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Labor &

Employment Law
Strategic Global
Topics
Fall 2016 edition
Employment Law
Challenges in Mobility and
Posting of Workers
In this issue, we focus on
Employment Law Challenges in Mobility and
Posting of Workers

Editorial 3 Costa Rica 14


EU update on posting of workers 5
Employment mobility law: aspects to consider
The new 2014 Directive
Cyprus 15
Angola 6 Worker mobility
Work visas: a closer look
Czech Republic 16
Argentina 7 International employee mobility
Migrant workers and the social security system
Estonia 17
Australia 8
Employment law issues in mobility
Global Mobility Update September 2016

Belgium France 18
9
Employment law challenges in mobility
Employment law issues with posting workers

Brazil Georgia 19
10
Employment law and mobility Choice of law in employment agreements with
international connections
Bulgaria 11 Germany 20
A trend toward greater protection of posted workers
Employment law issues in mobility
China 12
Greece 21
How employment law influences mobility
Employment law issues in mobility
Colombia 13
Hong Kong 22
Employment law issues in mobility
Employment law issues in mobility

1 Labor & Employment Law Strategic Global Topics


India 23 Serbia 33
Employment of expats: legal aspects Employment law issues in mobility

Italy Singapore 34
24
New constraints for assignments under Italian law Employment law issues in assignments

Japan Slovak Republic 35


25
Regulations for expatriate employees New Slovak rules for posting workers

Netherlands South Korea 36


26
Dutch employment law challenges with the posting Effective integrated strategy focusing on South
of workers Korean law

New Zealand 27 Spain 37


International employee mobility Assignment of workers abroad

Norway Sweden 38
28
The rights of employees assigned or posted Rules for posting workers

Poland Switzerland 39
29
Employment law issues in mobility Employment law issues in mobility

Portugal Turkey 40
30
International mobility the Portuguese approach Employment law in mobility

Romania United Kingdom 41


31
Assignment to the UK employment law issues
Labor force mobility regulations and challenges
to consider
Russia 32 Vietnam 42
Employment law issues in mobility Employment law issues mobility

Labor & Employment Law Strategic Global Topics 2


Editorial
The traditional mobility model of the 20th Century, where employers
were required to coax their employees to venture out into the brave world
and take on an international assignment is rare in todays digitalized and
globalized world. Indeed, employee mobility is no longer an issue faced
by businesses in special cases but has become a key component of their
organizational structure and business model. Businesses now seek to
benefit from advantages of a more flexible and mobile workforce, and
therefore fully optimize their internal HR supply chain. Businesses now
need employees to be mobile, on shorter notice, for shorter periods of
time, and not only for internal matters but also to serve client project
needs and deliver on global contracts. Indeed, in todays competitive
landscape, a multinational must be agile and ensure that its workforce is
in the right place, at the right place, at the right time, with the right skills.
The use of mobile employees however raises HR legal risks of which employers need to be aware.
Employee mobility is a key aspect of the European Union, given that freedom of movement for
workers is one of the Unions cornerstones. The European Union has implemented complex regulations
and directives, and country specific rules must also be kept in mind in order to avoid legal with respect
to the posting of workers and reputational risk. In this edition, we will explore these key challenges
and issues.
Roselyn Sands
EY Global and EMEIA Labor & Employment Law
Leader

3 Labor & Employment Law Strategic Global Topics


Labor & Employment Law Strategic Global Topics 4
EU update on posting of workers

The new 2014 Directive recent modification was in 2012), the 1996 posting. The 2014 Directive also provided
Posting of Workers Directive had not been for additional rights to posted employers
Posting of workers is regulated in the
updated since 1996 and it was felt that its in order to increase their rights in the
European Union by Directive 96/71/CE,
contents were no longer sufficient in our subcontracting chain. Indeed, following
called the Posting of Workers Directive
globalized economy. It is for this reason, the new Directive, Member States must
which was approved on December 16,
and through political pressure from several now ensure that posted workers in the
1996. The posting of workers Directive
Members of the European Union that the subcontracting sector can hold their direct
aims to protect the social rights of posted
Directive was reviewed, in order to provide subcontractor, in addition to or in place of
workers by providing for core employment
additional protection to posted employees. the employer, liable for all wages owed.
conditions that must be applied to posted
On May 15, 2014, Directive 2014/67/EU Thus, the business relationship may be at
workers in their host country. These core
was implemented, modifying the 1996 risk if violations occur and customers are
employment conditions include maximum
Posting of Workers Directive. The deadline held liable.
work periods and minimum rest periods,
annual paid leave, health and safety for the transposition of this new Directive One of the other main parts of the new
at work as well as applicable minimum by Member States was June 18, 2016. 2014 Directive is focused on increasing
rates of pay. Even if today, this deadline has passed, cooperation between national authorities
the following countries have yet to have and administrations in charge of
The Posting of Workers Directive has been
implement the EU Directive in their national compliance. These changes include
applied in coordination with other various
legislation: Bulgaria, Croatia, Czech time limits for the supply of information
European Regulations, in particular to
Republic, Estonia, Greece, Luxembourg, between national authorities as well as
regulate the issue of the social security
Slovenia and Portugal. Belgium is currently the implementation of fines for companies
affiliation of posted employees. The most
debating the conditions under which the that fail to comply with the applicable
recent EU Regulation on social security is
Directive will be implemented in their regulations. Posted workers also have
Regulation 987/2009, which provides the
country. Some countries, like Germany, increased protections as they can bring
currently applicable coordination rules on
consider that their local law already takes legal action both in the home or host
social security systems.
the new Directive into account and that no jurisdiction.
The coordinated application of both the transposition is required. On March 8, 2016, the European
Directive and the EU Regulation provided
The purpose of the 2014 Directive is to Commission proposed another revision of
for holistic rules on both employment law
help fight abuse and circumvention of the rules on posting of workers within the
and social security regulation. However,
the applicable rules, in particular via the EU. So this an issue that requires careful
although the European Regulation has
use of fake companies, and ensure legal attention.
been updated over the years (the most
that specific situations qualify as genuine

Roselyn Sands
EY Global and EMEIA Labor &
Employment Law Leader

5 Labor & Employment Law Strategic Global Topics


Ricardo E Veloso Angola

Work visas in Angola: qualified foreign citizens can be approved. Repatriation deposit
a closer look An application should be carefully prepared The repatriation deposit requirement is set
to demonstrate the foreign citizens forth in Law No. 2/07 of 31 August 2007
Work visas: requirements and qualifications and professional experience. and in Presidential Decree No. 108/11
procedures of 25 May 2011. The granting of a work
Employment agreement
According to Angolan law, a work visa is visa is subject to a deposit made by the
Foreign citizens working in Angola must
required for those undertaking temporary employer to cover the costs of a potential
sign an employment agreement that
remunerated work in Angola, and its holder repatriation of the employee.
contains some imperative clauses and that
can perform only the specific professional
must be registered with the Ministry of Declaration of Honor
activity for which the visa was issued.
Labor. When the contract is terminated, Foreign citizens wishing to work in the
Main characteristics the employer must write to the Ministry of country must sign a Declaration of Honor
This visa allows its holder to undertake Labor to request cancelation of the foreign stating that they will comply with Angolan law
remunerated activity in Angola for employee registration. and will return to their country of origin after
Angolan companies, but it does not allow The employment agreement will enter into the employment agreement is terminated.
the applicant to become a resident in the force only after the work visa is issued and
national territory of the Republic of Angola. the employment agreement is registered
Registration
with local authorities. To obtain the visa, The local company must register the
Period of stay foreign employee with the relevant
This visa must be used within 60 days of companies can submit an employment
agreement or a promissory employment authorities at least 30 days before
issuance, and entitles its holder to enter activities start. Registration should occur in
multiple times and to stay in Angola until agreement, both signed. Both will be in
force only after being registered in Angola. the first month of employment.
the end of the employment agreement
term a minimum of 3 months and a Because the employment agreement will More than one
maximum of 36 months. be effective only after (a) the visa has been employment agreement
issued, (b) the employee enters Angola Under Article 9 of Decree No. 6/01, the
Procedure with the visa and (c) the contract has been employee cannot sign a contract with
Obtaining a work visa can be bureaucratic registered, the employee can work abroad any other employer (domestic or foreign)
and, in most cases, time-consuming. In for another company during the procedure during or after the termination of the first
general, the procedure comprises two to obtain the visa. agreement without complying with specific
main phases:
rules thereby established.
Obtaining a favorable opinion on the Salary
Foreign citizens working in Angola must It has been considered that this situation
hiring from the ministry that oversees
be included on the local company payroll may be ignored it the foreign citizen is
the sector where the employer
and be paid in Angola in kwanzas. Upon working in Angola under a secondment
undertakes its activity
receiving evidence of a valid employment agreement. When a foreign company
Submitting the visa application to the agrees with a local company on an
agreement registered with the Ministry
Angolan Consulate (in the country of assignment for the employee, the
of Labor, commercial banks will allow the
origin or residence) employee must have two employment
transfer of money abroad.
Obligations and additional rules agreements one with the local entity and
Taxes and social contributions the other with the foreign entity. However
Quota regime Companies hiring foreign employees will Angolan law does not foresee this situation,
Angolan companies must comply with a always be required to withhold employment authorities may reject it.
statutory quota in the hiring of foreign income tax on income received in Angola.
citizens a minimum of 70% of national The social security contribution is required
citizens and a maximum of 30% of foreign only if the foreign citizen is not paying
employees. Also, only visa applications for social contributions in the country of origin Anabela Silva
and residence. anabela.silva@pt.ey.com
Ricardo E. Veloso
ricardo.veloso@pt.ey.com

Labor & Employment Law Strategic Global Topics 6


Argentina Javier Sabin

Migrant workers and the social The negative effect on retirement benefits Another market practice is to keep the
might be mitigated if the employee is assignee on the Argentinean payroll.
security system
assigned to a country that has a social However, this is not recommended because
Globalization is one of the main drivers
security agreement with Argentina. The it increases the costs for the employer and
of worker movement: about 60% of the
employee can compute the period worked the employee, and it indicates that the
worlds migrants are migrant workers,
in the other country for retirement in employment relationship in Argentina has
a number that is expected to rise as
Argentina. Nevertheless, no social security been maintained.
companies expand to different countries
contributions would be paid in Argentina The company should consider these
and regions. Thats the case in Latin
during the assignment, lowering the concerns when planning the assignment,
America, particularly Argentina.
average estimated pension amount. because the success of expatriation is
International assignments raise numerous
Argentina has nine ratified social security deeply connected to the actions taken on
concerns, including contributing to social
agreements, with Chile, France, Greece, social security themes. To help reduce
security and maintaining the social security
Italy, the Mercosur region (which includes the negative impacts on social security,
benefits of migrant workers. How can these
Brazil, Uruguay and Paraguay), Belgium, employers can speak with potential
workers be certain that their social security
Portugal, Slovenia and Spain. Because assignees and consider their age, how
benefits (especially their retirement
Argentinean employees are spread around close they are to retirement and whether
pensions) will be preserved?
the globe, these agreements do not help in they plan to retire in their home country.
In Argentina, the territoriality principle every assignment. Employers may have to Human resources should also become
guides the social security system, consider alternative solutions. more connected to the companys strategic
meaning that contributions are obligatory
To help lessen the negative effects of goals. A well-planned assignment can
for services rendered within national
discontinued contributions, companies can benefit the employer in many ways,
territory. Considering that employees
take two actions: from costs and employee satisfaction to
transferred abroad will perform no
Buy private insurance to cover company reputation.
activity in Argentina, their compensation
contingencies with no equivalent
from the foreign company will generally
coverage in the country of destination
not be subject to employer or employee
contributions to the Argentinean system. Ask the individual to register with the
federal system of self-employed workers
If the individual is assigned to a country
that lacks a ratified social security Other recommendations include making
agreement with Argentina, the assignees voluntary contributions to a private
benefits may suffer because payments to pension plan or paying cash to the worker
the Argentinean social security system as compensation for the lack of
will be suspended. The main concerns are retirement contributions.
related to health insurance (Obras Sociales)
and retirement benefits.

Javier Sabin
javier.sabin@ar.ey.com
Fernanda Baroncini
fernanda.baroncini@br.ey.com

7 Labor & Employment Law Strategic Global Topics


Dayan Goodsir-Cullen Australia

Global Mobility Update employment continued beyond the three Australian and New Zealand entitlement),
years term. To add confusion to the factual an amount equivalent to notice of
September 2016
matrix, Dr Xs salary was paid by a related termination and an implied redundancy
Australian Federal employment law
Singapore company which we shall call entitlement.
has an inherent but rarely exercised
DEF for the purpose of this article. DEF had Critically, the 2000 employment
extraterritorial applicability. Australian
been his employer prior to 2000. agreement was professionally drafted.
employees serving abroad may benefit
Between 2000 and 2011, when his position Subsequent letters, agreements,
from rights under the Fair Work Act 2009
was terminated, Dr X moved to a number secondment arrangements (variously
(Cth). Equally, Australian employers may be
of locations throughout the Asia-Pacific described) were not professionally drafted.
subject to obligations set out in that Act.
region. With each move ABC issued The court found that after the 2000
However, a more fundamental issue
Dr X with various letters purporting to employment agreement there had been
is most often at play in the interaction
constitute fresh employment agreements no discussions or negotiations regarding a
between Australian employment law and a
on local (not Australian) terms which were change of employer. Whatever the intention
globally mobile workforce: the applicability
variously described as an addendum to of the parties (and there was dispute
of Australian contractual terms and
your original contract with DEF, and an in relation to this), the documentation
conditions of employment overseas. An
expatriate assignment. As it transpired, pointed to the abiding relevance of the
Australian Federal Court case from 2012
a number of these letters included wording 2000 employment agreement. The court
is illustrative of the care that must be
to the effect that his original terms of found that the post-2000 agreements were
taken by Australian employers in sending
employment remained in full force, such as: merely additions to the 2000 employment
employees overseas. The case remains
This letter is an addendum to your original agreement, effectively supplementing
good law.
employment contract with[DEF]dated its terms with further local terms.
This was a case where the uncertainty Having found largely in Dr Xs favour, the
15 February 2000. The terms of your
in relation to the employing entity of a court ordered ABC to pay Dr X almost
employment with[DEF]are amended as
regionally mobile employee gave rise to AUD600,000 by way of back-payment of
follows [2006 agreement]
considerable and unforeseen accumulated entitlements in addition to paying Dr Xs
I am pleased to be able to confirm
entitlements. legal costs.
[DEFs] terms and conditions for the
Between 1988 and 2000 a senior Despite being over three years old,
continuation of your current Expatriate
employee (we shall call him Dr X) was the case remains a salutary lesson to
Assignment for a further period of 24
employed in Singapore by numerous employers in Australia to ensure that all
months. [2008 agreement]
entities that were acquired by an earlier agreements speak to one another. When
All other terms and conditions of your
manifestation of a group of companies dealing with a globally mobile employee
employment remain unchanged. [2009
which we shall call the ABC Group in 2000. chief among an employers tasks should be
letter regarding changed compensation]
The ABC Group had changed its name to ensure clarity of intention regarding:
several times since its floatation on the Throughout these documents the
continuity of employment,
Australian Stock Exchange in 2000. For employing entity was referred to, among
other things as DEF and variations of that applicable entitlements, and
the sake of convenience we shall call all
these entities collectively ABC. In 2000, name. The issue before the Full Federal the proper employing entity.
ABC employed Dr X under a three-year an Court in the matter was whether or While the criticality of these elements
Australian employment agreement which not Dr X was still employed by ABC (his is demonstrated in this Australian case,
granted Australian terms and conditions, contention) or by another regional member global employers will recognize these as
including entitlements to annual leave of the ABC Group (ABCs contention). common themes across the world.
and long service leave, as well as a 6 Dr X sought payment of accrued leave,
month notice period. As it happened the annual leave, long service leave (a unique

