Assignment Agreement, Terms and Conditions
Contract duration and termination notice
It should follow as standard procedure in the wording in the IAP, that an assignment agreement (IA) should be established between the employee aimed for the assignment, and the employer.
The IA is a binding document between the employer and the employee, where all terms and conditions that will apply during the assignment, should be stated as clear as possible.
Types of Assignments
There are several different types of assignment agreements, and these will determine what the employment obligations will be;
An assignment to another location for more than one year but most limited to five years in one and the same location abroad. Benefits for assignees on a long-term contract normally include a housing allowance, travel allowance, holiday entitlement, spousal support, a net assignment salary and usually a tax protection or tax equalization technique to protect the assignee from any adverse tax effects on the assignment related income.
These agreements are for employees working abroad on a short assignment of six months or less. Like the long-term packages, but usually benefits are limited due to the fact that assignment duration is shorter, and families don’t accompany the assignee in the host country.
An employee may commute regularly between their home location and the work location in another country. Commuter assignments may be weekly, bi-weekly, or other agreed schedules. Commuter assignments may be agreed for a long period of time, but it is most common to establish a timeframe of 18-24 months.
Commuter assignments have the same compliance challenges of extended business trips. Companies need to track the days the employee is present in foreign country to ensure that immigration, taxation, and other regulatory statutes are taken care of.
Developmental assignments are designed to help an employee gain critical skills in various parts of an organisation. They are often utilized for employees identified as high potential at any point in their career.
Permanent international relocation, sometimes called one-way moves or indefinite transfers. Traditionally, international transfers have been used when an employee fills a permanent position in another country.
Permanent relocations may be used when the duration of the stay is unknown or for employee-requested transfers.
Frequent business travels or extended business travels are growing in numbers. The major concern for the companies is compliance related. Employees undertaking normal business trips get their travels extended and/or there are many of them in the same location within a specific timeframe. This will create tax, immigration and other regulatory compliance implications that can cost the company money, time and even their presence in the host country.
Companies need to track the days the employee is present in foreign country to ensure that immigration, taxation, and other regulatory statutes are taken care of.
Companies of different sizes and in different industries may apply other types of assignments suitable for their business needs and industry practise.
It is of utmost importance that the parties involved in an assignment agreement (IA) understand the impact of the terms and conditions that apply. The consequences of breach of the terms in the IA should be clearly stated in the IA.
Governing Law and Jurisdiction
There is simply no such thing as a standard assignment agreement that can be implemented for the purpose of assignment to any country. Both the employee and your company need to identify and understand the laws that apply in the jurisdiction that follows the presence of the assignee in the host country. This requires clarity in the IA, both with respect to assignment period, the company he/she will be working for, as well as the assignment compensation package.
Any IA will need to take into consideration the applicable law contractual terms and conditions are governed by. Such could be;
local law in the country you will be employed in,
the law of the home country from which you relocated,
the law of the country in which your employer is incorporated.
Terms and conditions of employment are the elements of an IA, which help to define the relation between an employer and an employee. When you consider sending your employees on a temporary assignment to another country, the employment terms and conditions can vary depending on the exact circumstances of your transfer. For example, a long-term assignment agreement will, normally, contain more elements than a short-term assignment contract.
Providing detailed information of policy and communicating the terms and conditions in the Assignment contract to the Assignees will become essential part of managing your international assignee population. When designing an assignment contract, it is important that companies carefully consider several factors:
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