
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What to know before your employees go


EY Global

Multidisciplinary professional services organization

25 minute read 1 Sep 2016
Related topics Tax Mobility Law

Employee mobility is an essential element of today’s business model.

The traditional mobility model of the 20th century, where employers had to coax their employees into taking an international assignment, is rare in today’s digitalized and globalized world. Employee mobility is no longer a special case; it’s an indispensable component of the organizational structure and business model.

Businesses now seek to benefit from a more flexible and mobile workforce, optimizing their internal HR supply chain. They need employees to be mobile — on shorter notice and for shorter time periods — not only to handle internal matters but also to serve client project needs and deliver on global contracts.

In today’s competitive landscape, a multinational must be agile and must make certain that its workforce is in the right place, at the right time, with the right skills.

But employers must also remain aware of HR legal risks.

To avoid legal issues with the posting of workers, employers must heed the European Union’s complex regulations and directives, as well as country-specific rules.

The following roundup highlights some of the requirements and challenges that employers face around the world.

  • European Union

    On May 15, 2014, Directive 2014/67/EU was implemented, modifying the 1996 Posting of Workers Directive, with the intent of fighting abuse and circumvention of applicable rules. The directive also increases the rights of posted workers in the subcontracting chain. Member States must verify that posted workers can hold their direct subcontractor, in addition to or in place of the employer, liable for all wages owed. The directive also focuses on increasing cooperation between national authorities and administrations in charge of compliance. Changes include time limits for the supply of information and the addition of fines for companies that violate regulations.

  • Angola

    A work visa is required for those undertaking temporary paid work in Angola, and its holder can perform only the specific professional activity for which the visa was issued. The holder can work in Angola for Angolan companies but does not become a resident in the national territory.

    The visa must be used within 60 days of issuance, and its holder can enter multiple times and stay in Angola until the end of the employment agreement, up to 36 months. Obtaining a work visa can be bureaucratic and time-consuming, with two main phases:

    • Obtaining a favorable opinion on the hiring from the ministry that oversees the sector where the employer undertakes its activity
    • Submitting the visa application to the Angolan Consulate in the country of origin or residence


  • Argentina

    The territoriality principle guides the social security system, meaning that contributions are obligatory for services rendered within national territory. Considering that employees transferred abroad will perform no activity in Argentina, their compensation from the foreign company will generally not be subject to employer or employee contributions to the Argentinean system.

    If the individual is assigned to a country that lacks a ratified social security agreement with Argentina, the assignee’s benefits may suffer because payments to the Argentinean social security system will be suspended. To lessen the negative effects of discontinued contributions, companies can take two actions:

    • Buy private insurance to cover contingencies with no equivalent coverage in the country of destination
    • Ask the individual to register with the federal system of self-employed workers
  • Australia

    A fundamental issue in the interaction between Australian employment law and a globally mobile workforce is the applicability of Australian contractual terms and employment conditions overseas. In a well-known legal case, uncertainty surrounding the employing entity of a regionally mobile employee gave rise to considerable and unforeseen accumulated entitlements. It remains a salutary lesson to employers in Australia to confirm that all agreements “speak to” one another. An employer should always seek clarity of intention on:

    • Continuity of employment
    • Applicable entitlements
    • The proper employing entity
  • Belgium

    Belgium has enacted provisions — the Posting Act of 5 March 2002 — that concern employers who temporarily place workers in Belgium. It was introduced to implement European Directive 96/71/EC on the core labor conditions that must be met in the host country, but it goes beyond just imposing minimum standards.

    From a European perspective, it does not comply with the basic principle of the free movement of services in certain ways. The general rule is that each employer must respect the conditions for work, pay and employment prescribed by Belgian laws, administrative law provisions or conventional provisions (such as collective bargaining agreements). Noncompliance is sanctioned by criminal law statutes. Therefore, it has a broad application.

  • Brazil

    For inbound workers, the most common visas that allow the performance of professional activities in the country are permanent, temporary and technical services. The holder of a technical services work permit maintains an employment relationship with the home country, so Brazilian employment legislation does not cover these professionals. The permanent work permit holder will be treated as a local employee, with the same rules and challenges for budgeting purposes. The temporary work permit requires more time and effort to manage. For Brazilian employment law purposes, these expatriates should be treated as local employees. Nevertheless, because of a set of specific employment rules now in force, most companies struggle to forecast the costs.