Dayan Goodsir-Cullen
dayan.goodsir-cullen@au.ey.com

Labor & Employment Law Strategic Global Topics 8


Belgium Frank Ruelens

Employment law issues with The general rule is that each employer Measures from 2013 introduced a stricter
must respect the conditions for work, pay definition of transferring part of the
posting workers
and employment prescribed by Belgian employers authority with respect to
Using employees seconded from a foreign
laws, administrative law provisions or what instructions can be given by the user
employer to perform work or services in
conventional provisions (such as relevant undertaking.
Belgium is complex from an employment
collective bargaining agreements) Only the following instructions are no
law viewpoint. If the employer is in the
non-compliance is sanctioned by criminal longer part of the employers authority:
EU, such arrangements require a close
law statutes. Therefore, it has a broad
examination of EU legislation on the free Instructions on health and safety
application.
movement of services and people, as well regulations
Foreign employers who are not subject
as EU directives and the local legislation Instructions given in the framework
to the Belgian social security system
implementing those directives. These of a written agreement between the
and who comply with the mandatory
measures seek a balance between the free employer and the user undertaking on
Limosa declaration to the social security
movement of services, social dumping, and the condition that:
administration (or are exempt from the
the distortion of competition between local The agreement itself also contains an
requirement) enjoy certain benefits but
and foreign players. explicit and detailed description of the
only for 12 months. They no longer have to
In response to the European Court of instructions that the user undertaking
draw up certain Belgian social (workforce)
Justice case law on the free movement of can give.
documents for the relevant assignment:
services, Belgium has enacted provisions The instructions do not erode the
internal working regulations, the personnel
in the form of the Posting Act of 5 March employers authority; the legal
register and the regulations for monitoring
2002 that concern employers who employer should still determine the
the work schedules of part-time employees.
temporarily place workers in Belgium. job content, end the secondment,
These employers also no longer have to
This act was introduced to implement prepare individual (salary) accounting and determine a salary increase or change
European Directive 96/71/EC on the core salary slips for each pay period according of function, impose sanctions and
labor conditions that must be met in the to Belgian standards, provided that if control absences due to, for instance,
host country, to the extent that they offer asked by the social inspection they can incapacity to work.
better protection than the labor conditions submit similar salary documents drawn up The factual execution of the agreement
that would normally apply. Belgium has in accordance with the origin countrys law. between the user undertaking and the
not yet incorporated a second measure, This will avoid double salary administration. employer is fully in line with the details
Directive 2014/67, into its law. of the agreement on the instructions.
Triangular employment relationships
The Posting of Workers Directive adds when an employer hires out an employee to If the user undertaking does not comply
safeguards to protect the social rights another company (the user undertaking) with these conditions, the arrangement will
of posted workers. Posted workers are are strictly regulated. Under Belgian be deemed an illegal hiring-out. As a result,
those who, on behalf of their employer, are legislation, hiring out employees by the user would be legally regarded as the
sent for a limited period to work in an EU transferring part of the employers employer and, together with the original
Member State other than the one where authority is forbidden in principle. employer, would be jointly liable for paying
they normally work or have been hired. the required salary and making social
If a prohibited hiring-out occurs, the user
The Belgian Posting Act of 5 March 2002, undertaking is considered to have created security contributions.
however, goes beyond just imposing an indefinite employment contract from
minimum standards. From a European the start of activity.
perspective, it does not comply with the
basic principle of the free movement of
services in certain ways.

Frank Ruelens
frank.ruelens@hvglaw.be

9 Labor & Employment Law Strategic Global Topics


Carlos Antonaglia Brazil

Employment law and mobility The temporary work permit requires with a hybrid social security-tax nature.
more time and effort to manage. For The contribution is deposited in a savings
The employment legislation now in force
Brazilian employment law purposes, these account and can be withdrawn by the
in Brazil was created in the 1940s and
expatriates should be treated as local employee under specific circumstances.
does not take account of a more mobile
employees. Nevertheless, because of a set These include treatment of disease,
workforce. As conflicts on the applicability
of specific employment rules now in force, the acquisition of real estate or three
of the legislation emerge, the Government
most companies struggle to forecast the years without an active employment
continues to adapt the regulations to
costs for expatriation to Brazil. Here are agreement in Brazil. As this contribution
accommodate multinational companies
some examples: is unique, companies usually do not take
with subsidiaries in Brazilian territory.
Monthly payments in most countries, it into account in the assignment letter
In Brazil, as in most countries, the rules or for
salaries are annual and are divided into
differ for sending an employee abroad forecasting purposes.
12, 13 or 14 installments throughout
or receiving someone from outside the
the year. In Brazil, salaries and taxes 2. Outbound
country. Therefore, it is important to
are calculated monthly, but every Law 7.062/1982 regulates the rights
examine the legislative treatment of
employee is entitled to a 13th payment of employees transferred abroad by
inbound and outbound professionals to
(a Christmas bonus) proportional to the companies to perform activities for more
highlight the difficulties.
number of months worked throughout than 90 days. This legislation establishes
1. Inbound the year. that the transferred employees should
The type of work permit will define the Vacation for every 12 months worked, remain under the Brazilian legislation
rules applied to an inbound expatriate on the employee is entitled to a 30-day paid umbrella, including aspects of social
different levels, such as tax, employment vacation. This time can be divided into security and FGTS, apart from protecting
law and immigration. two periods, but smaller period cannot the employees rights to a mobility package
Although there are several types of work be less than 10 days. Every employee is (flights, expenses, insurance, etc.).
permit, the most common visas that allow also entitled to a vacation bonus of one- Transferred employees will maintain an
their holders to perform professional third of their monthly salary. employment relationship in Brazil, so
activities in the country are permanent, Social security employer contributions employers should prepare shadow payroll
temporary and technical services. vary from 20% to 31%, levied on the calculations to comply with the mandatory
The holder of a technical services payroll, or from 1% to 4.5% on gross contributions to FGTS.
work permit maintains an employment revenues (depending on the companys In conclusion, the biggest challenge
relationship with the home country, so the activity). For benefits, Brazil is a for mobility programs is forecasting
Brazilian employment legislation does not signatory to about 19 international the correct amounts for labor rights of
cover these professionals. social security agreements with different employees protected by local legislation,
The permanent work permit holder will be countries and regions (such as Quebc whether it is an outbound or
treated as a local employee, with the same and Mercosur). Therefore, every inbound expatriation.
rules and challenges for situation should be treated differently.
budgeting purposes. FGTS (the unemployment severance
fund), is a monthly 8% contribution by
the employer on behalf of the employee

Carlos A. Antonaglia
carlos.a.antonaglia@br.ey.com
Giuliano Cintra
giuliano.cintra@br.ey.com

Labor & Employment Law Strategic Global Topics 10


Bulgaria Tanya Stivasareva

A trend toward greater The tendency toward uniform treatment Expected changes in the
protection of posted workers of EU and non-EU workers is also legislative landscape
manifested by the statutory requirement
The steadily growing appeal of Bulgaria as A Government initiative toward enhancing
not to afford more favorable treatment
an outsourcing services destination has worker protections is in motion. Although
to non-EU-posted workers than to EU
boosted workforce inflow and outflow, the bill has not been officially submitted to
workers sent to a receiving entity in
particularly in high-tech industries. In the National Assembly, the fundamental
Bulgaria. The legislative rules do not
posting situations, employers commonly principles underpinning the forthcoming
elaborate on whether the assessment of
grapple with this question: which countrys changes are not expected to shift.
working conditions should be performed
law governs the employment relationship, One major change is the removal of the
at the receiving entitys level or at a more
and what consequences ensue? 30-day period mentioned above i.e.,
generalized level. However, the first
the granting of more beneficial working
Posting of workers to Bulgaria interpretation should be given more credit
conditions in the host state should
The parties are free to choose the because there is no publicly available
encompass short-term assignments as well.
applicable law, as recognized in both EU database at the national or regional level.
and non-EU cross-border employment The legislative proposal reflects the
Posting of Bulgarian workers to EU tendency towards expanding the
situations. For the term of the posting,
and non-EU countries applicability of the host countrys rules
the parties can decide to apply the
The conflict of law rules governing (not just the minimum standards).
home countrys laws or to subdue their
the employment relationship between a However, that applies only to postings
employment relationship to the local
worker and an employer based in Bulgaria, in an EU or EEA Member State or in the
legislation of the host country (i.e.,
irrespective of whether the employee is Swiss Confederation. Furthermore, an
Bulgaria), which is sometimes the case in
sent to work temporarily in an EU or a employer sending workers to Bulgaria in
long-term secondments. However, this
non-EU country, are fundamentally the the framework of provision of services
flexibility is limited by mandatory worker
same, and they mirror the rules set forth must comply with additional obligations,
protection rules.
by Rome I.2 The choice of law made by including submitting information about the
The treatment of inbound EU and non-EU the parties will be respected. However, posting to the Bulgarian labor inspectorate
posted workers is being developed on a employees cannot be deprived of worker before the provision of services begins.
largely uniform basis. Posted workers, protections that, in the absence of choice,
irrespective of whether the employer is New rules for administrative cooperation
would have applied.
based in the EU, are entitled to a set of and control between the competent
Only when the posting lasts more than authorities of the EU Member states are
core rights that replicate and even build on
30 calendar days does the employer to be implemented by the end of the year,
those enshrined in Directive 96/71/EC.1
have to afford at least the same minimum in compliance with the Directive 2014/67/
However, Bulgarian labor law might working conditions as those applicable EU3. Another important change is the
envisage less favorable working conditions to employees who perform the same introduction of joint liability for the main
than the law of the jurisdiction where the or similar work in the host country, if contractor and its subcontractor for unpaid
employer is established. In that case, the its an EU or European Economic Area employment-related remuneration owed to
receiving entity must ensure the more (EEA) Member State or part of the Swiss workers.
favorable working conditions for the posted Confederation.
workers and must attest to that before the
This higher standard of protection,
Bulgarian labor agency. The scope and
however, does not extend to workers sent 3
Directive 2014/67/EU on the enforcement of
content of that obligation are not clearly
to a third country. They are protected only Directive 96/71/EC concerning the posting of
defined either by the law or by the practice
within the boundaries delineated by the workers in the framework of the provision of
of the local labor authorities and courts.
applicable mandatory Bulgarian labor law services
But the general view is that it should not
provisions, even though the host countrys
extend to covering the difference between
legislation may be more beneficial. Tanya Stivasareva
the salary levels by the receiving entity,
because that remains an obligation of the tanya.stivasareva@bg.ey.com
employer. Irina Yaneva
irina.yaneva@bg.ey.com
1
Directive 96/71/EC on the posting of workers in 2
Regulation (EC) No. 593/2008 on the law
the framework of the provision of services. applicable to contractual obligations.
11 Labor & Employment Law Strategic Global Topics
Jane Dong China

How employment law 2. Issues during mobility company to pay wages to and withhold
1. A
 pplicable laws and rules individual income tax for the expat.
influences mobility
In the assignment arrangement, the The same goes for the reimbursement
When an expatriate (expat) is assigned
expats employment relationship of wages. It is advisable to consult
from abroad to mainland China known as
remains with the parent company and tax professionals to devise a suitable
mobility the following employment law
will be governed by foreign law. Whether mechanism for making reimbursement
issues should be considered.
the existing employment contract will be under the applicable foreign law.
1. Setting up mobility suspended or modified is subjected to 4. Other working rights
Ideally, a mobility arrangement should foreign law. Although foreign law governs mobility,
proceed as follows: During the assignment, the expats the expat in fact works in China and
1. The expat is hired as an employee by the entitlements will be based on the may be subject to local rules governing
overseas parent company (normally a employment contract with the parent working hours, rest, vacation, safety
direct investor or an affiliate of the local company or the assignment agreement and hygiene.
entity established in China), and the not Chinese law except for mandatory
items required by China. 3. Issues at the end of mobility
relationship is governed by foreign law as
The assignment agreement should
agreed by the parties. 2. Social security
stipulate the terms of termination.
2. The expat in an agreement signed Foreigners who are working legally in
Because foreign law governs, the expat
with the parent company is China must participate in the social
is not entitled to the statutory severance
seconded to work for the local entity, insurance system and contribute to
payment in China. To avoid disputes, the
an arrangement that creates no the five types of insurance schemes,
local entity should certainly not produce
employment relationship with the even if they are under an assignment
any document regarding the assignment
local entity. arrangement. Exceptions include workers
termination. However, the case will be
from some countries (such as South
Additionally, in our experience, most labor different in cities that mandate a local
Korea and Germany) that have signed
authorities in China accept the assignment employment contract.
treaties with China providing reciprocal
agreement for the expats work permit,
exemptions from social insurance.
provided that the parent company is
Some cities may exempt the expat
responsible for compensation and the
from contributing to social insurance
agreement includes provisions required by
according to local guidelines. Those
the local authority. In some cities, however,
will be confirmed on-site with the local
labor authorities may still require an
labor authorities before and during the
employment contract. In that case, Chinese
assignment term.
law will apply to the expat and the local
entity, and the parent company and the 3. Remuneration
local entity must consider how to deal with The parent company will be responsible
the two employment contracts (domestic for the expats wages. In practice, the
and overseas) to avoid dual employment local entity may need to pay the expat
relationship risks. first for convenience. To avoid giving
rise to an employment relationship, it is
crucial to produce evidence that the local
entity is merely entrusted by the parent

Annie H.P. Li
huiping.li@chenandco.com
Freda Xing
zhifan.xing@chenandco.com

Labor & Employment Law Strategic Global Topics 12


Colombia Carlos Sandoval

Employment law issues in The immigration perspective (including foreign nationals) who are not
mobility Within 15 calendar days after termination, considered tax residents are subject to
the company must inform the Special taxation only on Colombia-sourced income.
Repatriation Administrative Unit Migration Colombia of Pursuant to the Colombian Tax Law,
Companies face many challenges with the 183-day test does not determine
the expatriate conclusion of activities in
repatriation because of the complexities the obligation of an expatriate to file an
writing or through authorized electronic
of Colombian regulations around mobility income tax return. This test is intended
means (Article 5 of Resolution 714
services. In this section, we will discuss only to establish tax residency for defining
of 2015).
four specific topics. what portion of an individuals income
The employee has 30 days after
The labor and social termination to request a new visa or leave will attract taxation in Colombia and the
security perspective the country. applicable tax rate.
According to the principle of territoriality The applicable tax rates in Colombia are:
The repatriation perspective
(Article 2 of the Colombian Labor Code), Progressive rates of 19% to 33% on net
During the 30 calendar days after the
employment relationships are governed by taxable income for individuals classified
contract ends, companies must pay to
Colombian labor law when the services are as tax residents. Alternative income tax
repatriate the worker and their family.
rendered in Colombian territory, regardless systems (IMAN and IMAS) also apply.
of the employees nationality, the place If the employee does not use the Individuals must compare their income
where the contract is executed or the repatriation expenses, the company must tax obligations under both the regular
place where the salary is paid. Therefore, inform the Special Administrative Unit tax system and the alternative tax
independent of a labor agreement in the Migration Colombia in writing within five systems and apply the higher of the two
home country, the relationship with the days of the term mentioned above expiring. taxation liabilities.
host country should be terminated as it is In this case, the expatriate will assume the
Thirty-three percent on net taxable
ruled by local labor laws. relocation expenses. This obligation ceases
income for individuals classified as
when a foreigner has a resident visa or a
At the end of the assignment, regardless nonresidents for tax purposes.
TP-9 visa (refugee).
of the method of termination and the
When an assignment ends, it is important
employees nationality, every employer The departing expatriate must have paid
to determine whether the expatriate will
should pay: all housing and utility bills due, and leave
be a tax resident for that fiscal year to see
deposits for those that are outstanding.
Outstanding salaries what rate will apply and how much income
Fringe benefits (applicable only for The individual tax perspective will be subject to Colombian taxes.
ordinary salaries: legal services bonus, For tax purposes, residents are those who It is also mandatory to establish whether
severance and interest on severance) remain continuously or discontinuously expatriates must file an income tax
Vacations in Colombia for more than 183 days return for the year that the assignment is
(including days of arrival and departure), finalized, depending on their labor-related
Indemnities would apply if the employer
during any period of 365 consecutive income or the value of their assets in
unilaterally ends the assignment.
calendar days (Tax Law, Article 10). Colombia according to amounts specified
Employers must also report the termination
According to Law 1607 of 2012, individuals by law every year.
of the labor relationship in Colombia to the
(including foreign nationals) considered tax
social security system operator to cease
residents are subject to taxation on their
liability for health, pension, labor risk and
worldwide income from their first year
payroll taxes.
of tax residency in Colombia. Individuals

Carlos Sandoval
carlos.sandoval@co.ey.com
Paola Gutirrez
paola.gutierrez@co.ey.com

