When you impatriate employees to France, the French employer must have a say in the writing of the employees addendum to his work contract. Indeed, the French employer must assure himself that the addendum respects French labor laws, that optimizations for tax and social security purposes have been taken into account and that the clauses of the work contract and its addendum will be respected while on assignment in France.
The work contract or addendum to the work contract will be different whether the employee is expatriated, seconded, on a split contract or recruited locally in France.
The goal of this section is to provide you with the necessary reflex to chose the type of addendum or “avenant”, the specificities of this addendum which we believe need to be clearly addressed (and which are common to all contracts addendums), as well as any particularities or mistakes to avoid when writing this addendum to the work contract.
It is most often recommended to maintain a work contract with the home firm to which you add an addendum or “ avenant ” . The important point is to always respect the labor laws of the host country while respecting the home country labor laws, the firm ' s home specific rules “ accords d'entreprise ” and the rules of the company's mobility policy.
However, we will differentiate five different types of addendum to the work contract :
The original contract signed with the home employer remains applicable during the secondment. The main amendment of a secondment contract is the section concerning “social security protection”. Indeed, the employee seconded remains subject to the French mandatory social security scheme. Therefore, this amendment must be clearly identified and must correspond to the definitions provided by the totalization agreements signed with other countries or with the European agreements signed on social security matters (if the secondment is within Europe).
Employees seconded in France on a permanent assignment « mission permanente en France » for immigration purposes must file a CERFA document (ie this is actually done by the employer in the name of the employee). This document will be considered, in France , as a work contract. It will mention the gross compensation of the employee, as well as the net amount to be paid in France.
In case of a secondment, the employee remains subject to the decisions taken by his home employer and must follow the French employer's management decisions. For this reason, an amendment must be added to confirm that the employee maintains his obligations toward his home employer.
The home contract can remain applicable but you can also decide to suspend it during the expatriation‘s period in France. This depends mainly on your firm ' s policy but it is recommended to suspend it. During an expatriation, it is often necessary to sign a local contract with the French employer, in addition to the addendum or “ avenant ” signed in in the home location.
The local contract is not always requested (i.e. United States , UK , etc) by the labor legislation of the countries where you expatriate employees. However, a local contract is often a prerequisite prior to obtaining a work permit (i.e. Australia , Saudi Arabia , Morocco , etc).
In France, a « French » work contract (or a CERFA document) is often required. Indeed, for employees coming from certain countries, a « French » work contract is a prerequisite for obtaining a work permit.
The split contract by definition consists in signing two local contracts with the employee, one with the home employer and one with the host employer. This type of contract can only be in place if the employee works in two countries that are often close to one another in space and with international agreements (i.e. the two countries have an agreement in regard to social security protection). One of the contract is the main contract, which will respect all the local labor and social security laws in the first location but will remain a “ partial ” work contract (i.e. meaning that the employee does not work constantly for that employer), the other “ partial ” work contract being for the work realized in the other location. The second contract will also respect labor laws applicable in the second location.
This is a contract signed between the home location, the host location and the employee, in order to identify all the rules applicable during the period of the expatriation.
This contract is a contract signed with the host location that respects the labor laws applicable in the host location. This type of contract is often similar to local regular contracts signed. However, the conditions of termination at the end of the expatriation have to be clearly identified. Indeed, the idea is to avoid having to pay termination payments in the host location at the end of the assignments particularly if it is because of an internal transfer or a return to the home location and its employer.
You will find below a list of the amendments that we believe to be key when preparing an addendum to the work contract.
Goal of the addendum : It must be clearly written in the addendum whether the work contract remains applicable or whether it is suspended during the period of the assignment abroad. It must also mention which laws and rules will apply during the expatriation.
Place of work, job title and reporting requirements : Identify in the addendum the name of the host firm, its address, the city and the country location. Define the goal of the assignment, the job title, and the reporting requirements with the host and home employer.
Default clause : This clause is necessary in case the employee is unable to obtain the work permit or unwilling to go ahead with the medical visit.
Length of the assignment : Identify the date of departure and the planned date of return. Confirm whether the date of return is at a fixed date or whether the assignment can be extended. We recommend that from the beginning, it be written that the assignment may be extended, allowing more flexibility.