    For outbound workers, Law 7.062/1982 regulates the rights of employees transferred abroad by companies to perform activities for more than 90 days. This legislation establishes that the transferred employees should remain under the Brazilian legislation umbrella, including aspects of social security, apart from protecting the employee’s rights to a mobility package (flights, expenses, insurance, etc.). Transferred employees will maintain an employment relationship in Brazil.

  • Bulgaria

    The parties are free to choose the applicable law, as recognized in both EU and non-EU cross-border employment situations. For the term of the posting, the parties can decide to apply the home country’s laws or to subdue their employment relationship to Bulgarian law. Posted workers, irrespective of whether the employer is based in the EU, are entitled to core rights that replicate and even build on those enshrined in Directive 96/71/EC. However, Bulgarian labor law might envisage less favorable working conditions than the law of the jurisdiction where the employer is established. In that case, the receiving entity must bring about the more favorable working conditions and attest to that before the Bulgarian labor agency.

  • China

    Ideally, a mobility arrangement should proceed as follows:

    • The expatriate is hired as an employee by the overseas parent company (normally a direct investor or an affiliate of the local entity established in China), and the relationship is governed by foreign law as agreed by the parties.
    • The expatriate — in an agreement signed with the parent company — is seconded to work for the local entity, an arrangement that creates no employment relationship with the local entity.

    Additionally, in our experience, most labor authorities in China accept the assignment agreement for the expat’s work permit, provided that the parent company is responsible for compensation and the agreement includes provisions required by the local authority.

  • Colombia

    Companies face many challenges with repatriation because of the complexities of Colombian regulations around mobility services. Here are a few noteworthy issues.

    • Labor and social security: At the end of the assignment, regardless of the method of termination and the employee’s nationality, every employer should pay outstanding salaries, fringe benefits (applicable only for ordinary salaries: legal services bonus, severance and interest on severance) and vacations.
    • Immigration: Within 15 calendar days after termination, the company must inform the Special Administrative Unit Migration Colombia of the expatriate conclusion of activities — in writing or through authorized electronic means.
    • Repatriation costs: During the 30 calendar days after the contract ends, companies must pay to repatriate the worker and his or her family. If the employee does not use the repatriation expenses, the company must inform the Special Administrative Unit Migration Colombia in writing within five days of the term mentioned above expiring.
    • Taxes: For tax purposes, residents are those “who remain continuously or discontinuously in Colombia for more than 183 days (including days of arrival and departure), during any period of 365 consecutive calendar days.” According to Law 1607 of 2012, individuals considered tax residents are subject to taxation on their worldwide income from their first year of tax residency in Colombia. Individuals who are not considered tax residents are subject to taxation only on Colombia-sourced income.
  • Costa Rica

    Many companies disregard key aspects when importing their human capital to Costa Rica. Here are important issues to consider:

    • Foreign employees who work in jobs with high unemployment rates in Costa Rica — such as business administration or administrative personnel — are less likely to be granted work permits.
    • Local legislation will generally govern the labor rights of employees, independent of their immigration status, unless an explicit previous arrangement states otherwise and is more favorable to the employee.
    • The company must meet all social security requirements, including registering as the legal employer with the Costa Rican Department of Social Security, providing a complete and accurate list of company employees (including salaries) and keeping up to date on all social security contributions.
    • Alternatives to the work permit include a temporary visa, which requires a less complex process and takes less time (often suitable for employees visiting the country for a specific, temporary project).
  • Cyprus

    When employment requires EU nationals to remain in Cyprus for more than three months, the statute calls for them to register with the competent authority — i.e., the Ministry of Interior — and calls for registration with social insurance authorities. With social insurance, the guiding principle is that EU nationals are subject to the legislation of a single Member State. For employees, the legislation of the Member State where the activity is carried out usually applies. People receiving certain short-term cash benefits based on their employment or self-employment are also subject to the legislation of the Member State of activity. Any other person is subject to the legislation of the Member State of residence.