13 Labor & Employment Law Strategic Global Topics


Christopher Chaves Costa Rica

Employment mobility law in administration or administrative personnel a complete and accurate list of company
Costa Rica: aspects to consider are less likely to be granted work permits. employees (including salaries) and
The Ministry of Labor has taken this action keeping up to date on all social security
Costa Rica has seen exponential business
to give preference to local professionals. contributions. These are fundamental
growth and development, with a high rate
requirements, regardless of their
of economic opportunities thanks to local Labor rights
employees immigration status.
and international investment. Foreign Generally, local legislation will govern the
companies that establish ties in Costa Rica labor rights of employees, independent of Other considerations
have a chance to achieve development their immigration status, unless an explicit Employees can stay in the country
and stability. previous arrangement states otherwise and begin work, but their permanent
This success hinges on the companys and is more favorable to the employee. The presence is subject to the resolution of
own organization and its commitment to work contracts of many foreign companies the immigration process, which can take
following local migratory labor provisions. often dont take this into consideration. considerable time.
Legal advice from experienced Costa Alternatives to the work permit include
Many companies disregard key aspects
Rican attorneys is important: they can a temporary visa, which requires a less
when importing their human capital
verify that the contract reflects the complex process and takes a shorter
to Costa Rica. Here, we highlight the
applicable legislation. amount of time. This option suits
important issues to consider.
Social security employees who are visiting the country for
Immigration a specific, temporary project.
Another important matter is the fulfillment
The organization or company should
of all social security requirements. These aspects are a small sample of what a
clearly understand the immigration status
This is the foundation of any Costa company must carefully consider within the
of its employees. Their status could be
Rican employment contract, and is so Costa Rican labor immigration scheme.
temporary or permanent, each of which
important that it has primacy over any Proper legal advice on employment
must be previously established and
condition or status of the employee. The mobility is invaluable to the success of a
properly planned. Their profession is also
company should meet all social security foreign company operating in Costa Rica.
a vital consideration. Foreign employees
requirements, including registering as
who work in jobs with high unemployment
the legal employer with the Costa Rican
rates in Costa Rica such as business
Department of Social Security, providing

Cristina Mora
cristina.mora@integralegal.net
Ana Laura Hernandez
Ana.laura.hernandez@integralegal.net

Labor & Employment Law Strategic Global Topics 14


Cyprus Natassa Kiliari

Worker mobility The guiding principle is that EU nationals This could be seen as encouraging
are subject to the legislation of a single attempts to circumvent employment
The rules applicable to worker mobility in
Member State for the purposes of social or social security legislation. A Cypriot
Cyprus depend on whether the nationals
insurance. For employees, the legislation subsidiary could be used to post EU
are from a Member State of the EU or from
of the Member State where the activity is nationals of one country to another, with
outside of it.
carried out usually applies (lex loci laboris). a view toward saving on wages. These
(i) Employment of EU nationals People receiving certain short-term cash issues are expected to be addressed
in Cyprus benefits based on their employment through the transposition of the 2014
or self-employment are also subject to Enforcement Directive.
(a) Freedom of movement the legislation of the Member State of
The free movement of workers is a (ii) Employment of third-country
activity. Any other person is subject
fundamental principle enshrined in Article to the legislation of the Member State nationals
45 of the Treaty on the Functioning of of residence. The Constitution guarantees equal
the EU and developed by EU secondary treatment rights to non-nationals. The
legislation and Court of Justice case law. (c) Posting of workers main legislative instrument regulating the
Law 7(I) of 2007 the right of EU citizens Posting Directive 96/71/EC, concerning employment of third-country nationals is
and their family members to move and the posting of workers for the provision the Aliens and Immigration Law, Cap. 105
reside freely within the Republic of Cyprus of services, as amended (PWD), aims of the laws of Cyprus. Moreover, Cyprus
is the main legislative instrument regulating to facilitate aspects of the freedom of has adhered to Article 19 of the Revised
the free movement of EU nationals working movement of workers. The Enforcement European Social Charter (i.e., the right
in Cyprus. When employment requires EU Directive of 2014 (yet to be transposed of migrant workers and their families to
nationals to remain in Cyprus for more in Cyprus) supplements the PWD by protection and assistance).3
than three months, the statute requires addressing shortcomings related to Third-country nationals can apply to obtain
them to register with the competent implementing existing rules. Cyprus an immigration permit (temporary or
authority, i.e., the Ministry of Interior, transposed the PWD into the Cypriot permanent).4 If no particular circumstances
and calls for registration with social legislation in the form of the Posting of exist for special adjustments or an ad hoc
insurance authorities. Workers in the Framework of the Provision policy, the basic precondition for granting
of Services Law of 2002, L. 137(I) of 2002 a permit for employment of third-country
(b) Social insurance (PWL). nationals is the absence of Cypriot or
The rules for determining which Member Under PWL, a worker is any person EU candidates to meet the employers
States legislation applies are set out in working for another person either specific needs. That determination will
Articles 11 to 16 of Regulation 883/2004,1 under an employment contract or under be made after an investigation by the
and the related implementing provisions circumstances from which the existence competent authorities.
are set out in Articles 14 to 21 of of an employer-worker relationship can be Subject to exceptions, third-country
Regulation 987/2009.2 inferred, irrespective of that persons title nationals can remain for employment for a
in the country of origin. maximum of four years.

1
Regulation (EC) No. 883/2004 of the EP In terms of alignment with international
3

and of the Council of 29 April 2004 on the legal instruments on labor and employment,
coordination of social security systems OJ Cyprus is a signatory to the International
L. 166, 30.4.2004, corrigendum OJ L. 200, Labor Organization Migration for Employment
7.6.2004, amended by Regulation (EC) No. (Revised) Convention (1949), the Migrant
988/2009 OJ L. 284, 30.10.2009. Workers (Supplementary Provisions) Convention
Natassa Kiliari
Regulation (EC) No. 987/2009 of the EP and
2
(1975) and the Discrimination (Employment & natassa.kiliari@cylaw.ey.com
of the Council of 16 September 2009 laying Occupation) Convention (1958). Elita Papademas
down the procedure or implementing Regulation On the basis of one of the categories referred to
4
elita.papademas@cylaw.ey.com
883/2004, OJ L. 284, 30.10.2009. in Regulation 5 under Cap. 105.
3


15 Labor & Employment Law Strategic Global Topics


Ondej Havrnek Czech Republic

International employee Assignment without profit During the work for the host employer,
An employer does no need an employment the employee is subject to the law of the
mobility host country, including eventual clauses on
agency license, under the following
Generally, a Czech employer can assign conditions: choice of law.
its employee to work for another company
A written temporary assignment After employment with the host employer
abroad based on temporary assignment
agreement is executed between the is terminated, the employee returns to the
or agency employment. Another option
employee and the home employer. home employer. The employees Czech
is to suspend employment with the home
The agreement is executed health insurance company must receive a
employer and conclude an employment
no less than six months after confirmation of health insurance concluded
contract with the host company.
employment commences. abroad and its length.
Basic issues to be addressed when foreign
The host employer pays no consideration Under Czech law, an employee can also
employees are assigned to the Czech
to the home employer for the perform work in parallel for the home
Republic are mentioned at the end of
assignment, save for direct costs such as and host employer under two contracts.
this article.
The rights and duties arising from both
salary or travel expenses.
Assignment from the Czech Republic employment relationships, as well as
In a common scenario, a Czech home Employment agency assignment social security contributions, are treated
employer assigns an employee to Hiring out labor-for-profit is subject to separately.
perform work for the host employer. an employment agency license, and an
employment agency cannot assign an
Assignment to the Czech Republic
The employment contract with the
The assignment of employees of foreign
home employer continues, and no direct employee who is subject to a work permit.
employers to the Czech Republic is possible
relationship arises between the employee The agency can temporarily assign without an employment agency license if
and the host employer. The host employer employees under the following conditions: it is not done for profit. With intragroup
can assign work to the employee and
The employment contract includes a assignments, some consideration
supervise it, but can take no legal action
clause enabling agency employment. is acceptable if required by transfer
toward the employee. The home employer
A HOLA agreement is concluded pricing regulations.
pays the salary.
between the home employer and the The Czech host employer must notify
For assignments within the EU/EEA that
host employer; essentials are stipulated the Labor Office of any assignment on a
do not exceed 24 months), the A1 form
in the Labor Code. prescribed form.
may be applied for at the Czech Social
Security Administration. With that form, The home employer issues written Czech core working conditions, such as
the employee can remain in the Czech instructions to the employee; essentials minimum wage or maximum working
social security system. For assignments not are stipulated in the Labor Code. hours, must be provided to employees
covered by the A1 form or for assignments seconded by EU employers within a
Dual contracts transnational provision of services as
outside the EU/EEA, the home employer Under this alternative, the employee is
must generally pay social security follows form Directive 96/71/EC, even
engaged by the host employer, who also if the foreign law remains applicable. In
contributions in the host country. pays the salary and related fulfillments. addition, the pending implementation
The salary and working conditions of The employment contract with the Czech procedure of EU Directive 2014/67 in the
the employee during the temporary home employer may be suspended, if Czech Republic will impact these rules. It
assignment may not be worse than those agreed without any limitation. should enable trans-border cooperation
of a comparable employee of the host This scenario is normally connected of labor authorities when identifying
employer. with obligatory participation in the host assigned employees as well as ensuring
If the employment contract is subject to countrys social security system. If the their rights to the minimal/guaranteed
Czech law, it should continue to apply assignment exceeds six months, employees wages. Czech host employer will be held
during the assignment period. may deliver a written statement to their liable if he knew that the assigned person
After the assignment, the employment with Czech health insurance company that they did not received the minimum/guaranteed
the home employer continues. will be covered by health insurance abroad. wage and could have known under
Czech law regulates two types of Otherwise, social security does not have due care.
to be paid into the Czech system for the Ondej Havrnek
assignment (both subject to the above
period of unpaid leave. ondrej.havranek@cz.ey.com
rules), depending on whether the purpose
of the assignment is profit for the Eva Prochzkov
home employer: eva.prochazkova@cz.ey.com

Labor & Employment Law Strategic Global Topics 16


Estonia Hedi Wahtramae

Employment law issues in Dual employment contracts that are, in principle, not contrary to law.
mobility An Estonian Supreme Court decision (No. From a legal perspective, the suspension of
3-2-1-80-15) determined that two valid an employment contract constitutes unpaid
As a general rule, each time an employer
employment contracts can exist at the same vacation for the employee, obligating the
assigns an employee to perform work
time with both the home company and the Estonian employer to make minimum social
outside whats specified in the employment
host countrys company. This means that security payments on the employees behalf.
agreement it constitutes a business
trip (tlhetus in Estonian) under the agreement can be terminated through Social security issues may also arise due to,
local legislation. either countrys legislation. Depending on for example, a change in tax residency of
the contract type, the employer might also the assigned employee. The social security
Without an agreement, an employee cannot
face additional obligations (e.g., to pay of assignees within the EU is normally
be sent on a business trip for longer than
compensation). covered by European Council Regulation No.
30 consecutive calendar days. A pregnant
In practice, if there is no grounded need 883/2004. A few totalization agreements
woman or an employee raising a child who
(from a legal or tax standpoint) to conclude with third countries might result in the loss
is disabled, or who is younger than three
a local employment agreement, and if of social security coverage. For example,
years old, can only be sent on a business
a valid employment contract with the payments into a mandatory pension can
trip with the employees consent. If the
home countrys company already exists, be made only when the employee retains
employee works in a foreign country for
concluding a local employment agreement Estonian tax residency. As a solution, the
more than one month, the employer must
should be carefully considered. employer and employee should agree on
notify them of:
supplementary pension contributions.
The length of time to be worked abroad Format requirements
Estonian employment law states that Tax equalization
The currency in which the wages are paid
the employment contract, notifications, Applying tax equalization principles for
The benefits related to the employees assigned employees is common practice
consents and other agreements between
stay in the foreign country among international groups. Implementing
an employer and an employee that have (or
The conditions for returning from abroad might have) a legal effect must be in written tax equalization rules can be complicated, as
Estonian employment law calls for no form. Disregarding this rule does not void the law requires wages to be set at a gross
additional noteworthy restraints and does the contract but, in practice, difficulties rate. However, because tax equalization
not define the length of a business trip in will occur when collecting evidence if a is intended to minimize the extra tax
any way. The local employment law is scarce dispute arises. burden i.e., provide beneficial treatment
on business trips: essentially, the parties are of the employee sent on an international
Disputes and the
free to agree on the terms. assignment agreement on such internal
applicable jurisdiction
policies should be possible.
Estonia has also locally enforced Working Disputes will generally be resolved in the
Conditions of Employees Posted to country specified in the contract. As an
Estonia Act which is enacted specially alternative, jurisdiction will be determined
for the purpose to ensure the protection by the court of the country where the
of the rights of employees from a foreign employee performed the duties.
state who have been posted to Estonia
for the provision of services. Given that Social security issues
EU Directive 2014/67 has yet not been If the host country requires a separate
implemented into the local legislation and employment agreement, legal difficulties
hopefully the implemention process will arise for Estonia (as the home country) to
be completed before the year 2017, the put an employment agreement on hold.
implementation brings also some changes Estonian employment law does not set
into the local legislation (included into the regulations for suspending a contract,
Working Conditions of Employees Posted although, according to the general principles Hedi Wahtramae
to Estonia Act). of law, parties can establish any agreements
hedi.wahtramae@ee.ey.com
Elis Prangli
elis.prangli@ee.ey.com

17 Labor & Employment Law Strategic Global Topics


Roselyn Sands France

Employment law challenges in certain rules provided by the French labor for the Labor administration to stop the
code regarding, notably, equal treatment, project on which the posted worker is
mobility and posting of workers
non-discrimination, wage and hour law, working on. These sanctions are increasing
France has always been very attentive to
health and safety, termination of the on a regular basis.
providing protection to employees working
employment contract and training. Lastly, beyond potential fines provided
in its territory, which is why it has always
In addition to potential immigration by French labor law, non-compliance
had a best in class approach regarding
requirements, the employer is subject could have unforeseen consequences on
the application of EU Directives concerning
to reporting obligations to the Labor immigration issues, reputational issues
posting of workers. Indeed, France was the
administration prior to the posting including and even corporate tax issues. Indeed,
first country to implement the most recent
information on the duration and conditions failure to satisfy employment rules with
EU Directive (EU Directive n2014/67/
of the posting, its purpose as well as the regards to posting employees of workers
UE of 15 May 2014) less than 2 months
employees remuneration. The employer may undermine complex corporate tax
after its entry into force (Law n 2014-790
must also appoint a representative in France rulings by, for instance, the recognition
of 10 July 2014). Moreover, additional
to facilitate control and monitoring by the of a permanent establishment in a
legislation increasing administrative
French authorities. country where the company did not so
controls and burdens for employers and
It is not only the employer that is under intend. Non-compliance can also raise
customers, as well as sanctions, were
tight scrutiny from French authorities, but social security issues, in particular tied to
voted in August 2016.
also the subcontractor. In order to increase co-employment risks.
Posting of workers, is viewed in France as
the efficiency of its rules, French law has In addition to the transposition of the EU
a potential means to avoid the application
also increased the obligation of control and Directive of 2014, France just recently
of French employment law and therefore
reporting of subcontractors and customers passed further laws with regard to the
as a potential source of social dumping.
benefiting from the work of the posted posting of workers.
Therefore, employers sending posted
worker as well as their liability in case of Of particular importance, the new French
workers to France should be attentive to
failure of the employer to comply with its law of August 2016 provided the following
applicable rules to ensure full compliance.
obligations. Indeed, the subcontractor additional requirements:
The French rules focus on:
liability provision can create risk for
Enhanced sanctions for non-compliance
the posting employer must be a customers as well, thus jeopardizing the
legitimate foreign employer business relationships. The posting employer will be required to
finance the costs of legal enforcement of
the posted workers have reinforced Posted employees are further protected
these rules (maximum 50/employee)
protections in that they will now be able to sue the
employer directly, either in their home The user/client must ensure
the posting employer has enhanced
country or in the territory of the Member that the posting employer (and its
reporting and monitoring requirements
State in which he is posted. This will allow subcontractors) has complied with its
the legal administration has increased
employees to forum shop by finding the reporting obligations prior to using the
powers to monitor and sanction
most employee friendly country in which posted workers.
non-compliance
to litigate. Based on the foregoing, postings
In cases of posting of workers into France,
French rules have developed a large range employers need to be more attentive than
the employer must comply with special
of sanctions including fines, which can reach ever in ensuring compliance with french
labor and employment law regulations. The
up to EUR 500,000, as well as the possibility law on the posting of workers.
employer must ensure compliance with

