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Delivering A Successful International Assignment

Anne morris.

• 9 October 2019

IN THIS SECTION

• 8 minute read
• Last updated: 9th October 2019

Organisations deploy personnel on international assignment for many reasons. Whether you are addressing an internal skills gaps, supporting leadership development or looking to improve working relations across borders, for any international assignment to be successful, there will be a multitude of legal, immigration, tax and pensions risks to manage when sending employees overseas.

This article covers:

International assignment objectives, international assignment structures, employment law.

• Immigration options 

Assignee remuneration

Professional support for international assignments.

Global mobility programmes have traditionally been developed with a uniform approach, driven largely by cost management and operational efficiencies. However, organisations are increasingly taking a more flexible and bespoke approach to overseas assignments in order to attain advantage in areas such as compliance and talent development and retention.

While a one-size-fits-all approach to the fundamentals of mobility management may be a commercial reality, overlaying this should be areas of specific consideration and capability that can be adapted to the specific needs and risks of each international assignment. This allows for greater focus on the assignment’s commercial objectives and the agility to respond to the organisation’s changing global mobility needs .

From the outset of any successful assignment project, there should be clarity of objectives. Why as an organisation is the decision being made to invest in sending an employee to perform services in a different country?

International assignments can offer value in many areas, many of which typically present in the longer-term.

Internal knowledge transfer is a common assignment objective to address talent or skills shortages within overseas regions. Deploying key talent with specialist knowledge and skills to train and upskill local team members can help to resolve local labour or skill supply issues. The cost/benefit analysis can explore potential missed opportunities or delays resulting from shortages in the local talent market.

International assignments are also highly effective in building relationships and improving intercultural working. This could be relationships within an organisation, with local clients and intermediaries or local authorities. Face to face interaction remains highly effective and valuable in building influence on the ground and can offer significant potential for advantage over competitors.

Beyond relationships, value is also created in the knowledge gained by assignees working overseas, from insight into local customs and culture, improved language capability and a general understanding of how business is ‘done’ within the region and helping to adapt organisational protocol to suit the local environment. Combined with the assignee’s existing market and organisational knowledge, they can offer a global perspective with local details, bringing considerable potential to build competitive differentiation.

With clarity of objective, you can then consider whether an international assignment is the most appropriate solution . Is it possible to hire or promote locally? Would multiple, shorter trips be as effective in performance terms but with lower cost implications? International assignments demand significant investment and it will be important to assess cost projections against expected return and value to the organisation.

As well as clarity of objectives, a successful international assignment also requires clarity of contractual terms, both to manage the expectations and understanding of the assignee, and also for the mobility team to identify support needs and potential risks. 

Now more than ever, organisations are developing portfolios of mobility programmes to enable an agile approach to global mobility that responds to the organisation’s changing needs for international personnel mobility. Assignments come in increasingly different shapes and sizes, from permanent relocations or temporary exchanges, secondments or transfers to a different region or to a different organisation.

While organisations demand greater flexibility and agility from their global mobility programmes, underpinning the activity should be an appropriate assignment structure with a supporting contractual agreement that enables compliance with regulatory and legal duties.

When considering which structure to adopt, organisations will need to consider a range of factors including the type of assignment and the relevant environmental context such as regulatory, immigration, employment law, tax, pension implications. 

For international assignments, where the employee is moving from the home country employer to a host country employer, the employer could consider a number of assignment structures, including:

• The employee continues to be employed solely by the home employer.
• The employment contract with the home employer is suspended for the duration of the assignment while the employee enters into a new employment contract with the host employer .
• The employment contract with the home employer is terminated with a promise of re-employment at the end of the assignment while the employee enters into a new employment contract with the host employer .
• The employment contract with the home employer is suspended and the employee enters into a contract with an international assignment company (IAC) within the employer group
• The employment contract with the home employer is suspended and the employee enters into a contract with both an IAC and the host country employer.
• The employee remains resident in the home country and works in a host country under a commuter assignment.  

Each type of assignment structure offers advantages and disadvantages which should be considered in light of the individual assignment. For example: 

• Do employment laws in the host country require the assignee to be employed by a local entity? 
• Would the assignee be agreeable to ending their home country contract and starting a new agreement with a new entity in the host country? 
• Are there terms in the home country contract that would need protecting in any new agreement, such as restrictive covenants? 
• Which jurisdiction would prevail, the host or home country? 
• How would local laws interpret a situation where there is no contract of employment with the employer in the host country? 
• Issues such as income and corporate tax, pension and employment rights and responsibilities will need to be identified and assessed against the specific assignment objectives and budget and the assignee profile and circumstances. 

Employment law implications come hand-in-hand with selecting an appropriate assignment structure.

Home-country employment contracts for employees on assignment from the UK to an overseas jurisdiction should generally be interpreted under the laws of England and Wales. If a host country contract is used, there should be specific provision in the agreement to determine which jurisdiction would prevail. However, neither position is guaranteed, for example where issues of domicile arise which may supersede any contractual provisions. Again the need is to assess on an individual assignment basis.

As well as explicit contractual considerations, employers should also be aware of any statutory rights or implied terms under UK law that may continue to apply even in the host country.

Specific provisions may also need to be made to ensure confidentiality and appropriate handling of commercial and sensitive information. While this may be standard or expected for senior employees, those on assignment should also be considered for such terms relevant to the type of assignment and the commercial objectives of the project.

Immigration options

Successful international assignments will invariably require careful consideration of the immigration requirements. Governments across the globe are adopting increasingly protectionist stances towards economic migrants, as policies seek to favour domestic workers. This means business travellers and visa holders are now facing greater scrutiny when applying for work visas and when trying to gain entry at the border. 

