TYPES OF OVERSEAS EMPLOYMENT

The terms and conditions of employment while abroad typically depend upon the nature of the work and its likely duration:

§  Feasibility studies: Where an employee, or team of employees, visits a territory to assess the potential market for the introduction or development of the company's goods or services. These visits rarely last longer than a month and the method of payment is usually no more sophisticated than a reimbursement of expenses.

§  Commuter assignments: Such assignments have grown in popularity for two quite different reasons: first, in response to the growing unwillingness of employees to disrupt their children's education or the career of a spouse for the sake of a full expatriate assignment; second, where the organization does not wish to enter into the cost or commitment of a full expatriate assignment. Further, it may believe that the employee(s) concerned would be willing and able to travel to the work location on a Monday morning (or Sunday evening!) and return home on the Friday evening without detriment to the work or themselves. Such assignments are usually confined to European countries where the relative ease of travel and work permits makes such patterns of work manageable both for the organization and for the employee. Although it is not uncommon for 'Eurocommuters' to sustain this pattern of work indefinitely, it inevitably puts a strain on family life and can make it difficult for the employee to feel truly integrated into the work environment. However, one of the main advantages for the employer is that it can be more flexible and significantly cheaper than a full expatriate assignment. Small, serviced apartments can be rented instead of larger, more costly family houses and the added cost of moving children to international schools, etc, is avoided. The company would pay all reasonable out-of-pocket expenses plus the cost of travel, with the employee continuing to be paid in the UK where he or she would continue to pay income tax, national insurance, etc. Sometimes, the employer recognizes the inconvenience to the employee of such assignments and pays some form of lump sum, probably linked to the delivery of the project the employee was sent overseas to work on. This type of assignment can also be employed usefully at the start of an expatriation to ensure that both employer and the employee have a 'probationary period' during which arrangements can be undone without too much difficulty.

§  Contract work: Construction and civil engineering companies typically recruit contract staff for specific projects. Food and accommodation are often provided on site, in which case there might be no local currency payment. A lump sum or series of lump sums for the contract, agreed in advance, is then paid in the UK.

§  Short-term assignments: The definition of a short-term assignment varies from company to company but often refers to a period that does not exceed six months. Some companies choose to make the break point at three months, others at the point where the employee becomes liable for tax in the host country. Such situations might describe the presence of headquarters staff in the offices of a subsidiary when newly acquired or when such staff are sent in to address poor business results at one of their overseas locations. Such an arrangement is not dissimilar to the commuter assignment in the sense that employees on short-term assignments would typically continue to be paid in the UK, and pay tax in the UK, but would receive some allowance paid in the local currency to cover out-of-pocket expenses, hotels, etc. As with the commuter assignment, it is unusual for the assignee to be accompanied by family in the host location. As such, it is not uncommon for the employer to pay for a certain number of flights home over the period of the assignment, which can be used by the employee or the employee's family. Any additional tax liability arising from the assignment is usually met by the employer.

§  Expatriate status: Employing local nationals is usually much cheaper and has distinct local political advantages (eg in the Middle East, where localization is a strong national imperative for many countries) by comparison with expatriation, but many UK organizations continue to mix the local workforce with at least some management from the UK headquarters. Whether these UK managers are still employees of the parent company, whether they are kept on the UK payroll or whether they are transferred to the local company and local payroll would tend to be dependent upon who wants the manager there and the anticipated duration of the posting. If it is the country organization that is driving the posting, then the country might be expected to pay and be more obviously responsible for the assignee and, hence, have him or her on the books and pay his or her remuneration directly. If it is the UK headquarters that wishes to have the manager spend time in the host organization, then the costs of the assignee may be split between the host country and the headquarters or even fully funded by the headquarters. If the assignment is expected to be relatively short, it may be considered inappropriate to go through the administration of transferring the individual to the host country's payroll and changing the employee employment/ contract status. If the individual concerned is employed by the host country company rather than the parent company and the source of remuneration is local, it is generally accepted that the employee's status is a secondee and not an assignee.