Roselyn Sands
roselyn.sands@ey-avocats.com
Nicolas Etcheparre
nicolas.etcheparre@ey-avocats.com

Labor & Employment Law Strategic Global Topics 18


Georgia George Svanadze

Choice of law in employment Furthermore, the proof of admissibility because the PIL and Labor Code have
agreements with international of choice of law in such employment different subject matters and legal natures,
contracts stems from PIL Article 38, which their interrelation should not be considered
connections stipulates that the choice will be void if it in light of the hierarchy of Georgian laws.
Georgia recently adopted the Law on Labor disregards mandatory rules adopted to Therefore, it could be reasonably
Migration1 to establish rules governing protect customers and employees from argued that the parties have a right to
contractual relations among immigrant discrimination. This rule also applies to the apply a foreign law to their employment
job seekers, intermediate entities, delivery and financing of movable property, agreement. The parties, however, should
employees and employers residing in as well as labor and service contracts if take into account that the choice of law
different countries. Under the measure, they are concluded in a country where might become subject to scrutiny and
the governing law of the employment customers and employees have their places declared void if the work is to be carried
agreement between an immigrant of residence and where protective rules are out in Georgia and the chosen law
employee and a foreign employer will be in place. contradicts the countrys public order
that of the country where the work is to be
Notwithstanding the above, questions or disregards mandatory discrimination
carried out.2
could be raised about the admissibility protections.
The measure does not state what law of choice of law based on Article 1 of the To avoid such conflicts, an in-depth analysis
applies to an employment agreement Labor Code of Georgia, which prescribes of the foreign law is recommended.
between a Georgian employee and non- that the code regulates labor and its
Georgian employer. There is some question concomitant relations in the territory of
about whether such an employment Georgia. Because the Labor Code is above
agreement could be governed by the the PIL in the hierarchy of Georgian laws,3
substantive laws of the other country if the Article 1 could be seen as depriving parties
work is to be carried out in Georgia. of choosing applicable law.4 However,
In such cases, conflict-of-law rules would this conclusion should not be regarded as
normally come into play particularly the reasonable in the Georgian legal system
Law of Georgia on Private International because the PIL sets forth rules allowing a
Law (PIL). According to PIL Article choice of law in contracts with international
35(1), the parties can choose the law connections, which should also include
that applies to their contract; however, employment agreements. Moreover,
the choice will be considered void if it
disregards mandatory rules in the country
most closely connected to the contract
(Article 35(3)).

3
 he Labor Code is an organic law, meaning it
T
originates in the Constitution. According to the
Constitution of Georgia, organic law must define
the protection of labor rights, fair compensation
and safe, healthy working conditions, and
working conditions for minors and women.
Accordingly, the Constitution grants special
1
Law on Labor Migration (in force from 1 importance to organic laws and to matters
November 2015), https://matsne.gov.ge/ regulated by them.
ka/document/view/2806732, accessed on 4
Law on Normative Acts (in force from
14 August 2016. 9 November 2009), https://matsne.gov.
2
Law on Labor Migration, Article 12. ge/ka/document/view/90052, accessed on
George Svanadze
15 August 2016.
george.svanadze@ge.ey.com
Aleko Nanadze
aleko.nanadze@ge.ey.com

19 Labor & Employment Law Strategic Global Topics


Dr. Karsten Umnu Germany

Employment law issues in In addition, the German Law on Minimum 2. Issues during the assignment
Wages (Mindestlohngesetz) applies for During the assignment, the employee
mobility
assigned employees 8.50 gross, rising to should remain an employee of the home
The mobility of employees can be complex,
8.84 as of 1 January 2017. Some general company and work under the instruction
and the following issues must be considered
binding collective bargaining agreements and supervision of the home company to
with temporary inbound assignments to
on employment conditions must also be avoid having the German Act Regulating
Germany.
observed. The German Posted Workers Act the Supply of Temporary Workers
1. Issues in setting up the assignment (Arbeitnehmerentsendegesetz) requires (Arbeitnehmerberlassungsgesetz)
In Germany, it is not mandatory to have applying collective bargaining agreements to becoming applicable. The supply of
a local employment contract between minimum wages in specific sectors. temporary workers requires special
the employee and the host company. An In principle, all employees in Germany permission in Germany.
assignment agreement, as an amendment are subject to the German Social Security An important consideration, particularly
to the employment contract in the home System, which covers statutory pension with an assignment extension, is how long an
country, is sufficient. This agreement should funds, unemployment insurance, employee can remain in the home country
include the period of the assignment; the contributions to the statutory care social security scheme up to six or eight
names and addresses of the parties; a job scheme, health insurance and work years.
description; the gross annual salary and accident insurance.
benefits during the assignment, as well as 3. Issues at the end of the assignment
Within the EU (including Norway,
the housing allowance, costs for relocation At the end of an assignment, employees
Switzerland, Liechtenstein and Iceland)
and removal, and travel costs; confirmation might have a claim to payment in lieu
EU Directives 883/2004 and 987/2009
that health coverage will be provided of holiday if their contractual holiday
apply to an employee assigned to Germany
in Germany; the period of notice of the entitlement is less than 20 holiday
by a home country employer within an EU
assignment agreement; annual vacation; the days the minimum entitlement under
Member State. The employee can remain in
agreed work schedule; the place of work; the German Federal Paid Leave Act
the home countrys social security scheme.
social security; and tax regulations. (Bundesurlaubsgesetz).
Social security treaties have been reached
Unless otherwise specified in the assignment with several countries outside the EU. If an 4. Status of Implementation of
agreement, the employment law of the home employee is assigned to work in Germany European Directives regarding
country applies for employees temporarily for an employer located in one of the posting of workers in Germany
assigned to Germany. contractual countries, the employee may, on Since the content of the Directive 2014/67/
However, mandatory employment rules application, be exempt from German social EU is already covered by previous
under German law apply, according to security, in total or in part, and remain in regulations in German Law on the posting
Directive 96/71/EC: their home countrys social security scheme. of workers (Arbeitnehmerentsendegesetz,
Maximum work periods and minimum rest Citizens of EU countries are, basically, AEntG), there is no further need for new
periods free to start working in Germany, without legislation in Germany. As the reformed
any special notification or registration Directive 2014/67/EU represents an
Minimum paid annual holidays
obligations. enforcement directive and implementation
Minimum pay rates, including guidelines (i.e., a general liability of
overtime (this point does not apply to Note, however, that everyone must register
contractors is regulated), this is already
supplementary occupational retirement at the local Residents Registration Office
laid down in German statutory law. Further,
pension schemes) within one week of moving into a room or
the Directive 2014/67/EU does not require
an apartment. Most local registration laws
Conditions for hiring out workers, amendments regarding the change in wage
stipulate exemptions for foreigners, e.g., if
particularly the supply of workers for rates of posting of workers in Germany.
they do not stay longer than two months.
temporary employment
Exceptions depend on the local laws of the
Health, safety and hygiene at work place of work or residence and need to Dr. Karsten Umnu
Protective regulations for the employment be verified. karsten.umnuss@de.ey.com
of pregnant women, or women who have In principle, non-EU nationals need to obtain Lisa Bornemann
recently given birth, and for young people a visa from the German Consulate before lisa.bornemann@de.ey.com
Equal treatment of men and women and entering Germany for professional activities.
provisions on nondiscrimination
Labor & Employment Law Strategic Global Topics 20
Greece Maria Rigaki

Employment law issues in Although relevant court decisions authorities can grant an exemption (the
accept that the employees consent can A1 Certificate) that allows seconded
mobility
be implicit, the absence of a written employees to remain subject to the system
An assignment is defined as the transfer in their home country.
agreement may expose the indirect
of an employee from one work position
employer to liabilities towards the labor or Finally, EU nationals face no immigration
to another, usually in the same group of
social security authorities in the event of a procedure constraints, since employees
companies, for a definite time and for the
random audit. dont have to meet any residence permit
benefit of all parties involved.
Under this legal framework, the prerequisites before starting work
The Greek legal framework acknowledges in Greece.
international assignment of an employee
assignments through Article 651 of
to Greece is feasible; however, human As long as relevant EU and Greek laws
the Greek Civil Code: Subject to any
resources functions should consider are respected, the secondment of an EU
different conclusion that may result
specific constraints before initiating any national within the EU is a standardized
from the contract or the circumstances,
relevant procedure. procedure.
an employee shall be bound to perform
The assignment of an employee from an The secondment of an employee from
personally his obligation and the
EU country to Greece is feasible under outside the EU to Greece is more
employers claim for work to be performed
Presidential Decree 219/2000 which challenging due to immigration constraints.
may not be transferred.
implemented DIRECTIVE 96/71/EC of the
Based on case law, and in conjunction with Before assuming employment duties,
European Parliament and of the Council
Articles 361 and 648 of the Civil Code, an a non-EU employee must have a Greek
of 16 December 1996 concerning the
agreement in which an employer assigns residence permit. Because of immigration
posting of workers. These rules have been
the services of an employee to another law prerequisites, this is not feasible
updated by the provision of services and
employer is valid and legal as long as the unless the employee establishes a direct
Presidential Decree 101/2016 (enacted on
employee consents (a genuine employee employment contract with a Greek entity
26 September 2016) which implemented
lending agreement). The lending and is subject to the Greek social security
Directive 2014/67/EU of the European
agreement is a three-party relationship system (except in cases of bilateral social
Parliament and of the Council of 15 May
between the employee, the initial employer security agreements). Directive 2014/66/
2014 on the enforcement of Directive
and the employer using the services. EU, which facilitates the conditions of
96/71/EC concerning the posting of
Employees can give consent either entry and residence of third-country
workers in the framework of the provision
explicitly or implicitly for instance, when nationals under an intra-corporate
of services.
they go to work and provide services to the transfer, is scheduled to be incorporated
Before initiating a secondment, the into the Greek legal system by November
assigned employer.
direct employer is obliged to make an 2016. The major amendment anticipated
In this case, the employment relationship
official announcement to the Greek (but not confirmed yet) is that a direct
with the initial (direct) employer is not
labor authorities, including details on the employment contract between the non-EU
terminated, and the third party also
employee, the specific employment terms employee and the Greek Entity shall not be
acquires the capacity of the employer
(working hours, salary, annual leave, etc.), necessary.
(indirect employer). As a result, an
the direct and indirect employers, and their
allocation of the employers duties between As of now, however, a third-country
respective legal representatives.
the direct and indirect employer takes national can be seconded through an intra-
For the assignees social security coverage, corporate transfer only if the employee
effect. The direct employer has all the
Greece follows rules set by EU regulations and the indirect employer have a direct
obligations arising from the employment
that an individual is subject to the social employment relationship.
contract, e.g., payment of salary and
security system of one EU country only.
benefits, holiday benefits and social
security contributions. This employer is the The basic rule stipulates that assigned
only one entitled to terminate the contract. employees are subject to the social
security system of the country where they
The indirect employer exercises managerial
actually work unless special circumstances
rights (directing the employee) but always
apply. The competent social security
within the limits of the contract. Maria Rigaki
maria.rigaki@gr.ey.com

21 Labor & Employment Law Strategic Global Topics


Harry Lin Hong Kong

Employment law issues in Secondment arrangements are usually Under Hong Kong law, employers are
mobility adopted when the home employer intends obliged to take all reasonable steps to
to maintain the employment relationship, protect employees from injury, victimization
Because Hong Kong (a Special
monitor the employees performance and or harassment. Employers should assess
Administrative Region of China) is one
facilitate their return. These arrangements such risks by considering factors including
of Asias leading financial hubs, local
would be desirable only if they are the nature of the assignment; the
companies often transfer their employees to
structurally and commercially feasible. experience of employees; the capability of
different countries to fulfill business needs.
If a secondment is undesirable, an employer the host company to protect the employees;
Dealing with mobility issues requires special
can consider a dual contract, splitting the the steps taken to protect the employee;
care in examining the laws of both the home
employees duties and entitlements between and the degree of control of employers.
and host country.
the home employer and the host employer, If the worker remains employed by the
When assigning employees to other
which is particularly useful if the employee is home employer, the home employer may be
countries, employers should carefully
expected to carry out duties for both. held liable if the employee commits tortious
consider the contractual arrangement in
When workers remain employed by a Hong acts inside or outside Hong Kong if they
place. An employees overseas assignment
Kong employer through a secondment or are authorized or carried out in the course
can normally be managed in three ways:
dual contract, employers are still responsible of employment.
1. Secondment when an employee is
when their employees are injured or die After the assignment
sent (or loaned) to provide services
in the course of employment inside or If the employment with the home
in another local or overseas company
outside Hong Kong (regardless of whether employer is to be terminated during or
(host employer) while remaining
the employee was at fault or negligent or after the assignment, employers must do
employed by the employer in Hong Kong
whether the host employer has assumed the so in accordance with their contractual
(home employer)
duty to keep the employee safe). obligations, which should not fall short of
2. D
 ual contract while remaining
If the two abovementioned arrangements Hong Kong employment laws. If employees
employed with the home employer,
are not preferred, a direct hire is the are to resume their services solely for
the employee enters into a separate
most straightforward method for duty the home employer, employers should
employment agreement with a host
demarcation or risk delegation. Should terminate the assignment with the host
employer
employers choose this type of assignment, employer accordingly.
3. D
 irect hire when employment with they should take care when terminating
the home employer is terminated employment with the home employer and Assignment to Hong Kong
and new employment begins with the ending related contractual obligations. While overseas companies can decide the
host employer governing law of the employment contract,
During the assignment the legal position in Hong Kong depends
Considerations before assignment If the employee remains employed by the on the facts of each case, and Hong Kong
Before an assignment, employers should home employer, both the home and host employment laws might be applicable. When
review the current employment contract employers should make certain they comply dealing with foreign employees assigned
to understand whether the assignment is with contractual and statutory employment to Hong Kong under a foreign employment
legally possible (i.e., whether the employee obligations. The arrangement must be contract, Hong Kong companies should take
can be assigned, or, if the contract does structured and maintained carefully to avoid care in drafting their employment contracts
not cover mobility issues, whether a new or discrepancies in legal and contractual duties and secondment letters so as not to reduce
supplemental contract should be executed). between the home and host employers. or extinguish the employees statutory
When deciding on the type of contractual rights under Hong Kong law.
arrangement, employers should consider
the purpose and duration of the assignment,
as well as the nature of the employees job,
benefits and pay package. They should also Renee Mark
seek foreign legal and tax advice on issues renee.mark@laa.hk
that might arise from the transfer. Adrian Wong
adrian.wong@laa.hk

Labor & Employment Law Strategic Global Topics 22


India Anirudh Mukherjee

Employment of expats in India: Foreign nationals with visas valid for more enable foreign nationals from signatory
than 180 days must register with the countries to adjust their social security
legal aspects
relevant office of the Foreigner Regional contributions in India against their social
The fast-paced growth of the Indian
Registration Office within 14 days of security liabilities in their home countries.
economy has caused a large number of
arrival. Foreign nationals cannot change They also help fill gaps in benefit protection
foreign nationals to choose India as a
employers during the tenure of the visa for workers who have divided their careers
preferred destination to work. This section
unless the change is between a holding between their home countries and India.
examines key aspects of expat employment
company and its subsidiary, or vice versa, Foreign nationals from countries that have
that the employer and the employee should
subject to conditions stipulated by the not signed an SSA with India may have
keep in mind.
MHA. Failure to comply attracts punitive to contribute to social security in both
The entry, stay and exit of foreign actions, including potential deportation. countries. Except for superannuation and
nationals in India are governed primarily An employment visa can be extended to retirement due to disability, these foreign
by the Passport (Entry into India) Act a total of five years from the issue date nationals would also not be eligible for a
(1920), the Foreigners Act (1946) and the on a year-to-year basis subject to good lump-sum refund under the Employees
Registration of Foreigners Act (1939). The conduct, continued employment and Provident Funds Scheme (1952). Also,
Ministry of Home Affairs (MHA) oversees legal compliance. provident fund contributions for foreign
implementation of these acts, and the type nationals employed in India are not subject
Foreign nationals and their employers must
of visa issued to a foreign national depends to any statutory threshold (as is the case
also remain aware of tax and social security
on the purpose of the visit. for domestic employees). Contributions are
obligations. India follows a source rule
Employment visas are granted to highly taxation basis for foreign nationals, taxing calculated on the total wages received by
skilled or qualified professionals engaged all income arising from employment in such an employee the total received in
by an entity in India on a contract or India. Some relief is available to employees India as well as in their home country.
employment basis. They are not granted coming from countries that have signed With labor laws, foreign nationals employed
for secretarial or other routine jobs for double taxation avoidance agreements with in India and their employers must comply
which large numbers of qualified Indians India, including the US, the UK and France. with central and state laws, with no specific
are available. Further, foreign nationals exemptions. The employment agreement
In deputation scenarios, foreign nationals
sponsored for an employment visa should and benefits must comply with the
may have to pay social security to both
draw a minimum salary of US$25,000 per applicable central and state labor laws.
countries on the same earnings. Social
year (including all allowances paid in cash).
security agreements (SSAs), or totalization
Certain categories, such as ethnic cooks
agreements, should be carefully evaluated
and language teachers, are exempt from
to help reduce the financial implications
this requirement.
of employing foreign nationals. SSAs