Visa options and criteria vary between countries and are subject to frequent change. Where permission is required for the assignee to work in the host country, it will be important to ensure the assignee applies for the most appropriate route to meet the assignment need, whether that is a work permit or a business visitor visa. The immigration requirements and options will be determined in most part by the rules of the home and host countries, the nationality of the assignee (and any of their dependants who will be joining them overseas) and the nature of the activities the assignee intends to perform during their time in the host country. 

For example, a British citizen may be eligible to travel to the US to attend sales meetings and work conferences for up to 90 days  without having to apply for a visa but to conduct ‘gainful employment’ they would need to look at a specific work visa, such as the L-1 visa for intracompany  transfers. 

A further factor will be the specific requirements of the visa or permit. Work visas, for example, may require sponsorship of the employee by a local entity with valid sponsor status. The application process for work visas are typically resource-intensive and in many cases will require the employer to provide compelling evidence as to why the role or work cannot be performed by a worker resident in the host country. 

Preparation will, therefore, be critical, ensuring there is sufficient time to consider the relevant immigration options in light of local rules, and to then make the required application. Complications may also arise where the employee does not meet certain requirements under the local rules, for example if they have a past criminal conviction or negative immigration record. This will require careful handling and, depending on the host country’s rules, may require submission of a visa waiver to explain the issue and provide assurances of the employee’s eligibility by requesting a discretionary decision on the application.

Relocation packages are typically the biggest expense associated with an international assignment. While cost control will remain a concern, it is important for employers to ensure they are offering packages that are competitive within the market and that the package will support both the commercial objective of the assignment and compliance with associated legal and tax risks.

Home-based packages remain common, including those which may be markedly above local market compensation levels, particularly in circumstanecs where the assignment need is business-critical.

It may be possible however to look at offering a lower package than the home-based option, by either localising the package to harmonise with host nation levels or to develop a ‘local-plus’ offering that maintains a degree of competition, but this can be challenging to apply consistently across all assignment types and locations.

Again, consideration should be given to the individual assignment and the assignee. Millennial workers for example are generally understood to value international experience and the remuneration package may not be their primary concern where the opportunity for overseas exposure is available.

For organisations with a substantial cohort of international assignees and travellers, it may be more appropriate to build a compensation scheme specifically for globally-mobile personnel.

Importantly, assignees who will remain under an employment contract in their home country may continue to be subject to home country payroll while on assignment. This will also enable pension and benefits to be offered in the same way through the home country. Taxation, however, raises more complex issues, for example where withholding rules apply in the host country. This will require specialist guidance to ensure tax liabilities in the home and host country are correctly managed and met withiin the appropriate timeframes.

International assignments are demanding on the employer and the employee, but have become critical given the business imperatives to meet talent and development needs and achieve competitive advantage . 

Employers should not lose sight of the need to understand the specific risks of each individual assignment, which increasingly demand bespoke solutions. While compliance , efficiencies and cost control should be underpinned by a solid global mobility infrastructure of policies, systems and procedures, the current shift is away from a uniform approach to assignment management, instead moving towards more agile management of each assignment, shaped by the specific assignment objectives, budget and risks in relation to immigration, tax, remuneration and employment law.

DavidsonMorris’ specialist global mobility consultants provide expert guidance to employers on all aspects of international assignments, from programme management and implementation to strategic consultancy to ensure value and return on the mobility investment. We understand the commercial drivers behind mobilising workers and the need to ensure compliance without impacting return on mobility investment.

We work with senior management teams, HR and mobility professionals to develop strategies that ensure effective compliance risk management while supporting delivery of the organisation’s global mobility objectives. For advice on making the most of international assignments, speak to us .

Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.

She is a recognised by Legal 500 and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.

Anne is an active public speaker, immigration commentator , and immigration policy contributor and regularly hosts training sessions for employers and HR professionals

• Anne Morris https://www.davidsonmorris.com/author/anne/ Immigration & Societal Contributions
• Anne Morris https://www.davidsonmorris.com/author/anne/ A Guide to the Study Visa UK System
• Anne Morris https://www.davidsonmorris.com/author/anne/ The Principles of Immigration Sponsorship
• Anne Morris https://www.davidsonmorris.com/author/anne/ The UK Points Based System: A Guide

About DavidsonMorris

As employer solutions lawyers, DavidsonMorris offers a complete and cost-effective capability to meet employers’ needs across UK immigration and employment law, HR and global mobility .

Led by Anne Morris, one of the UK’s preeminent immigration lawyers, and with rankings in The Legal 500 and Chambers & Partners , we’re a multi-disciplinary team helping organisations to meet their people objectives, while reducing legal risk and nurturing workforce relations.

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Managing International Assignments: Compensation Approaches

A new international assignment landscape is challenging traditional compensation approaches

For many years, expatriate compensation has been focused on a dilemma: having assignees on expensive home-based expatriate package versus localization - which is about replacing expatriates with locals or at least transition expatriates from an expatriate package to a local salary. Many predicted that the traditional home-based balance sheet approach would gradually disappear. The predictions of the demise of the typical expatriate approach have been greatly exaggerated. We are witnessing the emergence of new compensation challenges instead, due to the complexity of having to manage multiple types of assignments and assignee categories.

The home-based approach still retains its utility for certain kinds of moves (e.g. business-critical assignments or moves to hardship locations). Local strategies are becoming more common but, due to the difficulty of applying them consistently in all transfer destinations, they are used only in some cases (moves between similar countries, developmental moves) and take multiple forms as “purely local” or local-plus approaches. Additional approaches like international compensation structures have emerged to address issues of global nomads.

