An employee in Europe has many advantages in terms of social protection.
They are covered by health insurance, provident funds and a basic pension scheme. Also 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. This raises the question of 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 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 regards social protection, seconded employees continue to benefit from the original social security scheme and the single old-age insurance scheme.
The maximum posting period varies according to the country in which the posted 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 from 6 months to 5 years. Beyond the periods specified above (maximum duration of secondment + extension), the employee will lose his 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. It is for 3 years, renewable once, for a maximum of 6 years. After 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 original employment contract.
Two options for the nature of the contract:
– An employment contract from the country of origin if the employee is recruited to work abroad or is sent there for an indefinite period.
– A local contract signed 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, on return to the country of origin.
Social protection for expatriate employees?
The expatriate employee is affiliated to the social security system of the country of expatriation. Depending on the local regulations in the country of expatriation, expatriates must take out additional health insurance. This insurance provides sufficient or even similar coverage to that enjoyed by the employee prior to expatriation.
Frontier worker status
A frontier worker is a person who works abroad, whether as a salaried employee or not, in a country to which he or she goes 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. He must therefore pay his social security contributions there. However, he or she is 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 expatriate status do not have the same social and tax impact. You need to take the time to consider which solution is best for both the company and the employee.
Expatriate companies that use private contracts to accompany their employees abroad often offer better coverage at a lower cost to the company. Expatriation also means 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 expensive for the company. Secondments are mainly for people with specific skills essential to the company’s development.
Mondassur offers insurance solutions for all types of status. Whether you’re seconded or expatriated, we offer international insurance cover for your employees, whatever the situation. Contact us for personalized advice on social protection for your employees abroad.