Anirudh Mukherjee
anirudh.mukherjee@pdslegal.com
Deepti Thakkar
deepti.thakkar@pdslegal.com

23 Labor & Employment Law Strategic Global Topics


Stefania Radoccia Italy

New constraints for assignment period and the recoupment of temporary workers, protection of
of the employees costs. The recoupment maternity rights and children, health and
assignments under Italian law must be limited to the pure cost of safety at work and equality of treatment
In Italy, an assignment occurs when an personnel without a markup; otherwise, between men and women);
employer sends an employee to execute the agreement might fall under a supply
a specific work activity for the benefit of of service. the home company and the host
a third entity but in the interests of the company are jointly and severally liable
In this context, the legislative decree no.
employer. The assignment governed towards the seconded employees up to 2
136/2016, effective starting from July
by Article 30 of Legislative Decree years after the termination of the posting
22, 2016 and implementing the Directive
276/2003 must meet the following in relation to salaries, social security
2014/67/EC concerning secondment, has
mandatory requirements: contributions etc.;
introduced in our legal system stricter
It must be in the interests of the constraints on secondments to Italy. The the seconding employer must give notice
seconding employer, including handling new regulations apply to: of secondment to the Ministry of Labor
technical and organizational matters and any company established in a within 24 hours before the beginning
sharing or expanding the employees Member State that seconds one or of the secondment and any further
knowledge. The assignment cannot be more employees, in the framework amendment within the next 5 days;
aimed merely at providing personnel, of a services agreement, to another the employment contracts, the payslips
since only a work agency authorized by company even belonging to the same and any other documentation related
the Italian Labour Minister can do that. group or to another business unit. to the salaries drafted also in Italian
It must be temporary. No labor This is on condition that during the must be also preserved by the home
provisions set the length of the secondment period the employment company for a certain period after the
assignment, even if it is indirectly relationship between the employee and termination of the secondment;
determined by social security rules. the home company shall remain;
the seconding employer has to appoint
During the assignment, the employment temporary workers staffed by external a person to liaise with, as well as to
contract with the sending employer will agencies established in a Member send to and receive documents from,
remain valid and unchanged, as will the State that send their workers to a user the competent authorities in the
employers obligations arising from the
company with its registered office or a host Member State concerning the
contract (e.g., salary, social security and
business unit in Italy. seconded employees;
job position). The employee will be inserted
into the organization benefiting from the employees seconded to Italy by extra all the relevant information related to
work, usually the same task performed EU-companies, where new rules apply. secondments will be published on the
for the sending employer. The sending The Decree lists all the requirements website of the Labour Ministry.
employer typically delegates organizational for a genuine secondment. Should the Breaches of these obligations will be
and managerial powers to the receiving secondment be ascertained as not genuine, punished with relevant sanctions and
entity, except for hierarchical authority that the seconded employees will be deemed to the National Labor Inspection Bodies
can affect the employment relationship. be actually employees of the host company shall control the employers, in order
At the end of the assignment, the employee where they are temporarily working, to ascertain possible breaches of the
will return to the same position as before or and the host company, together with the secondments rules.
to a post consistent with the different role seconding company, will be subject to
that he acquired during the assignment, administrative sanctions.
especially in cases of professional growth. As a result of the new regulations:
Termination of the assignment is not
the hosting employer shall grant to the
considered a fair reason for dismissal.
seconded employees a treatment equal
This information is usually contained in
to that applied to other employees of
a specific assignment letter delivered to
its in the same host Member State with
the employee and signed by the home
company and the employee. It is also reference to certain items (i.e., maximum
Stefania Radoccia
advisable for the home and host companies working hours and minimum rest
stefania.radoccia@it.ey.com
to draft a secondment agreement that periods, holidays, minimum economic
contains information on the employees treatment, limits on the employment Maria Teresa Iannella
maria-teresa.iannella@it.ey.com

Labor & Employment Law Strategic Global Topics 24


Japan Junya Kubota

Regulations for expatriate is seconded. Although the GRALA does can deduct employee premiums from
employees not spell out mandatory provisions, their salary on each payday. In general,
employment laws would typically fall under expatriate employees must enroll in the
Introduction that umbrella. four types of insurance, even if they are not
As international secondments from a foreign Further, public law in Japan, as opposed to Japanese citizens.
parent company to a Japanese subsidiary private law, generally applies, regardless EPI and EHI may fall under a social security
or branch become more common, the of the governing-law determination under treaty between Japan and the country from
multinational nature of these arrangements the GRALA. This poses difficult questions which an expatriate employee is seconded.
inevitably raise issues from an employment in practice because employment laws in As of August 2016, Japan has effective
law viewpoint. This section examines some Japan can be used both as private law and social security treaties with Germany, the
topics surrounding expatriate employees. as public law, and there are no clear-cut UK, the US, Belgium, France, Canada,
Governing law rules for determining whether a provision Australia, the Netherlands, the Czech
If a case is brought to court in Japan and the is used as private law or public law in a Republic, Spain, Ireland, Brazil, Switzerland
governing law of an employment agreement particular case. and Hungary. A treaty with India has taken
is at issue, the court will rule based on the effect on 1 October 2016. If expatriate
Social insurance
Act on General Rules for Application of Laws employees are seconded from one of these
Regulations on social insurance in Japan
(GRALA). This provides that the governing countries, they may be exempt from EPI and
are generally applicable to expatriate
law will be that of the place chosen by EHI by following prescribed proceedings,
employees as public laws. As such, whether
the parties at the time of the agreement. which leave no legal concerns (including
expatriate employees must be enrolled
However, if a law was chosen other than that immigration) about mandatory enrollment.
in social insurance in Japan should be
of the place most closely connected with These treaties vary from country to country,
studied on a case-by-case basis under the
the employment agreement, mandatory so careful preparation is needed.
relevant regulations.
provisions of the closely connected place When expatriate employees in Japan have
Four types of social insurance are generally
should also be applied upon request by been enrolled in EPI, they may receive
provided by employers:
the employee. If the employee is working lump-sum withdrawals from the EPI
in Japan, Japanese law is presumed to be Employees pension insurance (EPI) scheme after leaving Japan if they meet
the law of the place most closely connected Employees health insurance (EHI) certain requirements.
with the agreement. In short, a choice of Employment insurance (EI)
law clause is generally valid, but mandatory
Employees accident compensation
provisions of Japanese employment law
insurance (EACI)
could apply for expatriate employees. The
employer can overturn this presumption EPI, EHI and EI premiums will be borne
by proving that the place most closely by both employer and employee and
connected with the agreement is not Japan will be paid by the employer to relevant
but the country from which the employee insurance administrators. The employer

Junya Kubota
junya.kubota@jp.ey.com

25 Labor & Employment Law Strategic Global Topics


Joost van Ladesteijn Netherlands

Dutch employment law is impossible, repatriation is troublesome and important matter is participation in a pension
accrued employee rights will not continue. scheme of the home or host employer.
challenges with the posting
An inevitable challenge of the assignment The Dutch implementation legislation of the
of workers
approach is the mandatory (objective or EU Enforcement Directive (2014/67/EU)
The posting of workers is an important protective) applicable law, despite any choice with regard to the temporary assignment of
factor in globalization, which necessitates of law provisions in employment contracts. workers within the EU entered into force as
international assignment of employees. In Employers must ascertain mandatory of 18 June 2016. This new act covers, briefly
the last few decades, the free movement of minimum working conditions, employment put, four categories of requirements and/
employees has increased immensely. This terms and equal treatment. One frequently or enforcement: (i) minimum mandatory
trend requires a solid international legal asked question is, do we have to comply protective employment terms and conditions,
system to prevent the unequal treatment with all mandatory objective applicable law (ii) reporting obligation of the assignment
of workers a focus area of governments, provisions or only with the more favorable activities (will most probably enter into force
international institutes and organizations ones? The latter bears the risk that on 1 January 2018); (iii) administrative
such as the EU and the International Labor employees will cherry-pick employment obligations; and (iv) imposition of a penalty
Organization. Despite the involvement terms. of maximally EUR 20,500 per violation of
of these organizations, legal issues with the designated obligations. Companies may
It is imperative to settle each potential issue
international assignments remain. strategically decide to post employees from
comprehensively and carefully, up front in the
1. Issues with setting up assignments assignment letter. Other important matters to non EU countries to the Netherlands to avoid
A preliminary question about posting workers cover in the assignment letter include: the applicability of the abovementioned new
is which assignment structure is preferred, Dutch act.
The parties contractual intentions (e.g.,
the: concluding one formal and material 3. Issues with the termination of
1. A
 ssignment approach: assigned employee employment contract). assignment
based on the home employment contract The interrelationship between As mentioned previously, it is imperative to
or an addendum. the employment contract and the specify the interrelationship between the
2. S
 uspension approach: the employee has assignment letter. home employment and the assignment. If
two employment contracts, a home and a The scope of restrictive covenants to this is not accurate, companies may face
host employment contract. prevent an employee from easily joining legal issues with assignment termination.
3. T
 ermination approach: the employee only a competitor through contacts made Assigned employees may successfully argue
has a host employment contract; the home during the assignment. that besides the home employment contract,
employment contract is terminated. they have a material employment contract
2. Issues during assignments with the host country, both of which have
Advantages and disadvantages of If the preparation phase has not been to be terminated. They may then claim
each approach performed diligently, employers may face double (statutory) severance payments.
1. The advantage of the assignment approach significant legal issues during the assignment, Another issue is whether the employee may
is simplicity. The employee can be easily such as double payment employer liability unconditionally repatriate to their home
repatriated after the assignment ends, claims. country and return to the same position with
but the approach cannot be applied in all Another potential issue is unequal treatment their home employer.
country combinations. of expats and local employees. For example, Lastly, a proposal of amendment of the EU
2. A
 n advantage of the second approach is Dutch employees assigned to Germany may Posting of Workers Directive is pending which
that the employer will most likely comply argue that they remain entitled to the Dutch inter alia proposes to limit the temporary
with requirements of the home and host system of sick pay (104 weeks maximum) assignment of employees to 24 and to
countries. A disadvantage is that there instead of the German system (6 weeks ). change the minimum rates of pay into
may be two active employment contracts Another issue that may arise is the applicable remuneration, which would expand the
on which the employee can rely and it inter legal system of maternity leave: host or home definition of minimum wage.
alia creates a risk of double payments (e.g., country law?
severance and holiday salary). Expats will generally be entitled to benefits Joost van Ladesteijn
3. T
 he advantage of the suspension approach set forth in an expat policy. These include joost.van.ladesteijn@hvglaw.nl
also applies to the termination approach. applicable insurance for assigned employees Emilie Boot
The disadvantages are that standardization and minimum insurance coverage. Another emilie.boot@hvglaw.nl

Labor & Employment Law Strategic Global Topics 26


New Zealand Christie Hall

International employee New Zealand has minimum standards will not be eligible for the scheme as
legislation, including minimum wage participants must be permanent residents.
mobility
(currently NZD$15.25 per hour for Outgoing secondees will continue
As globalization becomes the norm, an adult), holiday entitlements, the contributions if they are still paid by their
mobility arrangements are increasing in entitlement to a written employment New Zealand employer. Employees may
New Zealands employment environment. agreement, and entitlements around also be able to take a contribution holiday.
However, businesses should consider a shift work and availability for work. Some
number of employment issues before Terminating a transfer or
uncertainty surrounds the degree to which
sending or receiving workers. secondment
these entitlements apply to an employee
When seconded employees remain
Employees become mobile in numerous seconded into or out of New Zealand.
employed by the home country, the home
ways, including: Recently, complaints were raised when employer is responsible for managing
S
hort-term business travel Chinese rail workers, sent to New Zealand any disciplinary or performance issues.
S
hort-term assignments (312 months) temporarily, were allegedly paid below New Accordingly, secondment agreements
L
onger-term assignments (13 years) Zealands minimum wage. The regulator should include provisions on:
commented that the workers may not
P
ermanent transfers T
he manner in which disciplinary matters
be subject to New Zealands minimum
Each type of assignment brings its will be managed, including a requirement
employment standards.
own issues. by the host employer to provide
Another case currently on appeal concerns information or witness statements
Establishing a transfer or pilots flying between Hong Kong and New
C
onfidentiality, intellectual property and
secondment Zealand who, despite their express choice
privacy, regarding both the home and
For short-term business travelers, the of Hong Kong law, successfully argued
host employers
employee usually remains on home that New Zealand age discrimination
country terms and conditions throughout provisions applied. A
ny right of return and the position
the assignment. Common issues include to which the employee may return (if
In light of this uncertainty, employers are
complying with immigration requirements, employees have been seconded for a
encouraged to:
managing employee expenses and long time, it may not be appropriate to
D
raft secondment agreements with a return to their previous role)
tracking the employees time spent in
clear choice-of-law clause, noting that
each country to avoid triggering tax C
ontinuity of service and how it affects
the choice of law should align with the
residency restrictions. entitlements such as redundancy and
surrounding circumstances and any
Short and long-term assignments give long-service leave (if offered)
public policy arguments.
rise to slightly different issues. In New T
he ways the secondment (and the
C
onsider complying with New Zealand
Zealand, these assignments normally take underlying employment) can be
minimum employment requirements. To
place through secondment, whereby the terminated by any of the parties
promote compliance, many employers
underlying employment agreement with Employment law considerations form
offer the employee the greater of the
the home country remains, but is varied an important part of any global mobility
relevant requirements in the home or
through a secondment agreement with strategy. Employers are increasingly
host country.
the host. The secondment agreement interested in formalizing their mobility
should address: New Zealand has a minimal social security
offerings and aligning these with
payments regime. Employees subject to
R
emuneration and benefits during wider decisions around risk appetite,
income tax in New Zealand must usually
the secondment employee value propositions and
pay an earners levy to the Accident
L
eave entitlements operational strategy.
Compensation Commission New
R
epatriation Zealands no-fault accident compensation
C
onflict of interest (between the home scheme which is also deducted from
and host entities) their wages or salaries. The country also
has a voluntary superannuation scheme, Christie Hall
P
erformance management christie.hall@nz.ey.com
KiwiSaver. Most incoming secondees
Olivia Brown
olivia.brown@nz.ey.com