The challenge for HR managers is, therefore, not so much to find the best approach applicable for all assignments as to deal with individual assignment complexity, envisage greater mobility policy segmentation and, if relevant for the company, map each compensation approach to a particular assignment in a consistent way.

The increasingly complex international assignment landscape: One size does not fit all anymore

Expatriates vs. Locals

One size fits all?

Let's localize assignees as soon as possible!

Expatriates

Rise of the third-country nationals

Need to add a cost efficient category for junior employees/developmental moves?

Traditional expatriates

Global nomads

Permanent transfers

Employee-initiated moves

Local or local plus?

Foreigners hired locally

Commuters (cross-border or regional

Multiple types of short-term/project/rotational assignments

Increasing number of home locations

Reviewing international assignment approaches in three steps:

Step 1: Understand the options available

Approaches linked to the host country (local or local-plus)

While these approaches sound logical and natural (when relocating assignees to a new country, they will be paid according to the local salary structure in that destination country) their practical implementation is often tricky. Few employees accept a salary decrease when moving to a low-paying country. It is often difficult to reintegrate assignees relocated to a high-paying country into their original salary structure due to their inflated base salary.

The host approach was historically not the most common for assignees on long-term assignments. However, we have witnessed a growing interest in recent years in host-based approaches – either a host approach or local-plus approach (host salary plus selected benefits or premiums) – as companies are trying to contain costs and as significant salary increases in many emerging markets make host strategies more attractive.

Approaches linked to the home country ("balance sheets")

Home-based approaches have been traditionally the most commonly used to compensate international assignees. Assignees on a home-based approach retain their home-country salary and receive a suite of allowances and premiums designed to cover the costs linked to expatriation. The equalization logic behind the balance sheet approach (no gain/no loss) encourages mobility by removing obstacles. Retaining the home-country salary facilitates repatriation. The balance sheet approach can, however, be costly. Many companies either look for alternatives or try to reduce the benefits and premiums included for less significant moves.

Other Solutions

Hybrid approaches attempt to combine the advantages of the home and host-based approaches. These often mean running a balance sheet calculation and comparing the results with the host market salary to determine what solution would make sense. A hybrid approach can work well for a small assignee population but it can generate inconsistencies when companies expand globally, and the assignee population grows significantly.

Finally, some companies rely on international compensation structures that do not use the host and the home structures at all. These might utilize the average salary in a selected group of high-paying countries where the companies operate. This approach facilitates mobility for global nomads and highly mobile employees. It is, however, often very expensive and doesn’t solve all assignment-related issues (e.g., currency issues, pension, taxation). It is typically used in specific industry sectors (e.g., energy and engineering) and for a few assignees (top level managers and global nomads.)

Step 2: Assessing assignment patterNs and business objectives

Assignment patterns

Are assignees moving between countries with similar salary levels, which would make the use of local or local plus easier or, on the contrary, are expatriates sent to host countries with different pay and benefits structures (low-paying to high-paying, or high-paying to low-paying country moves)? Are moves for a fixed duration – e.g., assignments lasting one to five years – or will the company rely on permanent transfers with no guarantee of repatriation?

Assignee Population

Are assignees coming mainly from the headquarter countries (typical for early stages of globalization) or is the number of third-country nationals already significant? A growing number of multinational companies report that the number of moves between emerging markets (“lateral moves”) is catching up with or exceeding the number from the headquarters, prompting a review of compensation approaches.

Are some assignees becoming true global nomads who move from country to country without returning home during their career? Employees, and especially the younger generations, are becoming much more mobile, but only a minority would be global nomads. These assignees are usually top-level managers, experts with unique skills, or globally mobile talent sourced from small or emerging countries where the absence of career opportunities perspective would preclude repatriation perspectives.

Company's philosophy and sector

Some industry sectors like services and finances relocate employees between major regional and financial hubs which facilitate the use of local approach, whereas energy and engineering companies transferred employees to hardship locations are a key feature of the business – and requires comprehensive expatriation packages often based on balance sheets and international salary structures.

Step 3: Assess segmentation needs

An increasing number of companies rely on expatriate policy segmentation to reconcile the cost control versus international expansion dilemma – how to have the same number of assignments or more without increasing the budget dedicated to international mobility. Segmentation means reallocating part of the budget to business critical assignees and limits the costs of non-essential moves.

Some of the commonly used assignment categories include strategic moves (business-critical), developmental moves (which benefit both the company and the employee), and self-requested move (requested by the employee but not essential to the business).

A consistent policy segmentation approach allows HR teams to present business cases or assignment options to management and provide a clearer understanding of the cost and business implications of relocation for different assignees.

It could also help manage exceptions into a well-defined framework based on a consistent talent management approach, as opposed to ad hoc deals.

Example of segmented compensation approach: the four-box model

Want to learn more about Expatriate Compensation Approaches?

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International Assignment Agreement

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What is an international assignment agreement.

An international assignment agreement is a contract between an employer and employee that formally assigns the latter to a position in a foreign country. Several pieces of important information are contained within this contract, such as where the assignment is, how travel and lodging costs will be paid, how much the compensation is, and how long the assignment will last. It also lays out specific terms and conditions surrounding how to shorten or lengthen the assignment and what will take place if unforeseen circumstances occur, such as random acts of nature.

Common Sections in International Assignment Agreements

Below is a list of common sections included in International Assignment Agreements. These sections are linked to the below sample agreement for you to explore.

