Expatriate compensation packages can vary enormously from company to company and location to location. When negotiating an expat contract that is right for your needs and those of your family, it is important that you carefully consider several factors:
One of the first major considerations of any expatriate compensation package should concern the nature of the relationship between the employee and the employer and should address what the employment relationship will constitute. There are several different types of expatriate contract and these will determine what the employment obligations will be-
When preparing to negotiate your contract you should not make any assumptions about the types of contract that you will be expected to agree to, as it is not always as simple as it seems. If for example, you are a UK citizen working for an American advertising agency in the UK and are requested to move to New York you may be expected to sign a “local” contract, even though your move is international. In this case, even though you are a UK citizen who has been requested to move abroad, you could be expected to live like a US resident and pay all US taxes, without any other traditional expatriate advantages. Understanding the type of relationship a company has in mind for your overseas contract is therefore crucial and should be done as early as possible, this will allow you to identify the consequences and highlight their requirement when negotiating your expatriate compensation package.
There are a number of different types of expat contract, those with specified end dates or durations, and those that are ongoing. In the US there is also a contract type that is referred to as “employment at will”.
It is of utmost importance when you enter into a contract negotiation that you have a firm understanding of the duration of your assignment and the type of contract you are signing, as this will impact the terms and conditions of your relationship. Failure to fully consider the implications of your contract type could have serious repercussions. Some of the things that you should consider are as follows-
The type of contract that you are expected to agree will be determined by your seniority and local law. In China or Japan, for example, there is no “employment at will” system.
It is important that you identify and understand the law and jurisdiction that may apply to your expat contract and expatriate compensation package. This will usually be the local law in the country you will be employed in, the law of the home country from which you relocated or the law of the country in which your employer is incorporated. There is simply no such thing as a standard expatriate contract that can be implemented in any country. The clauses and inclusions need to be modified according to the law of the foreign jurisdiction and tailored in such a way that ensures that any conflict between the law of the host country and the law of the country of the corporation or hiring entity do not conflict.
Any international contract will need to take into account several factors-
Many companies will include a clause in their contract that specifies that all local laws be waived in favor of the law of the employing country. However, despite this, it is worth noting that in many countries, especially those within the EU, this is unenforceable. In addition to this, although the law varies from country to country, it is generally accepted that, in the absence of a clear choice of law in the contract, the employment agreement will be carried out in the country within which the employee will carry out their work.
It is clear that even where a contract is robust and watertight in one country, variations in global law can entail that it becomes void and difficult to enforce. In order to adequately negotiate a contract you, or your legal representation, should have a good knowledge of the host country’s statutory law provisions. It is always worth noting that, on the whole, any terms and conditions you negotiate will only be valid if they do not conflict with the local law of the host. One useful resource for identifying local jurisdiction and how it may impact your expat compensation packages is the International Expatriate Employment Handbook by Andrius Kantrimas and Mary Samsa.
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