27 Labor & Employment Law Strategic Global Topics


Jane Wesenberg Norway

The rights of employees difficult. For assignments of less than a 2016, but the Norwegian government has
assigned or posted year, it will usually be the workers home indicated that the Enforcement Directive
country. For assignments of more than will be implemented as soon as the EEA
1. Introduction five years, it will normally be the host Joint Committee has approved the requisite
This section discusses temporarily assigning country. For assignments of one to five amendment to the EEA Agreement. It is
an employee to work in Norway, but it does years, it generally depends on a concrete not expected that implementation of the
not address sending a worker from Norway assessment of the terms and whether the Enforcement Directive will have far-reaching
to another country. assignment has the characteristics of a implications in Norway, as many of the
For the issues discussed below, the temporary arrangement. rights and obligations in the Directive
purpose of the assignment is irrelevant. If the circumstances as a whole indicate that already apply in Norwegian law.
The employer may, for instance, send the employment relationship is more closely The Norwegian regulations on posted
the employee to work temporarily in a connected with a country other than the one workers do not include rules on minimum
company that belongs to the same group where the employee habitually performs pay. In fact, Norway has no statutes on
of companies. Or the worker may be sent their work, that countrys law will govern the minimum pay, and employees who are
to Norway to perform services for the relationship. assigned there may, as a rule, work for the
employer, acting under the employers Because uncertainties can arise in the same salary they receive in their home
management and control pursuant to a absence of a choice of law, it is important country. In some industry sectors, including
service agreement between the employer to agree to the governing law in the construction, measures have been taken
and a service user in Norway. The employee employment or assignment contract. to avoid social dumping, and collective
may also be sent by a temporary agency agreements are given general application.
or similar organization that makes workers 3. Minimum employment rights for That means the wages and working
available for assignments in Norway. employees posted to Norway conditions negotiated between trade unions
All employees sent to work in Norway enjoy and employer organizations in collective
2. Application of Norwegian minimum rights, even though Norwegian agreements apply to all workers in Norway,
employment law to assigned law does not govern the employment including posted workers, irrespective of
employees; choice of law relationship. These rights are set forth in whether they are party to the collective
Norwegian employment law does not regulations that implement EU Directive agreement. Further, when a work permit
automatically apply to employees 96/71/EC (the Posted Workers Directive). is necessary, immigration rules require
temporarily assigned to Norway. The However, the regulations apply to all proof that the pay and working conditions
extent to which it does apply will depend employees posted to Norway, not only those in the employment or assignment contract
on the governing law of the employment from EU Member States. The rights include: are at least as good as those in the current
relationship. As a starting point, Norwegian collective agreement or pay scale for the
A safe working environment
law permits the parties to choose the industry, or at least as good as the norm for
law that will govern the employment Maximum working hours
the occupation.
relationship, and the countrys courts will Protection against discrimination
The rights specified in the regulations (and
generally respect an express choice of law Parental leave
the collective agreements) are minimum
in the employment or assignment contract.
Protection against dismissal for rights, and they will not apply if the posted
However, they will not respect an agreement
pregnant women employee has more advantageous rights
if it deprives the employee of mandatory
Holiday rights and holiday pay under an employment or assignment
protections that would have applied in the
The catalogue of rights will be extended contract or under the law or applicable
absence of choice.
when EU Directive 2014/67/EU (the collective agreement in the home country.
If no choice of law is expressed, the
employment relationship will be governed Enforcement Directive) is implemented,
primarily by the law of the country where to include limitations on deductions from
the employee habitually performs their salary and holiday pay. Norway is not a
work. Determining that place can be member of the EU and is not bound by
the transposition deadline of 18 June
Jane Wesenberg
jane.wesenberg@no.ey.com

Labor & Employment Law Strategic Global Topics 28


Poland Micha Balicki

Employment law issues in The employer should bear in mind that Under Polish law, the criteria for assessing
the host country may have labor law a posting structure (when an employee
mobility
provisions that unconditionally apply to is posted to Poland) does not differ
In Poland, mobility of employees
the posted employee. These may replace substantially from the rules provided under
has become a widely discussed topic
the minimum conditions provided by Polish Article 4 of Directive 2014/67/EU.
for employers, employees and their
laws (unless the foreign law is chosen as the The practice of public authorities and courts
professional advisors. This is mainly
governing law for the entire assignment). in assessing whether a posting structure
due to two important changes in Polish
The employer should also be aware of is proper has not been established. The
employment laws: the introduction of the
any additional requirements that may recitals to Directive 2014/67 stipulate that
Act on the Posting of Workers (the Posting
affect the assessment of how well the the lack of a certificate on the applicable
Act) and the establishment of a 33-month
posting structure complies with the host social security legislation referred to in
limit on employment contracts concluded
countrys regulations. Regulation (EC) No. 883/2004 may indicate
for a definite period. These new regulations
Under Polish law, ending the assignment that the situation should not be considered a
impose changes on planning and structuring
triggers no specific obligations for temporary posting to a Member State other
employee mobility.
the employer. than the one where the employee habitually
Posting an employee from Poland to
For the posting of employees to Poland, the works. In Poland, that is the A1 certificate
another EU Member State should be based
Posting Act sets three main obligations for issued by the Social Security Institution.
on an agreement between the employer
the employer: The requirement for substantial activity and
(including a temporary work agency) and
the prerequisites thereof are constructed
the foreign entity, or it can involve an Appointing a person responsible for
similarly to the requirement of normally
intragroup assignment. With an assignment contacting the authorities
carrying out the undertakings activities,
not a business trip, but a posting as Notifying the relevant authorities about established based on Regulation (EC) No.
defined by Directive 96/71/EC a Polish the posting 883/2004, Regulation (EC) No. 987/2009
employment contract must be amended and Maintaining relevant employment and the European Commissions practical
adjusted to the business needs and legal documents guide for determining legislation that applies
requirements of the assignment. This can
A National Labor Inspectorate is responsible to workers in the EU.
happen through a compromise agreement
for seeing that the posting structure Interpreting that requirement was the
or an entirely new contract. If a definite-
complies with laws. focus of numerous court disputes between
period contract is executed, the employer
For employees outside EU Member States, posting employers and the Social Security
should observe the maximum number
immigration requirements must be taken Institution. Similar disputes are expected
and time limit of such contracts. However,
into account. Assignees from certain to arise over the assessment criteria
the employment relationship should be
countries, such as Ukraine, the Russian introduced by the Posting Act.
preserved; otherwise, it may not meet the
requirements of posting. An assignment Federation and the Republic of Georgia, Ending the assignment to Poland triggers
letter may also be provided to the employee, have simplified procedures, and they may be a two-year retention period during which
but it is not legally required. hired temporarily without a work permit documents on posted employees must be
based on an employer affidavit registered maintained in Poland.
by the local labor office.

Micha Balicki
michal.balicki@pl.ey.com
Jakub Kowal
jakub.kowal@pl.ey.com

29 Labor & Employment Law Strategic Global Topics


Rodrigo Serra Loureno Portugal

International mobility the With social security, there are three distinct such a convention, the assignment requires
legal regimes, depending on whether the prior authorization from Portuguese social
Portuguese approach
worker is assigned to: security authorities. The Portuguese Work
The mobility of workers is considered an
A country of the EU or EEA Authority (ACT) must also be informed
important means of coping with todays
of the assignment, with at least five days
labor market challenges in the enlarged A country that is party to a convention
notice, and of all extensions.
EU. In Portugal, the economic crisis has with Portugal on the social security
accelerated the search for new export aspects of posted workers During the assignment
markets for domestic companies, thereby A country that is not part of any All relevant changes, such as extensions,
increasing the posting of workers in new relevant convention must be reported to the ACT and, if
countries and creating a new standard they affect the social security regime, to
In EU or EEA countries, its sufficient to
in employment law practice. Previously, the Portuguese social security agency.
submit a form to authorities guaranteeing
the country was mostly a destination During the assignment, the employer
that the Portuguese social security regime
for the staff of established multinational must continue to make social security
is applicable. In assignments lasting longer
companies, not a place that originated contributions for the assigned worker.
than 24 months, the company or worker
international postings in emerging markets. Temporary returns to Portugal are
can ask the social security authorities
The main feature of the Portuguese law considered part of the assignment and do
of both countries to agree on a different
is a set of minimum standards under not interrupt the employers duties.
regime that suits the interests of the
Directive 96/71/EC for safety, duration of parties. Upon completion of the assignment
work and rest periods, vacation, overtime, Although EU Directive 2014/67 has not Workers must be reinstated to their
minimum wage and parenting rights. These yet been implemented in Portugal, it is previous assignments unless the
are mandatory for assignments both to a expected to increase control on posting of agreement specifies otherwise. The
foreign country and to Portugal. Under the workers by the supervising authorities, and social security status of the worker
Convention of Rome, to which Portugal is a introduce some modifications on the legal remains unaffected.
party, the sides can choose which law will regime, such as:
rule the assignment. But when the rules Overall, the Portuguese legal regime for
Mandatory assignment of a contact mobility is very functional and presents no
of the law chosen by the parties are less
person by the employer to represent major obstacles. However, certain material
favorable to the worker, the Portuguese
the company before the controlling issues may arise, such as retribution rates,
minimum legal standards always apply.
authorities in both countries; expenses and benefits, that are better
With assignments to a foreign country, the
following aspects are worth considering. Duty to inform the supervising authority addressed through careful planning and
in the country of destination regarding negotiation with the assigned worker.
Before the assignment the activity of the company, the posting
Any assignment should begin with a of workers and related information;
written agreement that sets out the main
Duty to keep documentation related
conditions. Although its not mandatory,
to the assignment, including worktime
it will protect both parties to an extent
records.
if a dispute arises over the nature of
the assignment. It will also allow for the If the country is party to a social security
fulfillment of information obligations convention with Portugal, or if the worker
regarding work and repatriation conditions. is assigned to a country that is not part of

Rodrigo Serra Loureno


rodrigo.lourenco@rrp.pt

Labor & Employment Law Strategic Global Topics 30


Romania Nicoleta Gheorghe

Labor force mobility in In both cases, the host countrys law During the assignment, the Romanian
Romania regulations governs the assignment unless the home employment agreement is suspended, and
country legislation is more favorable to all related employee rights are granted
and challenges the employee on maximum work periods by the host company. Secondments
Romanias entry into the EU in 2007 and minimum rest periods; minimum may generate a gap in social security
brought significant changes to the legal paid annual holidays; minimum pay rates, contributions in Romania if no social
regime, which is applicable when Romanian including overtime; the conditions of security agreement is in place with the host
citizens are posted in EU countries and hiring out workers, particularly the supply country.
when EU citizens are posted in Romania. of workers by temporary work agencies; For the secondment of non-EU citizens to
Almost a decade later, uncertainties and health and safety at work; protective Romania, Romanian law imposes certain
practical difficulties remain in managing measures for pregnant women or women restrictions. Each year, the Government
employment, social security and who have recently given birth, for children issues a limited number of work permits
immigration requirements. and for young people; and equal treatment to non-EU citizens.2 As a rule, non-EU
According to a survey published by the for men and women and other anti- citizens may be seconded to Romania
Romanian National Council of Small and discrimination provisions. for a maximum of one year within a
Medium Sized Private Enterprises,1 80% of Foreign employers and Romanian host reference period of five years and under
interviewed private entities consider the companies must follow certain procedures strict conditions. According to the recent
EU posting procedures to be bureaucratic, when posting workers from the EU in amendments of the Romanian immigration
lengthy and costly. Romania, such as: legislation, third-country nationals who
With non-EU assignments, Romanian EU home companies are obliged to notify, are transferred within the same group of
employers still face challenges on the social in writing, the competent Romanian labor companies (ICT workers), may be seconded
security protection of posted employees authority about the assignment before its to Romania for maximum three (3) years.
and the time consuming procedures for commencement date. Projections for the future
obtaining work.
The host company must keep The Directive 2014/67/on the enforcement
EU assignments assignment-related documentation of Directive 96/71/EC is in process of
The principles of Directive 96/71/EC on and present it to the labor inspectors being implemented under the Romanian
the posting of workers were transposed in upon request. legislation by the end of 2016 or within the
Romania by Law 344/2006. EU Regulation No. 883/2004 on the first quarter of 2017, at the latest.
The law covers: coordination of social security systems also In its current form, the draft law follows the
Intragroup assignments applies in Romania. The Romanian National principles drawn by the Directive 2014/67/
House of Public Pensions issues A1 forms EC. It defines more clearly the concept
Employees posted under service
for Romanian workers posted to other of posting and empowers the Romanian
agreements between the home company
EU Member States, and it also recognizes Labor Inspection to collect the relevant
and the beneficiary of the services
A1 certificates issued by other EU social information and determine whether the
Workers posted by temporary work security institutions. However, Romanian posting is genuine or not.
agencies employers have expressed concern over The Romanian business community
Its provisions apply to assignments from the lengthy terms necessary for obtaining expressed confidence that, following the
Romania to EU, EEA States or Switzerland an A1 certificate and over the large transposition of the Directive, coordination
and vice versa. number of supporting documents required. will improve between the relevant
Non-EU assignments authorities, enhancing access to public
When posting Romanian citizens in non-EU information and leading to more simplified
countries, Romanian employers apply the procedures.
Romanian Labor Code, which generally
holds that assigned employees benefit Nicoleta Gheorghe
1
 ttp://cnipmmr.ro/2015/03/25/
h
dificultati-in-cazul-delegarilor-transfrontaliere from the most favorable rights either nicoleta.gheorghe@ro.ey.com
2
The contingent of foreign workers approved to those applied by the Romanian employer or
Anca Atanasiu
be assigned to Romania during 2016 is 700. those applied by the host company.
anca.atanasiu@ro.ey.com

31 Labor & Employment Law Strategic Global Topics


Oleg Shumilov Russia

Employment law issues in Russian currency control law should also The most advantageous work permit
mobility be taken into account because it imposes regime for foreign nationals is the Highly
additional requirements. Under the current Qualified Specialists (HQS) regime. One
General overview interpretation of the regulations, Russian of the most important criteria is the
Because of economic turbulence, citizens are viewed as Russian currency remuneration level that a foreign employee
Russia has shifted towards an increase control residents unless they continuously must receive locally from the party
in outbound work assignments rather spend more than one year outside Russia. sponsoring the HQS permit currently
than inbound assignments, which were Russian currency control residents must 167,000 rubles gross per month (about
widespread in the previous decade. notify authorities within one month when US$2,574). This permit has a simplified
Employers still use inbound assignments they open or close a foreign bank account procedure and a beneficial income
to invite foreign nationals to share or change their account details, as well as tax rate for tax nonresidents, i.e., 13%
knowledge and international experience. file cash flow statements on their foreign on their earnings in the HQS capacity
This section provides an overview of the bank accounts. instead of 30%. HQS income is also not
main considerations of both outbound and subject to social contributions (except
inbound assignments. Inbound mobility
those covering workplace accidents and
Because of immigration legislation, all
occupational illnesses).
Outbound mobility foreigners working in Russia must have a
Russian labor legislation is relatively local employment agreement to obtain a Generally, income paid in Russia is subject
rigid, and labor relations outside Russia work permit. A foreign agreement is not to tax withholding through payroll, while
are generally not governed. Therefore, legal grounds for working in Russia. income subject to Russian tax and paid
when companies set up long-term foreign abroad should be declared in a tax return
Some companies fully shift their payroll
assignments for Russian workers, the that is due no later than 30 April for the
to Russia, although it is common to retain
most straightforward option is to have preceding tax year. If the assignment
some payments from abroad for social
them sign a new employment agreement ends, a Russian departure tax return may
security coverage. There are a number of
with a foreign entity and to terminate the be required. It should be filed at least
options for structuring such assignments,
local employment agreement or suspend one month before the actual departure
each with pros and cons.
it through unpaid leave. This option also from Russia.
Although limited by new legislative
avoids double taxation on income delivered Since global mobility involves so many
requirements, secondment arrangements
during the assignment. However, Russian aspects, including employment law, taxes
are one of the most common assignment
social security would not cover the and currency control, companies should
structures. Legislative changes that took
assigned employees, potentially decreasing assess the pros and cons of various
effect on 1 January 2016 establish criteria
their pension payments a scenario that assignment structures and choose the best
that must be met for one company to
may not be attractive to the employee. one for their business needs.
provide personnel to another. Further
Companies prefer to classify short- changes introducing more detailed rules
term foreign assignments as business are to be adopted by the end of 2016.
trips. That requires payment based on
average earnings instead of salary as
stipulated by employment law, as well as
compensation of business trip expenses,
including per diem, sometimes leading to
additional onerous calculations and costs
for the company.

