Working Life > Labour Market > Working Overseas > Foreign Assignment

Foreign Assignment – Chance or Risk?

Definition, Explanation

In times of globalization and international collaboration, many companies send executives or specialists to work abroad. This can be for a short time, or for a longer period, with a secondment agreement. In the latter case, the employee is going to live abroad for a longer time, though without becoming a citizen of the new country, keeping the old one. The employees are called expatriates, or expats.

A longer stay abroad can be a chance, but also a risk:

• chance in career, since you gain experience in international business. That includes an understanding of other cultural differences, other business habits, other tactics in negotiation
• learning new languages
• intercultural competence which can be useful later back home in work with foreigners
• challenge for the whole family, whether you commute between home and foreign country or you move with your family

The only legal regulation on abroad secondment is § 2 Absatz 2 Nachweisgesetz (law of proof of substantial conditions applicable to the employment relationship). It requires an abroad employment contract if the abroad employment is for linger than 1 month. The contract should define:

• duration of abroad work
• remuneration payment details, e.g. currency
• additional remuneration, e.g. additional money for special expenses as occasional home flights, moving expenses, rent
• conditions for the employee’s return

Reasons for an abroad assignment:

• Companies want to improve communication and working of the employees in abroad affiliated and associated companies and in the central home facilities
• Companies have their interests embodied abroad by local manager and executive agents
• Transfer of professional and executive knowledge
• Examination and education of future executive personnel
• Desire of an employee to improve chances of advancement, to look for new challenges, to take more responsibility or to promote own personal development

Kinds of abroad secondment:

• Business journey with up to 3 months abroad
• It does not influence the employment contract or tax conditions. A business journey is done predominantly for the work on projects or for purposes of representation
• Delegation abroad with a duration of usually 3 up to 12 months
• In addition to the existing employment contract, there are agreed regulations on mainly remuneration (additional payments for stay abroad, respectively location of remuneration source). Special tax conditions apply for any stay longer than 183 days (more than half a year)
• Delegation with a stay abroad of up to 3 years
• Here, the life of the person delegated shifts abroad for a longer time. The employment contract must be negotiated anew, there are tax consequences to be considered, and the family might want to move as a whole. A delegation, basically, goes with the assumption that the employee will return to the home country and re-integrate in the home company. The latter is also contracted in the employment contract. The purpose of the delegation, from the perspective of the company, is to make a link between inland and abroad by sending the employee helping to intermingle the different cultures and working styles
• Transfer
• Here, the employee completely changes to the abroad part of the company. It is a transfer over country boarders, not a dismissal

Tips, Checklist

• Before you start working abroad, travel to the country with your partner, for at least one week
• Involve your partner and your family in the preparation phase
• Read up on the conventions, the culture, the working conditions, the social environment of the new country and learn the language
• Make a contract on the abroad secondment with your employer that also defines what happens after your stay abroad
• Sort out with your company in how far they support you in looking for housing, with organizational necessities, language courses, a job for your partner, schools for your children
• Make contacts in the new place, not only with other expatriates, but also with local people
• Have some intercultural training already before you actually go there, by learning about the history, the traditions, political situation, peculiarities and the conventions of conduct
• Show your interest in the host country
• Do not sign a secondment agreement blind. Be counselled about tax and social insurance
• Be sure to maintain your contacts in your home country very well, and do some self-marketing by putting your projects on the intranet or in the employees/company magazine. It will ease your re-integration or comeback

For employers:

• If the duration of the employee working in the foreign country is longer than 1 month, then it is a transfer that is obligatory subject to codetermination, i.e. the works council must be involved

Literatures

• Family Issues in the Process of Expatriation and Repatriation by Iris Steidl
• International Assignments: Expatriate Adjustment and On-site Support by Cornelia Funk
• Expatriation - the SME Challenge: Alternatives to Long-term Assignments Abroad by Peter Dirski

Last update: 06/01/2010