An employee in Europe enjoys many advantages in terms of social protection.
He or she benefits from health insurance, provident schemes and a basic pension. They also receive family benefits (not available in all European countries) and unemployment insurance (which varies widely from country to country). Is this always the case if the employee goes to work abroad?
When a company expands, international mobility is often envisaged for certain employees. The question then arises as to their future status: seconded employee or expatriate employee? The origin of the company and the duration of international mobility are the main criteria used to differentiate between these two statuses.
Seconded employee status
Considered a seconded employee when :
- Works for a company that has its head office or at least one branch in the country of origin
- Hired in country of origin
- Temporarily work abroad for a set period of time
- Remains subordinate to his original employer
- Continues to receive remuneration from the latter
As far as social protection is concerned, the seconded employee continues to benefit from the original social security scheme and the single old-age insurance scheme.
The maximum duration of secondment varies according to the country in which the seconded worker is based. Taking France as an example, here are the maximum periods of secondment:
- EU/EEA/Switzerland: the legal duration of secondment is 2 years (an extension of the secondment is possible under an exceptional individual agreement).
- Countries that have signed a bilateral social security agreement with France: the maximum period of secondment varies according to the provisions of the agreement. It can last between 6 months and 5 years. Beyond the above durations (maximum duration of secondment + extension), the employee will lose his/her secondment status.
- Countries outside the EU/EEA/Switzerland that have not signed a social security agreement: the duration of the secondment is that stipulated by French legislation. This is 3 years, renewable once, for a maximum of 6 years. Beyond this 6-year period, the employee will be considered an expatriate.
The status of expatriate employee
An employee has expatriate status:
- If hired directly abroad
- If the employer has not chosen the secondment system
- Because he has exceeded the maximum period of secondment
By opting for expatriate status, both the company and the employee agree to suspend or even terminate the initial employment contract.
Two options regarding the nature of the contract:
– A contract of employment in the home country, if the employee is recruited to work abroad, or if he or she is sent abroad for an indefinite period.
– A local contract concluded with the company in the host country, after suspension of the initial contract, if the employee is sent abroad for an indefinite period. The suspended employment contract is reactivated at the end of the assignment, when the employee returns to his or her country of origin.
What social security protection is available to expatriate employees?
The expatriate is affiliated to the social security system of the country of expatriation. Depending on the local system in the country of expatriation, the expatriate must take out supplementary health insurance. This insurance provides sufficient or even similar coverage to that enjoyed by the employee prior to expatriation.
The status of frontier worker
A frontier worker is a person employed or self-employed abroad, in a country to which he or she commutes daily or at least once a week. To qualify for frontier worker status, the worker’s place of residence must be in a frontier zone, generally less than 30 kilometers from the border.
Frontier workers are affiliated to the social security system of the country of employment. They must therefore pay their social security contributions there. However, they are entitled to health care on both sides of the border (country of residence and country of employment).
What is the best status for an employee abroad?
Secondment and expatriation have different social and tax implications. You need to take the time to consider which solution is best for both the company and the employee.
Expatriation, where private contracts are used to accompany the employee abroad, often offers better coverage at a lower cost to the company. Expatriation also allows for greater flexibility and direct contractual negotiation with the employee. However, it is essential to prepare for this change in advance, and to study local social protection conditions in detail.
Secondment status is often attractive for employees going abroad for short periods (less than 2 years). Secondment is much more costly for the company. Secondment mainly concerns people with specific skills essential to the company’s development.
Mondassur offers insurance solutions for all statuses. Whether you’re a seconded employee or an expatriate, we offer international insurance for your staff, whatever the situation. Contact us for personalized advice on social protection for your employees abroad.