Oleg Shumilov
oleg.shumilov@ru.ey.com
Lyudmila Sapronova
lyudmila.sapronova@ru.ey.com

Labor & Employment Law Strategic Global Topics 32


Serbia Marijanti Babic

Employment law issues in Work


permit for secondment within two A work permit can be issued only to
related entities (mobility within a group foreigners who have already obtained a
mobility
of companies) residence permit, and it covers the same
The global economy has created a need
Self-employment
work permit duration.
for companies to move workers outside
An employment permit can be obtained The work permit ceases to be valid in the
their home countries. Although the Serbian
only if a foreigner has an employment following cases:
Government acknowledges the need to
grant foreign citizens access to its labor agreement with a company registered Expiration
of the work permit or
market, domestic legislation imposes in Serbia. To conclude an employment residence permit
restrictions intended to protect local agreement with a foreign citizen, a local Termination
of the employment
citizens. Immigration laws remain the company must prove that it has had no agreement or assignment in Serbia
main issue. layoffs in the previous three months. The
A
stay that exceeds six months
local company should also apply for a
Residence permit labor market test with the Serbian National Foreigners should notify the Serbian
Citizens of the EU or countries that have Employment Agency 30 days before National Employment Agency about why
signed treaties with Serbia can freely enter submitting the request for an employment the work permit was terminated. No other
and stay for up to 90 days within a 6-month permit. The test should confirm that the requirements are imposed.
period. Citizens of other countries must local company has found no competent Insurance requirements
obtain visas before entering Serbia. To stay individuals in Serbia who are suitable for Serbia has three types of mandatory social
beyond 90 days, foreigners should apply the position. In practice, the test lacks security contributions (SSCs): pension and
for a temporary residence permit. impact: even if the agency proposes local disability, health care and unemployment.
Work permit citizens for the position, the company is not Foreigners can stay in their home countrys
All foreign citizens must hold a work permit obliged to employ them. social security system if they remain
to be employed in Serbia. On the other hand, if foreigners apply for employed with the foreign company.
On the other hand, the Serbian Law on a work permit for seconded individuals SSCs are mandatory for local employees;
Employment of Foreigners recognizes or secondment within two related for foreigners, it depends on whether
certain situations that do not require a entities, they can remain on their foreign their country has a bilateral social security
work permit. Foreign citizens who spend employment contract and work in Serbia treaty (totalization agreement) with Serbia.
less than 90 days in Serbia within a six- based only on an assignment letter issued
Under totalization agreements, the time
month period can perform the following by their employer.
when foreigners are exempt from local
business activities without a permit: To obtain a work permit, seconded SSCs is usually limited to one to three
Business
meetings individuals must be employed with the years, with possible extensions that
foreign company for at least one year. generally do not exceed five years.
Preparatory
activities related to
Individuals seconded within related entities
establishing a business in Serbia (e.g., When work permits are issued, authorities
must hold a key position in the foreign
setting up a subsidiary) will examine whether foreigners have
company (manager, specialist or director).
Activities
related to delivering, installing health insurance that covers Serbia.
Serbian labor law imposes no additional
or repairing equipment or machinery,
conditions on the assignment letter or the
or training local employees to use that
foreign employment agreement, only that
equipment and machinery
it must satisfy the minimum requirements
Types of work permits prescribed by law.
The law provides for different types of In practice, foreign citizens mostly apply
work permits: for employment permits and conclude
Employment
permit employment agreements with the
local company. Veljko osovi
Work
permit for seconded individuals
veljko.cosovic@rs.ey.com
Sofija Stefanovi
sofija.stefanovic@rs.ey.com

33 Labor & Employment Law Strategic Global Topics


Jennifer Chih Singapore

Employment law issues in Although it is not legally required, Under Singapore law, employees can have
assignments employers should prepare an assignment dual-employment status, meaning that
letter (or local employment contract). The assigned workers maintain employment
The Singapore city state depends heavily
MOM occasionally requests this document with the original entity.
on the contributions of its foreign
when evaluating work pass applications. Regardless of what law the parties choose
workforce. Based on figures published
by the Ministry of Manpower (MOM), the The letter should stipulate: for the assignment, Singapore employment
foreign workforce stood at 1,387,300 The individuals pay and benefits during laws may apply, including entitlements
in December 2015. To provide some the assignment such as annual, medical and maternity or
perspective, Singapores total population paternity leave, and possibly regulations
The party responsible for managing and
was 5,535,000 in 2015. governing termination if it takes place in
supervising the individual
Singapore. The employer should verify that
The terms assignment and secondment The duration of the assignment and the assignment terms meet Singapores
are typically used interchangeably. In both whether the local entity has a right minimum requirements.
cases, arrangements can be structured in of termination
different ways: Whether employment with the
Issues at the end of the assignment
Employment with the original employer The Singapore employer should withhold
original employer continues during
is suspended or terminated, and the all money due to the foreign employee at
the assignment
individual is employed by the entity to the end of the assignment until obtaining
The individuals confidentiality
which they are is assigned. tax clearance from the Inland Revenue
obligations to the local entity and the
Authority of Singapore.
The worker remains employed by the restrictive covenants that apply in favor
original employer but is also employed Furthermore, the Singapore employer
of the local entity
by the other entity essentially a dual- should make certain that the work pass is
No statutory rules dictate what laws should
employment arrangement. canceled within one week of termination.
govern the assignment letter. Please
Issues in setting up the assignment note, however, that it is not possible to
All foreigners working in Singapore must contract out of Singapore employment and
hold a valid work pass, and the Singapore immigration laws.
employer will typically apply for it on the Issues during the assignment
employees behalf. The employer must Singapores Central Provident Fund (CPF)
take care to include a condition in the is a mandatory social security savings
assignment letter that makes employment scheme funded by contributions from
contingent on the issuance of a valid work employers and employees. Only Singapore
pass by the MOM. citizens and permanent residents can take
The MOM has been restricting the flow of part, and there is no applicable scheme
foreign workers into Singapore, making for foreigners.
it increasingly difficult to obtain passes.
We expect this trend to continue in the
coming years.

Jennifer Chih
jennifer.chih@pkw.com.sg

Labor & Employment Law Strategic Global Topics 34


Slovak Republic Robert Kovacik

New Slovak rules for substantial obligations on employers who Concluding a written contract between the
post and receive employees and granting home and host employers is obligatory for
posting workers
labor inspectors more powers to check temporary assignment and recommended
In recent years, the Slovak labor market
compliance with requirements. The Slovak for other forms of posting.
has been transformed by global trends
Labor Code distinguishes the following Posting terminates when the assignment
toward optimizing costs and effectively
forms of posting within the EU: period ends, when employment with
using labor, in addition to Slovakias
Posting under the direction and the home employer ends or when the
EU membership and entry into the
responsibility of a home employer contract between the home and host
Eurozone. Executive management is
who provides services through posted employers ends.
now commonly shared among various
regional companies, and worker mobility workers to a foreign recipient Even non-employers have certain legal
has become an important topic for Posting within a group of companies obligations, provided that they receive
employers. Employment legislation has Temporary assignment (secondment) a service through posted workers. In
tried to reflect these trends but still lags of personnel, when an employee works particular, they may have to pay due
slightly behind the countrys economic and under the control and supervision of a wages to the employees of their supplier
social development. host employer (for objective operational if the supplier fails to do so, and they may
reasons, unlicensed employers may also be subject to fines if the supplier illegally
Beyond traditional forms of mobility, such
temporarily assign their employees for a employs workers.
as business trips and temporary workplace
relocation, Slovak law allows for posting an maximum of 24 months) Social security law
employee who: A Slovak employer who intends to post As a rule, social security contributions
Temporarily performs work for the an employee to another EU Member must be paid in the country where
economic benefit of a host party State must: employees work. They can stay in the social
Retains a labor contract with the Fulfill the receiving countrys legal security system of their home state under
home company administrative obligations exceptions found in Slovakias international
treaties and in EU Regulation No.
Returns to the home company after Obtain the employees consent
883/2004. Under the latter, employees
completing the posting Conclude a written posting agreement
posted within the EU for up to 24 months
The employee can also enter into a new with the employee
may remain in the social security system
labor contract with the host employer while Inform the employee about the essential of their home state (extensions are
terminating the original contract or putting terms and conditions of employment possible). Such an employee must hold an
it to sleep by taking unpaid leave. Or the under the laws of the host state, subject A1 certificate.
worker can enter into two simultaneous to provisions more favorable to the
In conclusion, Slovakias new law on
part-time labor contracts. employee (other issues can be governed
posting workers does not specify how
The rules may differ depending on the by law chosen by the parties)
it should coexist and interact with the
country where the employee is posted. An employer from another EU traditional Slovak institution of worker
Postings outside the EU are subject to a Member State sending an employee to mobility. Authorities are not interpreting
legal regime set forth by an international Slovakia must: the new law consistently, and for now
treaty, if applicable, and by both Slovak and Submit a notification form to the Slovak employers are at risk of applying it
foreign law. Within the EU, postings must National Labor Inspectorate before the incorrectly. Consequently, they have an
comply with the laws of the EU, Slovakia posting commences even greater need for legal and tax advice,
and the other EU Member State involved. as inspection bodies within the EU have
Appoint a contact person for document
Posting workers within the EU delivery in Slovakia new tools and can enforce cross-border
As of 18 June 2016, posting has fines more efficiently.
Maintain certain employee-
undergone significant legislative changes related documentation at the
in Slovakia. The new law implements Katarna Prkazsk
employees workplace
Directive 2014/67/EU, imposing katarina.prikazska@sk.ey.com
Soa Hankov
sona.hankova@sk.ey.com

35 Labor & Employment Law Strategic Global Topics


Jae Shik Kim South Korea

Effective integrated strategy other words, Korean law will apply even there is justifiable cause, the court
focusing on South Korean law though the parties agreed not to apply it). considers factors such as degree of fault,
Therefore, it is important to choose the relative seriousness of damage, regular
Integrated approach most efficient type of employment after conduct and circumstances after cause
Global mobility involves various types of considering all relevant Korean legislation, for disciplinary action. The employer has
contracts whether employers dispatch such as employment and social security the burden of proof, and dismissal without
workers overseas after executing an laws. justifiable cause will not be effective.
employment contract domestically or Trade secrets: non-compete restrictions
they hire local residents after establishing Termination of employment contract
Retirement benefits: each employer must may be necessary when terminating an
a subsidiary or branch overseas. An employment relationship. Employers can
appropriate legal review is required for establish at least one benefit scheme for
retiring workers (Article 4(1) of the Act seek an injunction to prevent actual or
each type of contract, focusing not only on threatened misappropriation of a trade
immigration but also on labor laws, social on the Guarantee of Workers Retirement
Benefits). Under a retirement allowance secret pursuant to Article 10(1) of the
security, tax and information security. Unfair Competition Prevention and Trade
system, employers pay a retiring worker a
Immigration prorated amount equivalent to average Secret Protection Act.
To be hired in South Korea, foreigners must wages earned for 30 days for each year Data privacy
obtain a valid visa in accordance with the of continuous service. With a retirement When hiring workers and doing business
Immigration Control Act. The act allows pension plan, employers save respective in South Korea, employers must comply
for 16 types of work visas, depending severance pay at an outside financial with the Personal Information Protection
on the status of sojourn eligible for institution for the term of the workers Act, which regulates privacy and data
employment activities. employment and operate it pursuant protection. Employers who do not adhere
to the instructions of the employer or to procedures could face penalties or
Applicable law
worker. Average wages are calculated by compensation for damages.
If the parties do not choose the applicable
dividing the total wages paid to a worker
law, the employment contract will be Anti-corruption laws
during three calendar months by the total
governed by the law of the country In South Korea, the Improper Solicitation
number of calendar days during those
where the employee habitually provides and Graft Act will be enforced from 28
three months. The relevant period for this
the service. If the employee does not September 2016, establishing strong
calculation is the three months immediately
habitually provide the service within one punishment for improper solicitation of
before the day that grounds for calculating
country, the governing law will be that public officers, etc. a broad category
the average wages occurred.
of the country where the employers that includes executives and staff members
business office is located (Article 28(2) Dismissal: according to Article 23(1) of
of mass media organizations, private
of the Act on Private International Law). the Labor Standards Act, an employer
schools and private kindergartens.
Even if the parties agree that Korean law may dismiss a worker only with justifiable
will not govern the employment contract, cause an act by the employee that
employees can still obtain protection under is so significant that the employment
Korean employment laws if they habitually contract cannot continue based on societal
provide their service in South Korea (in expectations. When determining whether

Jae Shik Kim


jskim@kr.ey.com
Yoo Jeong Son
yjson@kr.ey.com

Labor & Employment Law Strategic Global Topics 36


Spain Ral Garca Gnzalez

Assignment of workers abroad The Directive 2014/67/EU had to be Generally, workers assigned to other
transposed by June, 18th 2016. Even countries are subject to the social security
As borders open and international
though directives only take effect once legislation of that country. However, Spain
contracting increases, companies
transposed, the Court of Justice of the is bound by European Union regulations
need to expand their businesses and
EU considers that a directive that is not and bilateral social security agreements
cannot disregard the importance of the
transposed can produce certain effects signed with several countries. Therefore,
human factor.
directly in determined cases and individuals employees assigned to work for a limited
Proper planning and management of the may rely on the directive against an EU time in another country may be exempt
international movement of workers are country in court. from contributing in the host country if
essential to any expansion. Employees they keep contributing in Spain. To keep
The Spanish Labor Act defines geographic
can be sent to other countries in a contributing in Spain, the employer or
mobility as the employers right to
variety of ways, and each case requires employee must apply for a certificate of
unilaterally change the workplace on
a different legal approach. In this article, coverage. This also applies to employees
objective grounds related to financial,
we will focus on the Spanish employment who are assigned to work in Spain but
technical, organizational or productive
law perspective and the challenges that prefer to maintain contributions in their
causes. The law distinguishes between
companies face when temporarily sending home countries. The Spanish Labor
transferred and assigned employees based
employees to another country to carry out Authority must be informed about the
on the duration of the assignment.
a service. conditions for rendering services in Spain.
This would not apply to workers who
The Directive 96/71/EC supports the As long as the employment relationship in
move to a different workplace under an
freedom to render services across the EU the home country continues, the country
agreement with the employer or on their
and the respect for the employment rights of origins law applies. However, employees
own initiative. When the worker changes
of workers in the country they are posted are entitled to the minimum core rights in
countries, the employment relationship
to. This Directive was transposed in Spain force in the host country, no matter which
in the home country may be maintained
through the Law 45/1999. law applies.
or suspended. If the labor relationship
The Directive 2014/67/EU establishes continues, the parties should sign a letter If employees maintain social security
enforcement requirements for a better of assignment that focuses on: contributions in the home country, the
and more uniform implementation and social security law in that country will
The duration of the contract.
application of the posting Directive of apply while the corresponding certificate
1996. The Directive could have a potential The terms and conditions for the
of coverage is in force. Once it has
impact on certain areas with regards to the employee, including working hours,
expired, the social security law of the host
posting of workers in Spain. The Directive seniority, vacation and compensation for
country will apply. Sometimes, Spanish
builds on mutual co-operation information transfer expenses.
employees can also apply for the voluntary
and refers to the availability of information The applicable law. contribution regime in Spain.
for posted workers. In this sense, Spain The applicable social security regime. With work assignments in a different
should provide all the information and labor
If the relationship is suspended, the country, employers and workers must
conditions of posted workers in a single
worker should sign a new employment bear various matters in mind, even if the
and official website. The Directive also
contract with the company in the country employee is sent to a European Union
approaches the need to designate a contact
of destination, as well as an agreement country. To avoid problems, we suggest
person between the authorities of the
of suspension. In this agreement, the seeking professional advice.
home and host country and the necessity
employer and the worker will agree
of translating all the documentation related
on the duration and conditions of the
to posted workers. Lastly, it introduces a
suspension of the labor relationship and
requirement for subcontracting liability in
will coordinate the suspended contract and
the construction sector and it refers to the
the new contract.
sanctions which companies may incur if Eva Sainz Cortadi
the law requirements are not fulfilled or an Ultimately, the decision between these
eva.sainzcortadi@es.ey.com
employee is posted on fraudulently. options depends on which formula suits
the circumstances of the company and the Beatriz Reina Ibaez
employee better. beatriz.reinaIbanez@es.ey.com