International Assignment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.10 25 dex1010.htm INTERNATIONAL ASSIGNMENT AGREEMENT - JOHN TOWNSEND , Viewed September 16, 2022, View Source on SEC .

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I was born and raised in Wayne, New Jersey and attended Seton Hall University, graduating cum laude. I followed my family down to Florida to attend Ave Maria School of Law where I graduated cum laude. I was admitted to the Florida Bar in 2018. During law school, I participated in the Certified Legal Internship program with the State Attorney's Office of the 20th Judicial Circuit and litigated 5 jury trials, 1 non jury trial and argued various motions before the court under the supervision of an Assistant State Attorney. I was an Assistant States Attorney for Collier County from 2018 to 2020 before moving into private practice in the areas of real estate and first party property from 2020 to 2021. As of November 2021, I started my own law practice that focuses on business planning, real estate and estate planning.

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Gareth Wadley

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International assignments: Key issues to consider

What legal issues do you need to consider when it comes to sending employees overseas?

The number of employees working abroad is increasing. As it becomes more common, some assume this will lead to greater standardisation, with template assignment letters the norm.

However, the legal, tax, pension and other variables involved in international assignments require a more bespoke approach, leaving little room for standard documentation. We outline some key issues to address below.

What is an assignment?

Also referred to as a secondment or transfer, an assignment might be internal (to a different role abroad with the same employer) or to an external employer. A key characteristic of an international assignment is that an employee from one legal entity and country ('home' country) temporarily performs services in another country ('host' country).

Potential assignment structures

There are a number of different ways in which assignments can be structured and documented. Which approach is appropriate will depend on a range of issues including employment law, tax, pension, social security and regulatory implications as well as the expectations of employees. Five frequently used assignment structures are:

• the employee continues to be employed solely by the home employer;
• the contract with the home employer is suspended and the employee enters into a local employment contract with the host employer for the assignment;
• the contract with the home employer is terminated with a promise of re-employment at the end of the assignment. In the meantime, the employee enters into a local employment contract with the host employer;
• the contract with the home employer is suspended and the employee enters into a contract with an international assignment company (IAC) within the employer group; or
• the contract with the home employer is suspended and the employee enters into a contract with both an IAC and the host country employer.

Which is best?

When deciding on the best structure for the circumstances, some questions to consider are:

• Do the host country’s laws require employment by a local entity, ruling out sole employment by the home employer?
• Where there is no contract of employment in place with the host employer, could local laws presume that the host is the de facto employer?
• If the home contract is “suspended”, is the home employer prepared to accept the legal uncertainty, in employment law terms, that this status brings?
• In a dual contract structure, who will bear the greatest risk of being liable for employment claims – host, home (or the IAC)?
• Will the employee accept the termination of his/her home contract?
• What is the impact on pension and benefit schemes, social security and tax?

Are there key terms in the home contract that require special consideration and protection, for example, restrictive covenants and confidentiality?

Which national law applies, when and to what? Which courts would have jurisdiction in the event of a dispute?

Who pays for, and manages, the employee during the assignment and will the employee return to the home country?

Looking forward

It is inevitable that documenting assignments will become a smoother process as employers become more familiar with the issues involved. However, the range of significant personal, legal and financial implications will mean that a degree of tailoring will always be necessary, in order to avoid negative repercussions.

Gareth Wadley is principal associate at Eversheds

Further reading

Paying your way: International tax and benefits

How HR can improve LGBT+ employees' access to international assignments

Companies expect to increase international assignments

How territorial jurisdiction works

Hot topic: Key issues for the new government

Rise of 'global nomads' causes problems for employee benefits strategy, Mercer study shows

Three-quarters of Europeans would consider international roles

Businesses fail to track cost of overseas assignments

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Structuring Expatriate Assignments and the Value of Secondment

Multinational employers needing to post staff overseas can struggle to structure an expatriate assignment to meet business needs and legal mandates.

Although there are several viable expatriate assignment structures, "they are not interchangeable," cautioned Donald C. Dowling, Jr., an attorney with Littler in New York City.

Essentially, all expatriates fit into one of four categories, according to Dowling:

• Foreign correspondent.  An expatriate remains employed and paid by the home country employer entity while working abroad. The place of employment shifts to the host country, but there is no local host country employer entity and, thus, no in-country visa sponsor. This structure violates payroll laws in many countries.
• Secondment. An expatriate remains an employee of the home country employer entity but is assigned to render services to a host country entity, usually the employer's affiliate or business partner. The place of employment shifts to the host country. The home or host country entity—or both—may pay the expat, or the home country entity may pay the worker and the host country entity may issue a "shadow payroll," reporting the expat's income to authorities to comply with local laws. Then, the host country would reconcile the amount paid each payroll period with the home country employer.
• Temporary transferee or localized expatriate. An expatriate transferee resigns from the home country employer, moves overseas, and then is hired and paid by a new host country employer, which is often an affiliate of the initial employer but may be a third-party employer.
• Joint employee. An expat is simultaneously employed by the home and host country employer entities, or actively works for the host country employer entity with the home country employment agreement suspended or "hibernating." The place of employment usually shifts to the host country. The host country employer can sponsor a visa.

[SHRM members-only toolkit:  Introduction to the Global Human Resources Discipline ]

Advantages of Secondment as Expatriate Strategy

Secondment is popular among Fortune 500 firms, as it often fits their business needs, Dowling explained. It allows them to "lend out" an employee to work in a foreign affiliate or subsidiary and still maintain the expat as an employee of the home country employer entity.

