anna birtwistle, cm murray llp 17 may 2011 cm murray llp: specialists in employment, partnership and...

Anna Birtwistle, CM Murray LLP17 May 2011

CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Key issues for Expatriate Assignments and

UK employment rights

• City of London is the world’s leading international banking sector

• Currently 1,117 firms in the financial sector are majority foreign owned


Country No. of Foreign owned financial services companies in the UK

USA 548

Switzerland 67

Germany 57

France 53

Japan 42* Source IMAS

*

Overview

1. Red flags in managing international employment arrangements

2. Which country’s laws apply?

3. Choosing the most suitable type of contract

4. Top 10 key provisions for expatriate assignments


Red Flags in managing international employment arrangements

• The contracts rarely tie up

• No one has thought about the end of the secondment

• Not following procedures or allowing enough time

• Overseas line managers


Red Flags in managing international employment arrangements

• Cultural sensitivities– Religion– Business etiquette

• Language

• Pre-departure training

CM Murray LLP: Specialists in Employment and Partnership LawCM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Which country’s laws apply

Some Key Concepts:

• Governing Law: the law to interpret the employment contract (choice of parties)

• Mandatory Laws: compulsory employment laws (these generally cannot be chosen)

• Jurisdiction: The question of whether or not the Court Tribunal can hear the claim


Governing Law (Applicable Law)

Rome I Regulation

• Article 3: Freedom of choice but no derogation from mandatory laws

• Article 8 governs individual employment contracts:

– Parties free to choose the law governing the contract BUT such choice may not result in depriving the employee of the protection of mandatory laws

– Where parties have not chosen the governing law, the contract will be governed by the law of the Country in which, or, failing that, from which the employee habitually carries out work.

• Article 21: The governing law may not be applied if it is manifestly incompatible with the law of the forum.

• Contractual Obligations:Rome convention-pre17 December 2009 Rome I Regulation-post 17 December 2009

Chunilal v Merrill Lynch [2010] EWHC 2720 Duarte v the Black and Decker Corporation [2007] EWHC 2720

• Non-Contractual obligations: Rome II Regulation


What are mandatory laws?

• Laws that cannot be derogated from e.g. in the UK: rights on termination, notice on dismissal, working time, discrimination protections and right to the minimum wage

• How to determine which country’s mandatory laws will apply:

– Where employee habitually carries out work; or

– Country in which business through which employee was engaged is situated; or

– Some other country if it is more “closely connected” with that country.

• Posted Workers Directive


Contracts of employment:

• Employer can only sue in employee’s country of domicile

• Employee has choice of suing:– In employer’s EU

domicile/deemed domicile– EU place where employee

habitually carries out work; or

– If no such place, the EU place of hire

Samengo – Turner V Marsh & McLennon (services)Limited [2007] EWCA Civ 723

• Brussels I Regulation:– Defendant domiciled in EU– Civil or commercial matter

• UK: Civil Jurisdiction and Judgments Order 2001

• Pre dispute “exclusive jurisdiction” clauses will not work!


Jurisdiction: Where can claims be brought?

Extra territorial reach of UK statutes

• Domestic employment law– ERA 1996– Lawson v Serco

• European derived law– The “Bleuse” Principle:

Construe territorial scope to give effect to directly effective EU rights

• Discrimination– Pre EQA

Test set out by statute

However note application of Bleuse principle in MoD v Wallis and Grocott [2011] EWCA Civ 231

– Post EQALawson v Serco, pre EQA test or apply Bleuse principle?

Lawson v Serco

3 broad categories

1. Standard cases – employee working within Great Britain

2. Peripatetic employees e.g. pilots; and in exceptional circumstances,

3. Expatriate employees in following categories:- British enclave- Posted abroad for purposes of a British business- “Equally strong” connections with Great Britain/British employment law

(Serco Ltd v Lawson, Botham v Ministryof Defence and Crofts v Veta [2006]UKHL 3)


• Ultimately tax, social

security or immigration led

• Length of assignment

• Division of responsibilities between host and home country company

• Intercompany agreement on secondment?

Options:• Secondment• Dual/multiple contracts• Local employment contract• International standardized

contract tailored to local laws


Choosing the most suitable type of contract

Secondment

Home Company

Host Country Company

Employee

Intra Company agreement

Top 10 key provisions for expatriate assignments

• ImmigrationAssignment and continued employment to be conditional upon obtaining and retaining appropriate immigration documentation

• Pay and BenefitsDo pay and benefits need to be suspended in employee’s “home” contract?In what currency/ies should employee be paid?

• Preserving pension issuesIs a provision required in the expatriate agreement to preserve pension rights?Will the employer continue to make payments into the employee’s pension fund during the assignment?

• TaxDoes tax equalisation or protection need to be considered (e.g. if the employee will be subject to a higher tax regime in the host country)? Are there any taxation issues that might arise at the end of the assignment?

• Relocation costsShould a cap be included in the agreement as to the cost of shipping/storing of belongings?


Top 10 key provisions for expatriate assignments

• AllowancesShould relocation, cost of living, disturbance (out of pocket) and/or hardship allowances be provided?

• AccommodationConsideration to be given to level of contribution towards rent.Is the company willing to pay for the services of a rental agency/make a contribution to temporary accommodation costs prior to the employee finding permanent accommodation?

• School feesSpecify the level of any contribution to schooling fees of the employee’s children.

• Length of secondment and period of noticeInclude a clause clearly defining the anticipated length of assignment but allowing termination on earlier notice.Will the company consider allowing the employee to be localised at the end of the assignment?Consideration to be given to the level of and circumstances in which repatriation costs will and will not be paid.

• Company handbookEnsure that the contract identifies the rules by which the individual will be governed when working abroad and make sure that any global handbooks which are stated to apply to the expatriate are consistent with local laws.


Speaker Details

Anna BirtwistleCM Murray LLP

37th FloorOne Canada Square

Canary WharfLondon E14 5AAUnited Kingdom

If you have any questions, please do not hesitate to contact:

Phone: 00 44 (0)207 718 0090 Email: [email protected]

Website: www.cm-murray.com


anna birtwistle, cm murray llp 17 may 2011 cm murray llp: specialists in employment, partnership and...

Documents

partnership law slide

partnership law countryno

compulsory employment

partnership law key

uk employment rights

mandatory laws article

countrys laws

protection of mandatory