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GUEST COMMENT: What to look out for when you’re signing an international contract

Jonathan Exten Wright

For many financial services professionals, a secondment to Asia may seem appealing in the current market. Such assignments can be successful, both for employer and employee. However, they represent a major step and should not be entered into without care.

Contracts for employees embarking on international assignments tend to be more technically complex than standard employment contracts. Employment law, tax law and immigration law all have an impact.

In many cases, the employee will remain employed by their home employer. The existing contract of employment will therefore remain in place.  An employee will then be required to enter into a separate agreement containing the assignment terms.  To the extent that they conflict with the original contract of employment, all parties need to know whether the assignment terms will take precedence.  Alternatively, the employee could enter into a local contract of employment with the host country.

As an employee, there are several things that you need to watch out for. Ensure the scope of the benefits you’ll receive is fully defined and that the tax and social security position is spelt out. If you are going to be joined overseas by family members, ensure that your assignment terms address issues arising for this – including, for example, schooling provision.

It’s important to agree clear terms and conditions for an international assignment from the outset. This way, you will protect yourself from misunderstandings once you’re on the ground in the host country. At that point, it can be far harder to resolve any issues that arise.

Key questions:

*         Who will be your employer?  Your existing employer or the host company?

*         Will you be required to sign a new contract of employment or will you just have separate assignment terms?

*         Are there any immigration issues?

*         What will your duties be, who will you report to and what policies and procedures will apply?

*         What will be your tax and social security position?

*         What does your package of benefits comprise?

*         What will happen to your employment on termination of the assignment?

Jonathan Exten-Wright is a partner specialising in employment law at law firm DLA Piper.

Comments (2)

Comments
  1. Jonathan, great article addressing all major points. I have a question though. If one joins an international subsidiary on a local contract and a dispute arises at some point, could it be brought to a UK court or has to be dealt overseas?

  2. In a nutshell it is unlikely that the English courts will entertain hearing the dispute, but there are exceptions where a claimant can show despite such facts that there is a closer connection with England. This might include where work was undertaken for the benefit solely of the UK parent’s business in reality and where reporting lines were direct back to the UK rather than locally, or where there was effectively an expatriate enclave for all intents and purposes working as if an extension of England.

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