"A seconded employee is generally asked to handle a project-critical assignment in another country with the added benefit of maintaining home country salary and employment benefits, plus coverage of most or all local country costs," noted Courtney Noce, an attorney with Greenberg Traurig in Atlanta.

Ciara Muldowney, an attorney with Lewis Silkin in London, observed that in addition to providing employees with an opportunity to gain new skills and experiences, "secondments enable employers to move individuals around the business to use skills where they are needed, and to build relationships and networks by deploying employees to other organizations."

The secondment structure offers advantages, such as allowing an expatriate to continue participating in a company's 401(k), pension, and health benefit plans, as well as in the social security program, Dowling noted, although there are inevitably payroll complications to address.

Maintaining the expatriate as an employee of the home country entity—assuming it is a U.S.-based company—is also advantageous to the employer, as U.S. employment-at-will rules generally favor the employer. Nonetheless, a choice-of-law clause in an employment contract doesn't usually block more-favorable host country employment rights, Dowling said.

Structuring Secondment Agreements

Employers must exercise care to protect their interests in structuring a secondment. Muldowney said employers should document the secondment arrangement and have two secondment agreements in place: one between the host organization and the home country employer, and the other between the home country employer and the worker. The agreements should state that there is no direct relationship between the expatriate and the host entity.

"Both agreements should clarify the scope and duration of the secondment and the secondee's duties and responsibilities," Muldowney said. Both the home country employer and the host country entity will owe duties to the expatriate related to health and safety, and both entities may be liable for any discrimination claims arising during the secondment, she noted, so making a contractual agreement about who will bear any liabilities concerning the worker is appropriate.

"Employers will also need to consider issues in relation to data protection, confidential information and restrictive covenants, intellectual property, immigration, and tax requirements," she advised.

Secondment agreements must be tailored to the employment laws of the host country, Noce cautioned. For this reason, she suggested, have the agreements drawn up by a host country lawyer who specializes in this area.

Further, Noce said, employers "must consider the worst-case scenario—a need to terminate an employee during the expat assignment—and insert the necessary contingency clauses into the agreement to limit liability." 

Sarah Harrop, an attorney with Addleshaw Goddard in London, explained, "It is important to set out how long the secondment is expected to last, what will happen at the end of the secondment, and what happens if the secondment ends early." Further, agreements should specify any additional benefits or payments the expatriate will receive in connection with the secondment.

Because expat packages "often include valuable benefits, such as private-school fees, return flights and accommodation, which would not be available to a local recruit, it is helpful to include in the agreement a date after which the expatriate switches to local terms or returns home," Harrop suggested.

She stressed that agreements should also address the impact of the secondment on an expatriate's terms of employment in the home country. For example, agreements should provide for the treatment of an employee's taxes while overseas. "Employers also need to be aware that employees may have statutory employment rights in their home country and their host country," she said.

Dowling cautioned, "Structure expat arrangements with your eyes open. Choose the best option for your specific business needs among the four choices, and set it up properly."

Rosemarie Lally, J.D., is a freelance legal writer based in Washington, D.C.

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Short-term international assignments: How to achieve consistency

We previously discussed how in today's fast-paced business environment, the need to deploy employees to work outside of their home country can sometimes lead to many short-term assignees travelling on a business visa to avoid the expense and bureaucratic process of getting work authorisation. In addition, many managers may inadvertently create ‘stealth’ expats by asking short-term assignees to stay on for another month or two, thereby creating host country tax and social security withholding requirements, and possibly immigration infringements too. ECA has also observed more ‘floating employees’ sent to work in countries where the employer has no registered entity and this potentially could create a corporate tax presence for the non-resident employer. To account for these risks and to keep pace with an internationally mobile workforce, companies need to rethink how they structure employment arrangements, policies and processes accordingly.

Important issues to consider include:

Contractual arrangements

When an employee is sent on a short-term assignment, the individual is typically issued with an 'assignment letter', or 'assignment agreement'. This letter outlines the benefits (allowances, reimbursements, etc) that the employee is entitled to receive during the period of assignment to the host entity. However, it is important to consider how any underlying employment contract, with the home company, interplays with the separate assignment letter. In general, an employee on a short-term assignment remains an employee of their home company during the length of the assignment, but with certain rights and benefits suspended/hibernated and replaced by relevant terms and conditions contained within an assignment letter. Hibernating a home country contract can, however, complicate potential dismissals as the home country contract has not been terminated, but will ‘spring back to life’ at the natural end of an assignment or once an assignment has been terminated. 

The role of an assignment letter (agreement)

Short-term assignments are highly complex. Hence, it is crucial to have proper documentation in place to clarify and provide guidance. An effective assignment letter not only benefits the employee, but also the employer (HR, legal, tax and payroll, for instance). The assignment letter should clearly spell out the compensation and benefits (per diems, reimbursements, serviced accommodation costs etc) that the employee would receive during the short-term assignment, thus making all parties aware of assignment entitlements and mitigating any dispute or retroactive negotiations in the future. 

An appropriately drafted assignment letter can also minimise potential financial or reputational risk for non-compliance and help mitigate potentially adverse corporate tax implications. So, it is important that the assignment letter documents the responsibilities of the home and host country companies if the economic employer principles discussed below are to be avoided. Hence, it should address such issues as:

• The assignment start and intended end date;
• The employee’s specific duties while on assignment;
• The employing entity while on assignment;
• To whom does the employee report while on assignment?
• Who determines the holidays and work hours of the employee?
• Who will be responsible for any disciplinary issues during the assignment? 
• Who can terminate the contractual arrangements entered into with the employee? 