  • Czech Republic

    The assignment of employees of foreign employers to the Czech Republic is possible without an employment agency license if it is not done for profit. With intra-group assignments, some consideration is acceptable if required by transfer pricing regulations. The Czech host employer must notify the Labor Office of any assignment on a prescribed form. Czech core working conditions, such as minimum wage or maximum working hours, must be upheld for employees seconded by EU employers, even if the foreign law remains applicable.

  • Estonia

    As a general rule, each time an employer assigns an employee to perform work outside what’s specified in the employment agreement, it constitutes a business trip (töölähetus in Estonian) under local legislation. Without an agreement, an employee cannot be sent on a business trip for longer than 30 consecutive calendar days. A pregnant woman or an employee raising a child who is disabled, or who is younger than 3 years old, can be sent on a business trip only with consent. If the employee works in a foreign country for more than one month, the employer must notify him or her of:

    • The length of time to be worked abroad
    • The currency in which the wages are paid
    • The benefits related to the employee’s stay in the foreign country
    • The conditions for returning from abroad
  • France

    France has long been highly attentive to protecting employees working in its territory, as evident in its “best in class” approach to the application of the EU Directives on the posting of workers. The country views the process as a potential means to skirt French employment law and, therefore, as a potential source of “social dumping.” Employers posting workers in France should heed the applicable rules:

    • The posting employer must be a legitimate foreign employer.
    • The posted workers have reinforced protections.
    • The posting employer has enhanced reporting and monitoring requirements.
    • The legal administration has increased powers to monitor and sanction noncompliance.

    The employer must comply with rules provided by the French labor code on equal treatment, nondiscrimination, health and safety, termination of the employment contract and training.

  • Georgia

    Georgia recently adopted the Law on Labor Migration to establish rules governing contractual relations among immigrant job seekers, intermediate entities, employees and employers residing in different countries. Under the measure, the governing law of the employment agreement between an immigrant employee and a foreign employer will be that of the country where the work will be carried out. The measure does not state what law applies to an employment agreement between a Georgian employee and non-Georgian employer. There is some question about whether such an employment agreement could be governed by the substantive laws of the other country if the work will be carried out in Georgia.

  • Germany

    The employee should remain an employee of the home company and work under the instruction and supervision of the home company to avoid having the German Act Regulating the Supply of Temporary Workers apply. The supply of temporary workers requires special permission in Germany. An important consideration, particularly with an assignment extension, is how long an employee can remain in the home country social security scheme — up to six or eight years. At the end of an assignment, employees might have a claim to payment in lieu of holiday if their contractual holiday entitlement is fewer than 20 holiday days — the minimum entitlement under the German Federal Paid Leave Act.

  • Greece

    Based on case law, and in conjunction with Articles 361 and 648 of the Civil Code, an agreement in which an employer assigns the services of an employee to another employer is valid as long as the employee consents. The lending agreement is a three-party relationship between the employee, the initial employer and the employer using the services. Employees can give consent either explicitly or implicitly — for instance, when they go to work and provide services to the assigned employer. In this case, the employment relationship with the initial (direct) employer is not terminated, and the third party also acquires the capacity of the employer (indirect employer). The direct employer has all the obligations arising from the employment contract, e.g., payment of salary and benefits and social security contributions. This employer is the only one entitled to terminate the contract.

  • Hong Kong

    Because Hong Kong is one of Asia’s leading financial hubs, local companies often transfer their employees to different countries to fulfill business needs. Dealing with mobility issues requires closely examining the laws of both the home and host countries. An employee’s overseas assignment can normally be managed in three ways:

    • Secondment — when an employee is sent to provide services in another local or overseas company (host employer) while remaining employed by the employer in Hong Kong (home employer)
    • Dual contract — when the employee enters into a separate employment agreement with a host employer, while remaining employed with the home employer
    • Direct hire — when employment with the home employer is terminated and new employment begins with the host employer
  • India

    Employment visas are granted to highly skilled or qualified professionals engaged by an entity in India on a contract or employment basis. They are not granted for secretarial or other routine jobs for which large numbers of qualified Indians are available. With some exceptions, foreign nationals sponsored for an employment visa should draw a minimum salary of US$25,000 per year (including all allowances paid in cash). Foreign nationals cannot change employers under the visa unless the change is between a holding company and its subsidiary, or vice versa. India follows a “source rule” taxation basis for foreign nationals, taxing all income arising from employment in India. Some relief is available to employees coming from countries that have signed double taxation avoidance agreements with India.

