In a previous blog entry we looked into some of the concerns that are frequently generated in global human resources and employment relations environments, specifically when foreign companies and employees disembark in Spain.

We will now focus on the opposite phenomenon, that is, the dynamic of assigning workers abroad, a situation which, rather than a fad in human resources management, is a daily phenomenon at most Spanish companies that are seeking to expand or grow their business outside Spain.

Let’s start at the beginning: assigning employees aboard should be understood as a “return journey” and it is advisable to make plans for the return before the employee leaves. To hazard a guess, probably around 80% of the disputes that arise between employees assigned abroad and companies, are due to not having planned in advance many essential legal aspects of the posting.

Indeed, there are a series of questions that companies and employees should address before starting the assignment, in order to be able to plan in advance the formalities that may help the experience abroad to prove a success:

  1. What is going to happen with the contract in Spain? The contract can remain in force, can be held in abeyance or even terminated, according to the posting involved. This is not a question that should be taken lightly (in the vast majority of companies there are global policies in place for assigning workers abroad that regulate this aspect) and that, in any case, should be documented between the company and the employee, and it is advisable that, if there is visibility in this regard, an agreement be reached regarding what will occur at the end of the posting.
  2. What benefits is the worker entitled to? To provide an incentive for the assignment where this is necessary for the company, a package of the benefits that are of most interest to the employee should be crafted. Among the most frequent are the assumption of housing costs, life and health insurance, company car, relocation expenses, periodic flights to visit Spain and education benefits for children or the spouse/partner.
  3. How will the remuneration be paid? Salaries may continue to be paid by the Spanish company even when the employee provides his/her services for one of the subsidiaries abroad. However, some benefits or even the salary may be paid by the destination company, a circumstance that should be analyzed and regulated, especially in view of its tax implications and in case it generates an obligation under the legislation of the destination country.
  4. In the same vein, how long is the posting and what are the tax implications? It should be borne in mind that the expat may benefit from exemptions for work performed abroad, and this may be an attractive “incentive” as part of the assignment conditions.
  5. Is there a bilateral social security agreement between Spain and the country of destination? Will contributions continue to be paid in Spain? The fact that there is no bilateral agreement with the country of destination may make it difficult for the worker to collect social security benefits in the future (and is one of the most common dissuasive factors of assignments abroad). Consequently, it is advisable to analyze whether or not the employee can continue to pay contributions to the Spanish social security system (and for how long) in order to request the relevant authorization before the employee starts his/her posting.
  6. Should any formalities be met for the employee to provide his/her services in the country of destination? Apart from migratory requirements (in non-EU countries), it should be borne in mind that even in those cases in which the employment contract remains in force and contributions continue to be paid in Spain, some countries require the employee to have a local contract and therefore to comply with tax and social security obligations in that country (which may come in direct conflict with Spanish legislation).
  7. Who should be notified of the posting? The majority of countries require the assignment abroad to be notified to the local authorities (there is a similar obligation in Spain in relation to employees posted to Spain and its breach is classified as an infringement punishable by the labor inspection authorities).
  8. In what cases can the posting end? These are tumultuous times and in many cases (some non-work related such as conflicts that affect safety, personal changes or simply changes in the personal situation of the employee) may make it necessary to bring forward the end of a posting abroad. Situations such as for example, the final implementation of Brexit, may make it necessary to end the posting of a worker to the United Kingdom in a manner that does not harm either party.
  9. What are the consequences of the end of the posting? Are they the same according to whether it is the employee or the company that terminates the assignment? And what if it ends before the expiry of the initially agreed time period? Should the benefits of the assignment abroad be included to calculate possible severance? What about the benefits related to the assignment if the worker resigns? All these situations can be regulated in advance, either in a specific document made for the employee or in a general company policy in order to avoid a debate (many times in court) arising in each situation.

All of these aspects should be analyzed in advance if legal conflict is to be avoided, bearing in mind that the posting abroad is a return trip and therefore encompasses not just the start, but perhaps even more importantly, the end.

Felipe Ochoa

Garrigues Labor and Employment Law Department