Sending employees overseas – the risks

The recent case of Michelle Palmer, a British expatriate working in Dubai who was caught cavorting on a beach with a fellow Briton and is now facing a possible prison sentence of six years, raised a few eyebrows. It also highlighted the importance of abiding by local laws and customs when working overseas, especially in a country where drinking alcohol and kissing in public are officially illegal. The publishing manager from Peterborough and her co-accused, businessman Vince Acors failed to appreciate the cultural and religious differences between living and working in a Muslim country and the UK.

And while the Palmer/Acors case may seem somewhat extreme, it does raise a few questions for employers: for example what sort of responsibility do they have towards expats posted to work in different countries? Do they have any obligation to staff to spell out what is and isn’t acceptable behaviour in the host country?

Damaging reputations

Gagandeep Prasad, employment lawyer at Charles Russell law firm, points out that untoward behaviour by an employee can be highly damaging for a company’s reputation.

“In the Palmer case, the employee got into trouble outside working hours and the query is whether this misconduct needs to be dealt with by the employer. Preparing an employee for cultural differences both inside and outside the workplace is a key consideration and part of the duty of trust and confidence between an employer and employee,” she says.

“If a case ends up becoming high profile and receiving press coverage which makes reference to the employer, it could bring the company into disrepute and prove very damaging for business.”

In addition to being fully aware of the employment legislation in their local area, organisations must take the country’s customs and religious observances into account.

“Matters such as the fact that in Dubai, there is zero tolerance for drugs and pornography, that homosexuality is banned as well as sex outside marriage and that public decency laws forbid everything from kissing in public to cross-dressing, should be emphasised to an employee as part of helping them adjust,” Prasad advises.

Employees must be fully briefed on dos and don’ts and cultural nuances before being posted abroad as a matter of best practice.

But this is something that employers often overlook, according to Ben Wilkins, a director of the international mobility team at PricewaterhouseCoopers (PwC) consultancy.

“Cultural awareness and integration is something that employers can underestimate but for the employee it’s really important. Employers can be very good at sorting out the overall package but tend to overlook the other aspects,” he says.

“You’ve got to get it right upfront. Every country has different rules and employers can usually use an external adviser to limit the risks involved.”

Being fully aware of immigration policies and the legislative environment within a particular country is vital.

“Immigration regulations are constantly changing so you’ve got to stay on top of them. We have some horror stories of clients trying to get through the borders of Russia and being put in prison because they haven’t cleared their work status with immigration,” Wilkins says.

James Warren, partner, employment practice at Field Fisher Waterhouse law firm, says employers also need to consider that an employee could use the local legislation to their advantage.

“If you post someone overseas for a year or more then some aspects of local employment legislation which could be more favourable to the employee might come into force,” he says.

“The employee would be able to bring a claim under UK legislation in an employment tribunal but there is still a question about which country’s employment rights would apply. There may, for example, be a mandatory requirement to a pension in the host country or the issue of tax-free pay to consider.”

The correct particulars

Even if an employee is working on a relatively short-term project overseas, most UK legislation, such as the Working Time Directive (WTD), which sets out basic working hours, will still apply. But there is also a raft of other legal considerations to take into account.

Prasad explains: “Staff who are sent from the UK overseas for a month or more must be provided with what we call Section 1 Particulars. These tell them how long they are expected to work outside the UK, what currency they will be paid in, and whether they receive any additional remuneration and benefits while overseas.”

The differences between working in an EU country (as opposed to a non-EU country) can also be significant. Employers with a business in the EU will have to abide by the Posted Workers’ Directive which requires companies to offer minimum terms and conditions (set out by the host country) including minimum paid annual holidays and rates of pay. Maternity rights, health and safety laws and equal opportunities legislation will also play a part.

Also, practical considerations, such as relocation expenses, accommodation allowance, medical insurance, legal assistance, guidance with schools and school fees, all need to be factored in.

“Often, terms of returning to the UK during the assignment are also agreed including travel for the employee and the family back, for example, once a year,” Prasad says.

Clarifying the timescale and length of the assignment is also important. “One of the major issues for both the employer and employee is what happens when an assignment comes to an end,” Warren says.

“You need to agree in advance with the employee how things will work. Will you place them back in a similar role in the UK or make them redundant? This needs to be confirmed before you post them overseas.”

Wilkins from PwC points out that training can be an important issue for both the employee and their manager and that employers will often want to see a return on their investment, as the cost of posting an employee abroad can be significant.

Employers must make sure staff have a fully trained line manager to take responsibility for performance appraisals, pay reviews and any disciplinary action. 

It’s the job of the HR department to discuss all these aspects with the employee and let them know what is required of them , according to Warren. “HR should try and establish a general structure of considerations on existing laws, what the jurisdictions are in that country and how they will affect them as an employer,” he says.

“They then need to have a meeting with the employee and outline what is expected of them.”

Making sure an employee is fully prepared and briefed before they go is absolutely vital.

“Problems are much less likely if the employee is given guidance on what is and is not acceptable abroad,” Prasad notes. 

“The risks work both ways in terms of the employee alleging discrimination against the employer or the employee being accused of misconduct.”

And as the Palmer/Acors case demonstrates, the consequences of getting it wrong can be enormous.

Case study

Freshfields Bruckhaus Deringer is one of the world’s leading international law firms, with more than 2,500 lawyers working across 28 offices in 16 countries.

The firm typically offers two different types of overseas work: an international placement for lawyers who have expressed an interest in working abroad or a secondment when a partner in a host country has requested a lawyer with legal expertise in a certain area.

Global HR director Kevin Hogarth says it tries to ensure that all employees are fully briefed on the cultural aspects of the host country beforehand, either by an employee who has been seconded there previously or by a peer in the host country.

The firm also takes the employee’s training objectives and career development into account.

Hogarth says: “We’ll discuss the employee’s goals and make sure that the host country is aware of these. We also appoint a buddy to help guide them and also carry out regular catch ups with them.”

Any new skills the employee may have acquired working in a host country are taken into consideration when they are reintegrated back into the UK.

Hogarth says it’s important to have a clear policy for every employee working overseas, irrespective of the circumstances.

“Although it is usually the case that they remain on their home country contract, decisions need to be made about whether the individual will remain an employee of the UK or become an employee of the host country. Different jurisdictions will apply depending on the country.”

Factoring in the financial implications, such as tax and social security, from the outset is also vital.

Hogarth explains: “We have to make sure that the employee will be no worse off financially – such as being subjected to dual taxation.”

To do list

  • Prepare employees for cultural differences inside and outside the workplace

  • Advise – where relevant – on major religious issues

  • Advise on local employment laws

  • Set out local immigration laws

  • Set out detailed particulars about an overseas assignment

  • Explain how performance appraisal will be conducted

  • Advise on what happens when assignment ends

  • Give details of what an employee should do in an emergency.

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