Www.morganlewis.com Global Employer: Managing International Assignments Matthew Howse & Nicholas Thomas.

www.morganlewis.com

Global Employer: Managing International Assignments

Matthew Howse & Nicholas Thomas

© Morgan, Lewis & Bockius LLP 2

The Presenters

Matt Howse Nick Thomas

© Morgan, Lewis & Bockius LLP

• Form of assignment• Legal structures• Other issues to consider• Case study

Overview

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• Period of assignment◦ Short, medium or long term

◦ Indefinite duration

• Intention to return◦ To original role

◦ To similar role

◦ No clear intention

• Reporting lines – home or host company?• For which company’s benefit is the work to be carried out?

Form of assignment

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• Letter of assignment◦ Short term arrangements

◦ Home company remains employer

◦ Generally suitable when still reporting in to/working for the benefit of home company

◦ Return to original/similar job at the end of assignment period

Legal structures (1)

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• Secondment

◦ Short and medium term arrangements

◦ Home company remains employer

◦ Reporting in to/working for the benefit of host company

◦ Two agreements – home /employee and home/host – or tri-partite?

◦ Ensure notice and termination provisions tie in with root employment contract

◦ Repatriation at end of secondment?

◦ Consider restrictive covenants, IP and confidentiality obligations – are these wide enough to protect the host company?


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• New employment contract with “global employer”◦ Seconded to host?

◦ Flexibility to move employee around the world without new documentation?

◦ What will happen at end of assignment – dismissal or repatriation?

◦ Impact on redundancy process/applicable dismissal laws?

• New employment contract with host company◦ May be suitable for long term/indefinite term assignments

◦ Effectively severing ties with home company

◦ No obligation to repatriate at end of assignment

◦ Dismissal subject to local laws


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• Dual employment◦ Separate parallel contracts with home and host company

◦ Potential tax advantages versus administrative burden

◦ Consistency vital


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• Visa/immigration requirements

• For employee

• For family/partner

• Tax and benefits

• Where is income taxable?

• Who will be responsible for tax administration?

• Will employer offer tax equalization?

• Medical and disability insurance considerations?

• Pension concerns?

Other issues to consider (1)

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• Employment law issues

• Local employment law protections, e.g. unfair dismissal, discrimination, working time, whistleblowing, etc.

• Local minimum entitlements, e.g. annual leave, notice, etc.

• Difficulties on termination – repatriation?

• Cultural issues

• Culture and etiquette

• Local laws and customs (wills, property ownership, privacy, etc.)

• Religion, sexual orientation and marital status

• Potential for increased exposure to discrimination claims

Other issues to consider (2)

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• Game of Scones (GOS) is a tea shop/bakery chain that started in the kitchen of a Scottish grandmother and has rapidly become the hip alternative to the major coffee chains.

• It is now a multinational business with worldwide operations. • As a consequence of a decrease in sales in the UK, the company has decided

to send Bonnie Baker, the VP of Marketing, from the US to the UK. • The intention is that Bonnie will restructure the UK marketing team, dismissing

and recruiting as she considers necessary, and lead the team as the new structure is implemented. It is currently unclear how long this project will last.

• On a day-to-day basis Bonnie will report into the UK Managing Director, but will retain a “dotted line” report into the US based Global Head of Marketing.

Case study

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• Assignment or secondment – Bonnie remains employed by a US company.

• Transfer – Bonnie is terminated by US company and rehired by the UK company.

• Global Employment Company (GEC) – Bonnie is terminated by the US company and employed by the GEC who seconds Bonnie to a UK company.

• Dual employment – Bonnie is employed by both the UK and US companies.

Who will be the employer?

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• Bonnie’s US employment contract was modified by the secondment agreement

• Bonnie will benefit from employment laws of both the UK and the U.S.?• The secondment agreement must be carefully drafted

• employment status (at-will?)

• role, duration, reporting

• salary, benefits, tax

• termination of secondment, of employment

• choice of law and forum

Secondment

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• Bonnie employed by both UK and US companies• Useful if Bonnie is to provide services to both companies• Tax benefit?• Burdensome from administrative perspective• Requires two employment agreements• Carefully drafted to allocate time and duties to each relationship

Dual Employment

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• Clean break• UK law will apply to Bonnie’s employment• But Bonnie’s US employment is terminated• Two documents required:

• agreement (release?) terminating US employment

• employment contract for UK

Transfer of Employment

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• Bonnie’s employment terminated with the US company.• Bonnie’s employment transferred to GEC.• GEC becomes Bonnie’s employer and seconds her to UK

company.• GEC useful for global companies with large expat community.• GEC allows greater flexibility on terms and conditions,

compensation.• Limits the number of jurisdictions to consider (i.e., only GEC

country and host country).

Global Employment Company

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Questions?

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Thank you!

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Www.morganlewis.com Global Employer: Managing International Assignments Matthew Howse & Nicholas Thomas.

Documents

form of assignment4

host companymay

matt howsenick thomas

benefit of home companyreturn

end of assignment dismissal

local lawslegal structures

end of secondment

home companyno obligation