37 Labor & Employment Law Strategic Global Topics


Paula Hogus Sweden

Rules for posting workers or EEA, they must prove that they belong Issues at the end of the assignment
to the health insurance system in their At the end of the assignment, it is always
Although the bureaucratic hurdles are
home country (e.g., E101). A self-employed advisable to assess the workers tax
fairly manageable, certain rules and
individual must pay special social security or social security liabilities, that of the
regulations must be considered when
fees in Sweden (egenavgifter). posting entity. An international assignment
a foreign national comes to Sweden to
work. The following information details could affect future tax liabilities as well,
Issues during the assignment
important issues before, during and after particularly if the worker has stock options
A posted worker will be covered by core
an assignment. It is advisable to seek or similar equity bonus arrangements in
employment rights in Sweden, including:
specific legal advice before posting workers the employing company.
Regulations under the Working Time Act
to Sweden. (1982:673). The rules for working hours New legislation by early 2017
Issues in setting up the assignment are an implementation of the minimum The Swedish government is currently
The Posted Workers Act (1999:678), standards derived from the Working reviewing the implementation of the
primarily an implementation of EU Time Directive (2003/88/EC). Directive 2014/67/EU of the European
Directive 96/71/EC, applies when foreign Parliament and of the Council of 15 May
Minimum days of annual leave. According
entities post foreign workers in Sweden 2014 on the enforcement of Directive
to the Annual Leave Act (1977:480), a
for fixed-term projects. The Swedish rules 96/71/EC concerning the posting of
worker is entitled to at least 25 days of
cover all foreign nationals, regardless of workers in the framework of the provision
paid leave per year. Swedish regulations
whether they are EU citizens. If the foreign of services and amending Regulation
do not apply if the assignment is less
national works for a Swedish entity and (EU) No 1024/2012 on administrative
than eight days.
has no concurrent employment in another cooperation through the Internal Market
Minimum wage (if the worker is covered Information System into Swedish law.
country, Swedish labor law is generally by a Swedish collective bargaining
fully applicable. By early 2017, it is expected that the
agreement). Please note that Sweden government will propose new laws and/
Citizens from outside the EEA must apply has no statutory minimum wage. or changes in the current legislation with
for a residency permit as well as a work Safety and other work environment respect to posting workers.
permit, irrespective of the length of their regulations (in the Work Environment
assignment. Non-EEA citizens who are Act). This responsibility lies with both
permanent residents of another EU country the posting entity and the host entity
(with at least five years of lawful residency) (as the party responsible for the actual
are exempt from this requirement. A workplace).
posted worker or a self-employed individual
Discrimination regulations, such as the
only needs to apply for a residency permit.
Discrimination Act (2008:567).
When posting workers in Sweden, the
If the workers status in Sweden depends
employer must notify the Swedish Work
on work or residence permits, social
Environment Authority and name a contact
security certificates and so forth, the
person residing in Sweden.
worker and the employer should consider
Foreign employers who are posting workers any expiration and reapplication dates to
in Sweden for less than one year do not avoid complications, such as immigration
have to pay social security fees in Sweden. violations and penalty fees.
If the posted workers reside within the EU

Paula Hogus
paula.hogeus@law.se.ey.com
Pourab Paul
pourab.paul@law.se.ey.com

Labor & Employment Law Strategic Global Topics 38


Switzerland Sylvia Grisel

Employment law issues in working hours, vacation, social security, keep an employment contract with the
mobility seniority, tax equalization, and the home company and should not be bound
applicable law and jurisdiction in case of to the host company. In practice, though,
When considering international mobility
litigation. Employers should verify that we may consider the possibility of an
under Swiss employment law, employers
the letter complies with any rules of public employment relationship with the host
must decide whether to set up an
policy in the host country. company. If Switzerland is the host country,
expatriation or an assignment, because the
The main issue with social security then an employment relationship might
rules differ for each structure.
coverage arises when Switzerland lacks a exist, particularly when the employee
With expatriation, the employee works on has a subordination relationship with the
social security treaty with the host country.
behalf of the host company under a local host company, works on its premises and
In this situation, Swiss social security
employment agreement and has no direct receives payment from it. Two employers
coverage can be maintained in addition to
subordination relationship with the home may coexist and may be sued by the
host country social security and pension
company. The employee is no longer part employee in case of a dispute.
coverage but only under strict conditions.
of the home companys staff; the home
(For instance, the employee must have Most employment and assignment
employment agreement is terminated; and
been affiliated with Swiss social security agreements address which court
the employee is not maintained under the
for at least five consecutive years.) Should jurisdiction will resolve disputes, but it is
home countrys social security system.
those conditions not be met, employers necessary to verify the applicability of such
The legal framework of an expatriation
have two choices: clauses. International treaties, such as the
structure is, in principle, simple
Change the structure of the mobility, i.e., Lugano Convention on jurisdiction and the
and defined.
set up an expatriation enforcement of judgments, should take
During an assignment, the employment precedence over Swiss private international
agreement with the home company is Find a contractual way to maintain social
law. These foresee that jurisdiction
maintained, and the employee is assigned security and pension coverage
decisions can be made only after the
to the host company. The employee has Immigration rules may also affect the dispute has arisen.
a direct subordination relationship with choice of mobility structure. For instance,
the home company and, when possible, EU and European Free Trade Association Issues at the end of the assignment
remains part of the home countrys social (EFTA) nationals under local contract with If the employee returns to Switzerland
security system. The legal framework may a Swiss employer are entitled to receive and the employment agreement
therefore be more sophisticated. a work and residence permit. But EU and continues to be valid, the worker should
EFTA workers assigned to Switzerland for be given an equivalent position with
When choosing a mobility structure,
more than 90 days per calendar year are equivalent compensation.
employers should consider
employment law, social security and subject to a decision by Swiss immigration In conclusion, before setting up
immigration regulations. authorities, who will examine salary and an assignment, employers should
working conditions. examine each situation carefully from
Issues in setting up the assignment an employment, social security and
The home company and the assigned Issues during the assignment
immigration law perspective.
employee should conclude: From a Swiss employment law perspective,
we must point out two issues. The first
A regular employment agreement
concerns the relationship between
An assignment letter detailing the the host company and the assigned
conditions of the assignment employee, which may be reclassified as
Assignment letters should cover the an employment relationship. The second
start date, the assignment duration and relates to the competent jurisdiction to
extension, compensation and benefits, resolve a dispute.
termination, repatriation conditions, In theory, the assigned employee should

Sylvia Grisel
sylvia.grisel@ch.ey.com

39 Labor & Employment Law Strategic Global Topics


Mehmet Kkkaya Turkey

Employment law in mobility The new law introduces the Turquoise agreements (totalization agreements) to
Card. Foreigners who have the appropriate prevent double social security coverage.
General information education level and experience; who The 27 agreements provide social security
The new Law on the International Labor contribute to science and technology; rights to expatriates of contracting parties
Force regulates issues involving the whose in-country activities or investments (and equals), to their dependents and,
employment of foreigners. The law aid Turkeys economy; and whose academic in case of death, to their successors.
numbered 6735 and dated 28 July 2016 works are internationally recognized may The other parties are Germany, the
was published in the Official Gazette be granted a Turquoise Card provided that Netherlands, Belgium, Austria, France,
on 13 August 2016, and took effect on its first three years are a transition period. the Turkish Republic of Northern Cyprus,
the same date. Until the new regulations Holders benefit from the same rights Macedonia, Azerbaijan, Romania, the
become effective, provisions of the current provided by permanent work permits, Czech Republic, Bosnia-Herzegovina,
Law on the Work Permit of Foreigners and their spouses and dependent children Albania, Luxembourg, Croatia, Serbia,
and its implementing regulations that do will receive documents that substitute for Montenegro, Italy, France, Macedonia,
not conflict with the new law will continue residence permits. Denmark, the UK, Georgia, Sweden,
to apply.
Foreigners can apply for work permits at Switzerland, Quebec, Libya and Norway.
Foreigners must obtain work permits Turkish Consulates abroad. However, if they People covered by the social security
before performing dependent or have a valid residence permit of six months, system of a country that has an agreement
independent work in Turkey, unless they can apply for a work permit in Turkey. with Turkey should take the following
otherwise specified in treaties. Work permit
Foreign applications actions to receive medical benefits:
applicants must have an employment
agreement with the Turkish employer. A foreigner must submit the work visa People who qualify for medical benefits
That agreement will be subject to application and required documents to the in a contracting country should apply to
mandatory provisions of the labor code Turkish Consulate in the country where the local social security offices or the
and must include a job description, the they are a citizen or permanent resident. department dealing with non-domestic
salary, working hours, the employee and The Consulate will forward a reference social security issues.
employers name. For Turkish employment, number to the foreigners employer in They will receive a medical examination
any dispute will be settled in accordance Turkey. The employer will use the reference and treatment within a period specified
with Turkish law by the labor courts. If the number to apply for a work permit from the in the health benefit document.
employment arrangement with the home Ministry of Labor and Social Security within
They must seek treatment at health
country is retained, any dispute may be 10 days. After the work permit is issued,
institutions with which the Turkish Social
handled in accordance with the provisions foreigners must revisit the Consulate to
Security Institution has an agreement.
of that agreement as well as the laws of the complete the application.
If the period specified in the health
home country. Expatriates sent to Turkey on behalf benefit document has ended and
Work permit applications of a foreign corporation treatment is needed, they should apply
Before working in Turkey, foreigners must The legislation mentioned above has to the local social security offices or the
obtain a work permit from the Ministry of similar regulations for expatriate department dealing with non-domestic
Labor and Social Security. employees transferred to Turkey on behalf social security issues.
There are three types: of a foreign corporation. To prevent double
social security coverage, they can notify
Definite-term work permits
the Turkish authorities if they are covered
Indefinite-term work permits by social security in their native countries.
Independent work permits However, it is important to determine
Foreigners who intend to work which legislation applies to the individual.
independently in Turkey must legally and Social security agreements
continuously reside there for at least five Along with the EU agreement, Turkey
years. has concluded bilateral social security
Mehmet Kucukkaya
mehmet.kucukkaya@tr.ey.com

Labor & Employment Law Strategic Global Topics 40


United Kingdom Justin Roberts

Assignment to the UK customer relationships and confidential Issues often arise when assignments are
employment law issues information. These protections might continually extended but the assignment
need to be expanded given that the documentation is never updated. After
to consider assignee could have a wider range of a qualifying period of two years of
As workforces become internationally clients in the UK. The letter will also need continuous employment, the assignee
mobile and employees commonly move to set out the prescribed information that will gain a number of statutory rights in
from one country to another (either must be provided under Section 1 of the the UK that could make terminating the
temporarily or permanently), employers Employment Rights Act 1996. assignment more difficult and expensive.
need to be aware of the employment law Protections related to whistle-blowing and
Assignees from another EU Member State
issues that can arise in the UK. discrimination will apply to the assignee
even those working in the UK temporarily
Most assignments or moves have three rather than ordinarily may be entitled to from day one.
clear stages, each with its own issues. certain minimum benefits provided in the The end of the assignment
The start of the assignment UK, including those related to holidays and Whether UK employment law applies to the
Before assigning an employee to the UK minimum pay rates. assignee will be a key consideration when
from another jurisdiction, employers We note that EU Directive 2014/67, which ending the assignment, particularly if the
should consider the structure of the is concerned with the posting of workers assignees employment is ending because
assignment, including: within the EU in the framework of the they cannot or no longer wish to return
The duration provision of services was published in May to employment in the home country. If UK
of 2014 (the Enforcement Directive). employment law does apply, the end of the
Whether the assignees will carry out all
Member states were required to implement assignment must be handled like any other
their work in the UK
the Enforcement Directive by 18 June dismissal or redundancy process in the UK,
What happens at the end of the 2016. The UK Government took the particularly when the assignee has met the
assignment view (following public consultation in qualifying period.
Whether the assignees will remain 2015) that the UKs existing domestic Employers who have considered what
employed by their original employer and laws were largely sufficient to comply happens at the end of the assignment, and
be seconded to the host company, or will with the provisions of the Enforcement have drafted documentation that reflects
be employed by the host company under Directive and so, with an exception this, will be in a much better position to
an employment contract in the UK for specific enforcement in relation to deal with any issues that may arise.
If the assignee will work in the UK contractor liability in the construction
Even if the assignment ends amicably or
ordinarily, then UK employment law will industry, the UK has not introduced any
the assignee will return to employment
apply. Even if the assignees employment additional legislation to give effect to the
in the home country, employers should
contract or arrangements are said to be Enforcement Directive.
consider entering into a settlement
governed by the home countrys laws, it During the assignment agreement to extinguish any liability that
will not override mandatory protections Employers should be mindful of the way results from the assignment. They should
provided under UK employment law. the assignment has been set up and also consider drafting the agreement so
Accordingly, when employers are drafting monitor actual working practices to verify that it protects not only the host company
documentation, they should be aware of that the reality matches the assignment but also the assignees original employer.
the employment protections afforded to documentation. Even if the assignment
the assignee in the UK. arrangements were drafted carefully, the
When the assignee is seconded to the documentation will quickly lose its value
UK and is not entering into a separate if it stops reflecting what is happening in
UK employment contract with the host practice. Key issues to monitor include
company, the assignment or secondment reporting lines, the work the assignee is
letter should include protections governing doing and the time spent in the UK. Justin Roberts
jroberts4@uk.ey.com
Nick Logan
nlogan@uk.ey.com

41 Labor & Employment Law Strategic Global Topics


Niem Thi Than Tran Vietnam

Employment law issues 2014, a manager can be an owner of a Documentation and rights and
private company, a general partner, the obligations
mobility chairperson or a member of the board The Labor Code does not clarify whether
General regulations of directors, the company president the law of the home country or the host
In Vietnam, all employment issues are or another managerial position that is country will govern arrangements covering
governed by the Labor Code 2012, dated 18 authorized to bind the company according the transfer of employees to Vietnam.
June 2012. The Labor Code, passed by the to the company charter. Therefore, the secondment agreement
National Assembly of Vietnam, is the highest- A manager can also be the head or deputy or appointment letter should make
ranking legislation governing this area. head of an agency or organization. clear which countrys law governs the
Although the Labor Code provides no clear arrangement.
An executive director refers to a person
definition, employment mobility typically who is the direct executive operator of If Vietnamese law is chosen, the workers
entails Vietnamese working abroad and a subsidiary unit of any organization or rights and obligations set out in the
foreign employees working in Vietnam. In this enterprise. employment agreement should be in
section, we will discuss foreign employees line with the Labor Code. These include
working in Vietnam, particularly updated Definition of expert the term of employment, annual leave
legislation that deals with the secondment Unless an expert is certified by the relevant and termination-of-employment issues.
of employees. This updated legislation is an foreign authority or organization, the In such cases, the host employer will be
addition to the procedure governing work transferred employee must satisfy the responsible for paying the salary, making
permit applications for employees who following conditions: compulsory social insurance contributions
enter the Vietnamese employment market Have a university-equivalent or higher degree and obtaining a work permit for the
as direct applicants to a new first posting Have at least three years of experience in the employee. The worker must comply with
in Vietnam. That topic is not covered in this specialty in which they were trained the hosts internal labor rules, collective
section. bargaining agreement and code of
Have work experience compatible with the
In early 2016, the Government issued conduct, as well as Vietnamese laws.
position they will perform in Vietnam
updated legislation1 Decree 11 dealing In another scenario, the home and host
with work permits for foreign employees Definition of technician entities may agree that the employment
under a secondment or similar arrangement. A technician means a worker who has at agreement signed by the home country
Decree 11, effective on 1 April 2016, clarifies least one year of training in their technical and the transferred employee will continue
and replaces previous legislation. specialty and at least three years of to govern the workers benefits, rights
relevant experience. and obligations while the employee works
Internal transfers
To obtain a work permit, the employee in Vietnam. The home and host entities
In general, Vietnamese laws recognize
must submit supporting documents to may decide which one will pay the salary
employment mobility in the form of
the labor authority demonstrating their and other allowances to the transferred
transfers between companies in the same
qualifications and experience. employee. Although the home countrys
group. Pursuant to Decree 11, a foreigner
law governs the employment relationship,
transferring internally within an enterprise Minimum time spent working at the
the worker must comply with the hosts
means a manager, an executive director, an home organization
internal labor regulations and with
expert or a technician of a foreign enterprise Besides possessing the qualifications and
Vietnamese regulations governing work
who temporarily transfers to the enterprises experience detailed above, the employee
permits and visas, personal tax income,
commercial presence in Vietnam. must have been recruited by the foreign
etc.
enterprise at least 12 months before the
Qualifications and experience
transfer or have been employed for 12 Approvals and other paperwork
Only certain foreign employees will meet
months prior to the transfer. In practice, an Any foreign employee working in Vietnam
the requirements for an internal transfer.
employee who has worked for 12 months must have a work permit except for some
Decree 11 provides detailed definitions of
for different companies within the same exceptions that are provided in the laws.
those employees:
group may qualify. The employee must
Definition of manager and executive submit supporting documents to the
director labor authority proving the duration of
Rod Cameron
Under the Law on Enterprises No. employment with the overseas entity.
rod.cameron@vn.ey.com
68/2014/QH13, dated 26 November
Niem Tran
niem.than.tran@vn.ey.com
1
Decree 11/2016/ND-CP, dated 3 February 2016.

Labor & Employment Law Strategic Global Topics 42


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For further information, please contact:

EY Global and EMEIA Labor & Employment Law Leader


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43 Labor & Employment Law Newsletter


Strategic Global Topics
Labor & Employment Law Newsletter Coordinator
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