  • Italy

    Under new regulations, the hosting employer must grant the seconded employees treatment equal to that applied to its other employees in the same host Member State (e.g., maximum working hours, minimum rest periods, holidays and protection of maternity rights). The home and host companies are jointly and severally liable for the seconded employees up to two years after the termination of the posting in relation to salaries, social security contributions, etc. The seconding employer must give notice to the Ministry of Labor within 24 hours before the beginning of the secondment and any further amendment within the next five days. Among other requirements, the home company must preserve employment contracts, pay slips and any other salary documentation — drafted also in Italian — for a certain period after the secondment is terminated.

  • Japan

    If the governing law of an employment agreement is at issue, the court will rule based on the Act on General Rules for Application of Laws, which states that the governing law is that of the place chosen by the parties at the time of the agreement. If a law was chosen other than that of the place most closely connected with the employment agreement, mandatory provisions of the closely connected place should also be applied upon request by the employee. If the employee is working in Japan, Japanese law is presumed to be the governing law. In short, a choice-of-law clause is generally valid, but mandatory provisions of Japanese employment law could apply for expatriate employees. The employer can overturn this presumption by proving that the place most closely connected with the agreement is not Japan but the country from which the employee is seconded.

  • The Netherlands

    In posting workers, companies face a choice of assignment structures, each with advantages and disadvantages.

    The assignment approach: employment is based on the home employment contract or an addendum.

    Pro: Simplicity. The employee can be easily repatriated after the assignment ends.

    Con: The approach cannot be applied in all country combinations.

    The suspension approach: the employee has both a home and a host employment contract.

    Pro: The employer will most likely comply with requirements of the home and host countries.

    Con: There may be two active employment contracts on which the employee can rely, creating a risk of double payments (e.g., severance and holiday salary).

    The termination approach: the employee only has a host employment contract; the home contract is terminated.

    Pro: The employer will most likely comply with requirements of the host country.

    Cons: Standardization is impossible. Repatriation is troublesome. Accrued employee rights will not continue.

  • New Zealand

    When seconded employees remain employed by the home country, the home employer is responsible for managing any disciplinary or performance issues. Accordingly, secondment agreements should include provisions on:

    • The manner in which disciplinary matters will be managed, including a requirement by the host employer to provide information or witness statements
    • Confidentiality, intellectual property and privacy, regarding both the home and host employers
    • Any right of return and the position to which the employee may return
    • Continuity of service and how it affects entitlements such as redundancy and long-service leave
    • The ways the secondment (and the underlying employment) can be terminated by any of the parties
  • Norway

    Norwegian regulations on posted workers do not include rules on minimum pay. In fact, Norway has no statutes on minimum pay, and employees who are assigned there may, as a rule, work for the same salary they receive in their home country.

    Wages and working conditions negotiated between trade unions and employer organizations in collective agreements apply to all workers in Norway, including posted workers, irrespective of whether they are party to the collective agreement. And when a work permit is necessary, immigration rules require proof that the pay and working conditions in the employment or assignment contract are at least as good as those in the current collective agreement or pay scale for the industry, or at least as good as the norm for the occupation.

  • Poland

    For the posting of employees to Poland, the national law sets three main obligations for the employer:

    • Appointing a person responsible for contacting the authorities
    • Notifying the relevant authorities about the posting
    • Maintaining relevant employment documents

    A National Labor Inspectorate is responsible for seeing that the posting structure complies with laws. For employees outside EU Member States, immigration requirements must be taken into account. Assignees from certain countries, such as Ukraine, the Russian Federation and the Republic of Georgia, have simplified procedures, and they may be hired temporarily — without a work permit — based on an employer affidavit registered by the local labor office.

  • Portugal

    The economic crisis has accelerated the search for new export markets for domestic companies, thereby increasing the posting of workers in new countries and creating a new standard in employment law practice. Previously, Portugal was mostly a destination for the staff of established multinational companies, not a place that originated international postings in emerging markets.