Reference to the home compensation : Identify the compensation of reference to be used to calculate home social security contributions, expatriation premiums and that will be the employee ' s compensation upon his return home, unless a salary increase is granted during the assignment.
Compensation during the assignment : Identify the actual compensation that the expatriate will receive during the assignment (base salary, expatriation premium, cost of living adjustment, etc), as well as the rules applicable when calculating the adjustments (annual or semi-annual adjustments for example) of each element of the compensation.
Benefits-in-kind : List all benefits-in-kinds that the expatriate will benefit from (housing, utilities, car, annual home leave, etc) and determine how those will be given to the expatriate (through an allowance, reimbursement, etc).
We recommend that you access our articles in the blog section when writing this clause of the addendum. Indeed, you will find lots of information concerning ways to optimize from a French perspective benefits-in-kind for income tax and social security purposes.
Social security protection : This clause to the addendum is probably one of the most important. It has to be clearly listed whether the employee will be seconded or expatriated, then detail the type of protection the expatriate will benefit from (private insurance, CFE, CRE / IRCAFEX, foreign social security coverage).
Vacation entitlement : You can decide that the expatriate will benefit from at least the same number of vacation days local employees in the home location get. However, the host location can guarantee different vacation days. The rules applicable in the host location will apply first. The legislation that applies in regard of the numbers of hours to work per week is a local decision. Therefore, anything that differs from the host location in favor of the employee will be considered as a benefit. National holidays applicable are those in the host location
Work time : The legislation on working time is of local public order, therefore French legislation on working time is the one applicable. Public holidays are also those stipulated by the French legislation.
End of assignment : You must clearly determine the termination conditions applicable under different scenarios (ie regular end of the assignment, assignment ' s extension, termination or the conditions of an early end of assignment).
We also recommend that the following details be included in the addendum :
- the procedure to bring the expatriate back in the home location's staff ;
- the budget provided by the employer for the purpose of moving back ;
- the administrative assistance (housing, enrollment of the children in a school).
Applicable law : In general, the laws applicable during an employee's assignment are determined by the different people signing the work contract‘s addendum.
By default, the law applicable in the home location, where the original work contract was signed, applies. However, it is still recommended to clearly mention the law applicable in the addendum, as well as the industries ' common rules or “ convention collective ” that apply during an assignment abroad (if they exist).
Competent court system : In case there are discussions on how the addendum to the work contract needs to be applied and in case of a termination of the work contract, it is important to know which court system is competent.
In general, if it is the host firm that calls upon the law, it will contact the host court system, if it is the home firm that calls upon the law, it will contact the home court system. If it is the employee that calls upon the law, he will be able to choose between the host or home location court system or the location where the addendum was signed. Therefore, it can be mentioned in a clause that only the court system of the home location employer is applicable in case of any issue arise while executing the conditions applicable in the addendum to the work contract.
When the host location rules force you to have a “ local ” contract signed, careful to the conditions in case of a termination of this contract. Indeed, certain countries ' legal rules force the employer to pay termination payments or departure payments even if the employee remains an employee of the employer in the home location. In those countries, it is important to look at the work contracts available and the possibilities they allow. The decision often taken is to sign a “ local ” contract with a duration equal to that of the expatriation addendum. However, it is important to study carefully this question in each country.
Before terminating an employee on expatriation, it is recommended that the employee be brought back to the home location in order to end all legal and work connections with the host location. This will allow to reduce the risk of having two types of rules apply in two different legal systems concerning termination.
This is one of the great paradox of labor law, it recognizes the right for an employee to be brought back in the home location staff because it recognizes the concept of an “ international group ” and the concept of “ mobility intra-group ” . However, when the employee is terminated, all these concepts no longer exist and the employee can benefit from the rules applicable in two different legal systems. Therefore, the employee can cumulate the termination payments available in both countries. The termination cost gets extremely expensive.
As a conclusion, do not overlook any clause of the addendum to the work contract and do not forget that as the employer you have a theoretical obligation to inform which obliges you to provide information about the host location (ie the word “ theoretical ” is used because this obligation only exist in written in a few industries common rules or “ convention collectives ” ).