How long an assignment is anticipated to last has an important bearing on immigration and tax compliance regulations. For example, in the United States, it is possible to exclude certain travel, meals and accommodation expenses from federal tax if an assignment is expected to last less than 12 months. However, should the assignment length change from less than one year to greater than one year, the expenses previously considered non-taxable would be deemed taxable from the date of the change in ‘intent’. Consequently, the anticipated or intended assignment duration should be supported through appropriate language in the assignment letter. 

The choice of language used in an assignment letter can also have implications for the taxability of certain allowances and benefits. For example, there is a distinction between an employee sent to Japan for business travel and one sent under a secondment arrangement. An employee ‘seconded’ on a short-term assignment to Japan cannot exempt income from taxation under the 183-day rule, whereas a ‘business traveller’ or ‘visitor’ can potentially do so based on facts and circumstances. An assignment/secondment agreement for employees sent to Japan for short-term projects should therefore use consistent terminology to qualify for the preferential tax treatment. 

Cost allocation

Who picks up the costs of a short-term assignment can be a source of much debate in many organisations when an employee is temporarily assigned to work in another country. This is because costs need to be borne in the correct location to ensure that the appropriate tax deductions can be claimed by the group. 

Consider the potential tax risks when an employee is being assigned internationally to another company within a group. Certain tax authorities adopt an ‘economic employer’ approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article (economic employer is discussed further here ). One of the conditions of Article 15 states that if the assignee’s salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the ‘economic employer’ and therefore the employer for the purposes of interpreting Article 15. In this case, tax relief would be denied and the employee would be subject to tax in the host country even if the individual spends less than 183 days there. Short-term assignments can also create a corporate tax liability in the host jurisdiction if cost allocation is not carefully managed.

To help minimise any unexpected tax surprises, it is advisable to put an agreement in place, which specifies how costs will be managed during an assignment. An inter-entity agreement should be drawn up between the host company and the assignee’s home company. This agreement governs how costs associated with the assignment will be funded. An inter-entity agreement is in addition to the assignment letter (agreement) between the employee and the home company.

Short-term assignments now take all shapes and forms, with short-term projects, weekly commuters, and extended business trips becoming more common. A written short-term policy can be a cost-effective tool as it provides discipline and a framework that enables equity of treatment amongst assignees and reduces the number of employees negotiating their own packages. It can set out logically the steps to be taken in any relocation and the procedures to be followed.

It is advisable that each category of short-term assignment be housed in a separate policy document, as there is a possibility that employees will attempt to leverage off the best parts of other packages to suit their particular circumstances. Additionally, a short-term policy should be regularly evaluated against the current industry trends as well as the company’s business goals to make sure it is fit for purpose.

The short-term policy should address the following key issues:

• Should any host country tax liability arise, will the assignee receive any tax assistance?
• Will the assignee be on the host country payroll, home country payroll, an international assignee payroll, or multiple payrolls?
• Will the assignee’s pay be protected from exchange rate volatility?
• What happens when short-term assignments are extended and change from one assignment category to another? 

Managing exceptions

Exceptions to policy can be difficult to manage, requiring negotiations between the mobility team, the assignee and the business line for approval. They can also be costly, triggering unaccounted-for expenses and untracked ‘budget creep’, the impact of which is rarely calculated or consolidated across the business functions. 

Exceptions should only be granted under very limited circumstances and require written explanations and approval of the executive board or HR director. If carefully monitored, the number of exception requests can indicate that a particular process or policy component requires re-design or further instruction to a vendor. 

To ensure global equity and minimise budget creep, consider: 

• Creating a detailed policy governance process for identifying and capturing deviations to policy or process with a view to reducing or eliminating exceptions;
• Setting up a centralised system to manage and approve exceptions to help minimise expenses;
• Establishing a process owner for short-term assignments, someone with responsibility and authority to monitor and report on trends in exceptions;
• Creating a formal short-term assignment policy, as mentioned above, to minimise exceptions and foster consistency and clear communications.

Tracking potential risks

Tax and immigration irregularities are common for employees on short-term assignments. Accordingly, it is important to develop an education programme for employees and their managers to inform them about the risks of cross-border work and the consequences of non-compliance. 

Work permit and immigration infringements should not be underestimated as the penalties for individuals working outside their home country without the appropriate work authorisation can be harsh. Not all short-term assignees need immigration approval, but then again, some do. It is important to note that just because an employee may not trigger any host country tax liability it doesn’t follow that they are exempt from immigration requirements. Indeed, staying on the home payroll is one of the most common areas of risk for short-term assignees and it is not an indication that immigration approval is not required.  

For many companies, technology has become the key to achieving and maintaining compliance. Without proper monitoring, an employer may unwittingly be exposed to tax and social security risks. Diligent tracking of short-term assignees and a solid process to be able to identify risks up-front are key to ensuring compliance. 

Source: ECA’s Managing Variety in International Mobility survey

Once a company’s short-term population reaches a certain size, manual tracking of policy exceptions using Excel spreadsheets is unlikely to be sufficient to ensure compliance with now greater information sharing among tax and immigration authorities. So, if companies want to be ahead of the curve in managing short-term assignees, they need to start tracking them. This will require communications to be established between the business units, tax, HR, legal, payroll, etc early in the assignment planning process, as well as when any assignment extension is contemplated.

Coordination with payroll 

At the heart of the administration process is the payroll team and it is essential that the appropriate home and host country payroll personnel are involved in planning for short-term assignments. They are ultimately responsible for ensuring the accurate and timely delivery of the assignment package to employees, while managing the local jurisdiction compliance requirements with regard to tax and social security withholding. 