    The main feature of the Portuguese law is a set of minimum standards — under Directive 96/71/EC — for safety, duration of work and rest periods, vacation, overtime, minimum wage and parenting rights. These are mandatory for assignments both to a foreign country and to Portugal. Under the Convention of Rome, the sides can choose which law will rule the assignment. But when the rules chosen by the parties are less favorable to the worker, the Portuguese minimum legal standards always apply.

  • Romania

    Romania’s entry into the EU in 2007 brought significant changes to the legal regime, which is applicable when Romanian citizens are posted in EU countries and when EU citizens are posted in Romania. A decade later, uncertainties and practical difficulties remain in managing employment, social security and immigration requirements. According to a survey published by the Romanian National Council of Small and Medium Sized Private Enterprises, 80% of interviewed private entities consider the EU posting procedures to be bureaucratic, lengthy and costly. With non-EU assignments, Romanian employers still face challenges on the social security protection of posted employees and the time-consuming procedures for obtaining work.

  • Russia

    All foreigners working in Russia must have a local employment agreement to obtain a work permit. Some companies fully shift their payroll to Russia, although it is common to retain some payments from abroad for social security coverage. Although limited by new legislative requirements, secondment arrangements are one of the most common assignment structures. Legislative changes that took effect on 1 January 2016 establish criteria that must be met for one company to provide personnel to another. The most advantageous work permit regime for foreign nationals is the Highly Qualified Specialists (HQS) regime. One of the most important criteria is the remuneration that a foreign employee must receive locally from the party sponsoring the HQS permit — currently about US$2,574. This permit has a simplified procedure and a beneficial income tax rate for tax nonresidents.

  • Serbia

    Serbia has three types of mandatory social security contributions (SSCs): pension and disability, health care, and unemployment. Foreigners can stay in their home country’s social security system if they remain employed with the foreign company. SSCs are mandatory for local employees; for foreigners, it depends on whether their country has a bilateral social security treaty with Serbia. Under such agreements, the time when foreigners are exempt from local SSCs is usually limited to one to three years, with possible extensions that generally do not exceed five years. When work permits are issued, authorities will examine whether foreigners have health insurance that covers Serbia.

  • Singapore

    All foreigners working in Singapore must hold a valid work pass, and the Singapore employer will typically apply for it on the employee’s behalf. The employer must take care to include a condition in the assignment letter that makes employment contingent on the issuance of a valid work pass. The Ministry of Manpower (MOM) has been restricting the flow of foreign workers into Singapore, making it increasingly difficult to obtain passes. We expect this trend to continue in the coming years. Employers should prepare an assignment letter that stipulates:

    • The individual’s pay and benefits during the assignment
    • The party responsible for managing and supervising the individual
    • The duration of the assignment and whether the local entity has a right of termination
    • Whether employment with the original employer continues during the assignment
    • The individual’s confidentiality obligations to the local entity and the restrictive covenants that apply in favor of the local entity
  • Slovakia

    An employer from another EU Member State sending an employee to Slovakia must:

    • Submit a notification form to the Slovak National Labor Inspectorate before the posting commences
    • Appoint a contact person for document delivery in Slovakia
    • Maintain certain employee-related documentation at the employee’s workplace

    Concluding a written contract between the home and host employers is obligatory for temporary assignment and recommended for other forms of posting. Posting terminates when the assignment period ends, when employment with the home employer ends or when the contract between the home and host employers ends. Even non-employers have certain legal obligations, provided that they receive a service through posted workers. In particular, they may have to pay due wages to the employees of their supplier if the supplier fails to do so, and they may be subject to fines if the supplier illegally employs workers.

  • South Korea

    If the parties do not choose the applicable law, the employment contract will be governed by the law of the country where the employee habitually provides the service. If the employee does not habitually provide the service within one country, the governing law will be that of the country where the employer’s business office is located. Even if the parties agree that Korean law will not govern the employment contract, employees can still obtain protection under Korean employment laws if they habitually provide their service in South Korea. Therefore, it is important to choose the most efficient type of employment after considering all relevant Korean legislation, such as employment and social security laws.

