Commuting may be a preferable option both for executives and for businesses particularly on initial market entry or where personnel are required periodically.
As an international commuter, the employee continues to be based in the UK but works abroad for certain periods – effectively extended business trips. Service during these arrangements will remain governed by UK law and so avoid the administration, management time and complexity of relocating executives.
The business should agree specific terms with executives for periods worked overseas. Where a UK employee will be required to work outside the UK for a period of more than one month, the employer must provide a written statement of terms and conditions which will operate during their posting abroad. This should include the period(s) to be spent overseas, any additional remuneration payable/benefits provided or removed, the currency in which the executive will receive payment of remuneration and any currency conversion rate provisions and the terms and conditions relating to their return to the UK (if any).
Under a secondment arrangement the executive lives and works abroad for longer periods, often for a couple of years. UK companies will usually continue the employer/employee legal relationship while the secondee is working in Asia.
Businesses should consider maintaining the secondee’s employment connection with their home country through contractual terms. A British expatriate who is living and working in Asia will need to keep a strong connection with Britain in order to retain key British statutory employment law protections, including unfair dismissal rights which accrue after two years’ continuous service.
Where in their home country legal rights and protections are more favourable than those given by host country local laws, executives will also be keen to retain this connection. Secondees may also want to keep entitlements to certain benefits/incentives offered by their home employer business.
These issues are best managed through contractual terms agreed with the secondee, although statute law rights cannot all be replicated by contractual agreement.
Employees may want a business to include:
- Terms that their contract is governed by the law of their home country and disputes adjudicated by its courts;?
- Contractual preservation of home country employment law protection;?
- Confirmation that the secondee’s career centre remains his home country; and
- Provision for repatriation at the end of the assignment and retention in employment after repatriation.
They may also want provision for the resumption the secondee’s entitlement to benefits or incentives in his home country, the offer of a comparable benefits package, or transfer to local/global schemes or compensation if this cannot be facilitated.
Local Employment Law
Additionally, local employment laws will apply in the host country to secondments (the extent of which will vary by country). Local legal advice is recommended, especially in relation to employment termination and business protection provisions to ensure they are enforceable.
Protection of Host-Company’s Business
As the secondee will be working in the host company’s business, it is advisable for the host company to require executives to sign up to direct confidentiality, business and proprietary protection obligations to protect the host country’s business too.
We recommend compliant written agreements between the parties in order to confirm role, responsibilities, rights and obligations during the secondment.
There are, of course, also important considerations in relation to tax, social security and immigration regulation.
Carolyn Brown is a Partner and Head of Employment and Susie Al-Qassab is an Associate at law firm HowardKennedyFsi LLP. Visit www.hkfsi.com for further information.