The home country payroll must be informed of the intended assignment duration and assignment package to be paid to the employee. The home payroll will need to understand whether the allowances and benefits will or will not be considered taxable to the employee. 

Assignment income, such as a short-term allowance or per diems, is often paid through the home country payroll to comply with standard tax treaty rules. Typically, if income is to be exempt of host taxes, the payroll costs should not be borne by a permanent establishment in the host country. 

If an employee triggers a tax liability, many host countries will require withholding of income taxes through a local payroll. Consequently, the host country payroll will need to be informed of the assignment package the employee is receiving to understand if these may be considered taxable in the host country, even if they are not taxable in the home country. The host payroll will also need the relevant social security applications to be made to ensure that contributions are paid to the appropriate tax authorities. 

Our three-part series of articles on short-term assignments has highlighted some of the complexities in structuring short-term assignments, and some of the challenges concerning immigration, payroll reporting and tax compliance. With proper planning and administration, short-term assignments can be an effective and efficient means of increasing the pool of potential employees for the international assignment programme.

Our Consultancy & Advisory team can help you manage your short-term international assignees as effectively as possible, whether you are looking for assistance with the  design or review of existing policies , the creation of  assignment letters ,  assignment cost projections or other support.

ECA's Short-term Allowance Calculator provides a choice of regional bases on which to create consistent allowances in the host location, whatever the nationality of the assignee. Find out more about the Short-term Allowance Calculator here  or request a demo .

If you haven't already done so, read the first two articles of this three-part series on short-term international assignments:

• Key considerations when structuring short-term packages
• Compliance challenges involved with short-term assignments

Compensation and Benefits: Essentials of International Assignment Management

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• Juergen Czajor 2  

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Internationalization became an essential strategic dimension for companies to ensure profitable growth. International assignments play an important role to implement this strategy. As a consequence the number of international assignees is growing year by year; they work as interface manager between headquarters and branch office, as cultural ambassador, or as technical specialist to transfer knowledge. For ambitious and open candidates, a position in a foreign country and in a different culture can be an interesting step to further develop their professional career. International assignment management first of all needs a policy framework, defining the compensation and benefit package, especially the typical assignment allowances depending on distance to the home country and hardship of the host country. The administration of international assignments secondly requires standardized processes for all phases of an assignment, from selection to reintegration and with clear allocation of roles and responsibilities between all human resources partners involved. Organizations exchanging bigger numbers of specialists and executives between several countries work with centralized assignment management teams, who cooperate with local HR in the host countries and often use external partners for relocation, social security, payroll, and taxation to manage this complex task.

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Deutsche Industrie- und Handelskammer in Japan (DIHKJ) –Auditor – (2007) Expatriate versus Local, Vor- und Nachteile von Expatriates in japanischen Tochtergesellschaften deutscher Unternehmen. http://japan.ahk.de

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Czajor, J. (2016). Compensation and Benefits: Essentials of International Assignment Management. In: Zeuch, M. (eds) Handbook of Human Resources Management. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-44152-7_73

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FAQ’s: Structuring of International Assignments

Faq’s: structuring of international assignments.

There are many ways of structuring an international assignment. Many companies develop a special policy in which the structures of international assignments are described, and the applicable labour conditions are defined. Although a wide variety can be recognised, there are five different ways: 1. The “home closing” setup. In this situation, the initial employment in the home country will be terminated and replaced by an employment agreement in the host country. 2. The “Secondment” setup. In this situation, the initial employment agreement in the home country remains in place. But the employee will be temporary seconded to an employer in the host country. Usually, but not necessary, this is a company that belongs to the same group of companies the home company also belongs. 3. The “suspend” setup. In this setup there are two different approaches:To the initial employment agreement in the home country, an agreement between the employee and the employer of the host country is added, by which the authority and control of the home company is temporarily transferred to the host company; – The initial employment agreement is temporarily put aside and replaced by a local employment agreement or assignment agreement. – The “split employer” setup. In this case, the employee will work at home as well as the home country for two different formal employers. 4. The employer-employee relationship is defined in two various employment agreements. This setup is also known as the “split salary” setup. Which setup is chosen depends on the company policies, day to day practices of the company and possibilities the legislation in home and host countries allows.

There is no general legislation on which elements should be part of any assignment agreement. In the day to day practice, the following subjects can be distinguished. These subjects can be, but are not limited to: – Arrangements regarding the necessary visa; – Arrangements regarding assignment salary and allowances and benefits (company car etc.); – Arrangements on salary raise, bonuses, stock options and other benefits; – Arrangements regarding applicable labour legislation; – Arrangements regarding maintaining home country social security and pension; – Arrangements on (additional) insurances; – Arrangement regarding taxes on income payments and tax filing obligations and support; – Arrangements on return to home country guarantees; – All kind of practicalities, like move costs, house and school search housing costs, schooling costs for accompanying children, home visit costs.

There are three different situations: 1. The home and host country both belong to the EU (and Switzerland, Liechtenstein and Norway). In these countries, the EU a treaty on social security is applicable. This treaty determines which system of social security in which case is appropriate and consequently where contributions will have to be paid. Normally, the home country system can be maintained in case the assignment does not last longer than 24 months (which can be extended to 60 months); the employee is not replacing a former seconded employee, and the employee was part of the system of social security in the home country for at least one month. In such cases, the employer can file an application to the social security authorities for the so-called A1 statement. Please, note that under this agreement, it is not possible to maintain the home country system of social security for accompanying family members! It neither applies to the costs for medical expenses! Contributions and premiums will have to be paid in the home country. 2. The home and host country have agreed on a bi-lateral agreement on social security. It works the same as the EU method. However, every bi-lateral treaty has its own articles on applicable legislation, accompanying family members, duration and application procedures. The approval that the home system remains applicable is laid down in a Certificate of Coverage. Contributions and premiums will have to be paid in the home country. 3. The home and host country do not belong to the EU (and Switzerland, Liechtenstein and Norway) and do not have a bi-lateral agreement. In such cases, it might be possible to enter home country voluntary social security insurances. It usually offers a comparable home country level of social security. Premiums for these insurances will have to be paid in the home country, but it does not touch the obligation also to pay contributions to social security in the home country. It leads to double premiums and higher costs.