  • Spain

    When a worker changes countries, the employment relationship in the home country may be maintained or suspended. If the labor relationship continues, the parties should sign a letter of assignment that focuses on:

    • The duration of the contract
    • The terms and conditions for the employee, including working hours, seniority, vacation and compensation for transfer expenses
    • The applicable law
    • The applicable social security regime

    If the relationship is suspended, the worker should sign a new employment contract with the company in the country of destination, as well as an agreement of suspension. In this agreement, the employer and the worker will agree on the duration and conditions of the suspension of the labor relationship and will coordinate the suspended contract and the new contract. Ultimately, the decision between these options depends on which formula suits the circumstances of the company and the employee better.

  • Sweden

    A posted worker will be covered by core employment rights in Sweden, including:

    • Regulations under the Working Time Act (1982:673): The rules for working hours are an implementation of the minimum standards derived from the Working Time Directive (2003/88/EC).
    • Minimum days of annual leave: According to the Annual Leave Act (1977:480), a worker is entitled to at least 25 days of paid leave per year.
    • Minimum wage (if the worker is covered by a Swedish collective bargaining agreement): Please note that Sweden has no statutory minimum wage.
    • Safety and other work environment regulations (in the Work Environment Act): This responsibility lies with both the posting entity and the host entity (as the party responsible for the actual workplace).
    • Discrimination regulations: An example of it is the Discrimination Act (2008:567).
  • Switzerland

    Two main issues deserve special attention: (1) the relationship between the host company and the assigned employee and (2) the competent jurisdiction to resolve a dispute. In theory, the assigned employee should keep an employment contract with the home company and should not be bound to the host company.

    In practice, though, we may consider the possibility of an employment relationship with the host company. If Switzerland is the host country, an employment relationship might exist, particularly when the employee has a subordination relationship with the host company, works on its premises and receives payment from it. Two employers may coexist and may be sued by the employee in case of a dispute. Most employment and assignment agreements address which court jurisdiction will resolve disputes, but it is necessary to verify the applicability of such clauses.

  • Turkey

    Foreigners must obtain work permits before performing dependent or independent work in Turkey, unless otherwise specified in treaties. Work permit applicants must have an employment agreement with the Turkish employer. That agreement will be subject to mandatory provisions of the labor code and must include a job description, the salary, working hours, and the employee’s and employer’s names. For Turkish employment, any dispute will be settled in accordance with Turkish law by the labor courts. If the employment arrangement with the home country is retained, any dispute may be handled in accordance with the provisions of that agreement as well as the laws of the home country.

  • United Kingdom

    Whether UK employment law applies to the assignee or not, it will be a key consideration when ending the assignment, particularly if the assignee’s employment is ending because he or she cannot — or no longer wishes to — return to employment in the home country. If UK employment law does apply, the end of the assignment must be handled like any other dismissal or redundancy process in the UK, particularly when the assignee has met the qualifying period.

    Employers who have considered what happens at the end of the assignment, and have drafted documentation that reflects this, will be in a much better position to deal with any issues that may arise. Even if the assignment ends amicably or the assignee will return to employment in the home country, employers should consider entering into a settlement agreement to extinguish any liability that results from the assignment.

  • Vietnam

    The Labor Code does not clarify whether the law of the home country or the host country governs arrangements covering the transfer of employees to Vietnam. Therefore, the secondment agreement or appointment letter should make clear which country’s law governs the arrangement. If Vietnamese law is chosen, the worker’s rights and obligations set out in the employment agreement should be in line with the Labor Code.

    These include the term of employment, annual leave and termination-of-employment issues. The host employer will be responsible for paying the salary, making compulsory social insurance contributions and obtaining a work permit for the employee. In another scenario, the home and host entities may agree that the employment agreement signed by the home country and the transferred employee will continue to govern the worker’s benefits, rights and obligations while the employee works in Vietnam.


In today’s competitive landscape, a multinational must be agile and must make certain that its workforce is in the right place, at the right time, with the right skills. But employers must also remain aware of HR legal risks.

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EY Global

Multidisciplinary professional services organization

Related topics Tax Mobility Law