It depends. In some countries pension is part of the system of social security. In others, like The Netherlands, it is not. Focusing on the Netherlands, the company pension is part of the labour conditions and the state pension (“AOW”) is part of the social security system. The state pension part, therefore, is arranged in the EU treaty or bi-lateral agreements. The company pension is not. It is crucial to check the existing company pension agreement of the employer with the pension company. And if it is possible to maintain the accrual of pension entitlements during an international assignment of any nature.

In most cases, the answer is “yes” because most home country insurances only reimburse these costs up to the home country level. In other countries, these costs can be much higher, and limiting conditions are applicable. Professional advice is necessary to avoid unpleasant surprises.

The experts of EMG have extensive knowledge of international social security situations and legislation and have access to a database with existing EU and bi-lateral agreements on social security. Next to that, EMG has an extensive network of specialists in all countries where professional advice can be taken on these matters, including insurances on medical expenses.

Want to know more about the unique advantages of partnering with EMG?  Contact us or let us contact you!

Assignment Of Employment Agreement

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What is an assignment of employment agreement.

An assignment of employment agreement is a contract between an employer and employee that give employees rights in inventions they make. This agreement applies to inventions made while employeed with the contracted company and is meant to entice employees to come on board with the company. Since these agreements are so crucial in ensuring an employee's intellectual property is protected, employers place a special emphasis on the wording of these agreements.

The purpose of the agreement is to ensure the contracted company has the rights to use inventions of the employee without risk of legal retaliation.

Common Sections in Assignment Of Employment Agreements

Below is a list of common sections included in Assignment Of Employment Agreements. These sections are linked to the below sample agreement for you to explore.

Assignment Of Employment Agreement Sample

Reference : Security Exchange Commission - Edgar Database, EX-10.26 28 f8k0210ex10xxvi_envision.htm ASSIGNMENT OF EMPLOYMENT AGREEMENT, DATED FEBRUARY 10, 2010, BY AND BETWEEN CASITA ENTERPRISES, INC., ENVISION SOLAR INTERNATIONAL, INC. AND ROBERT NOBLE , Viewed September 19, 2022, View Source on SEC .

Who Helps With Assignment Of Employment Agreements?

Lawyers with backgrounds working on assignment of employment agreements work with clients to help. Do you need help with an assignment of employment agreement?

Post a project  in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate assignment of employment agreements. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

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Navigating Employee Repayment Agreements

Repayment agreements can help businesses safeguard investments, retain talent, and manage international assignments in a competitive landscape..

Editor’s Note: This article was updated on 27 November 2023. 

In corporate spheres, employee repayment agreements have increasingly become a prevailing norm, particularly when it comes to training initiatives and the costs associated with employee relocation. Such agreements act as a bulwark, shielding employers from potential losses should relocate personnel abruptly resign—a circumstance that, albeit unlikely, can be financially burdensome. 

For many employers, protecting their investment in valuable employees is a top priority. One way often chosen by companies to do this for relocation-related expenses is through repayment agreements. These agreements, signed by employees before any relocation costs are incurred, act as a crucial shield to protect your resources. By requiring employees to sign these agreements when they accept a job offer or relocation assignment, companies take proactive steps to safeguard their interests and strengthen the stability of their workforce.

Repayment agreements have also become an increasingly controversial practice, with impacted employees and other critics of the practice voicing concerns about the impact of having to repay what can be thousands of dollars or more to their employers if they leave their employment prior to the term outlined in the agreement. These agreements have come under the scrutiny of the U.S. government, with agencies increasingly focused on their impacts on employees and considering regulatory changes that could significantly impact employer practices in this area.

Here are some of the things you need to know about how repayment agreements work, how they can be used in global mobility programs, and some of the key issues or risks associated with repayment agreements.

What Is a Repayment Agreement?

Repayment agreements, when included in contracts, are frequently done so because they make sure that employees get reimbursed if they choose to leave on their own or if they are let go after moving to a new place. Specifics may vary, with some agreements focused on voluntary resignations to minimize terminations for cause.  

It’s important to be clear about when repayment needs to happen. Usually, if someone leaves within 12 months, they must repay everything. But if it’s within two years, they only must pay a portion. Graduated scales make it easier for people to finish their assignments and lessen the financial burden if they must leave early. Some companies have done away with the graduated repayment approach and have implemented a 100% repayment obligation regardless of when the employee leaves. When implementing a full balance repayment agreement, companies often do so to discourage employees from leaving before completing the repayment agreement period. 

Repayment agreements employ graduated scales to diminish reimbursement obligations over time. This practice alleviates financial burdens for employees who must depart unexpectedly. For permanent relocations, agreements usually span one to three years, with two years being the prevailing standard.

“Repayment agreements accomplish two main objectives,” says Jim Carroll, senior manager for global mobility at WestRock . “One objective is to demonstrate to the employee the commitment the company is making to move them. The second objective is that it affords the company to pursue repayment in the event the employee voluntarily terminates employment during the repayment period.” 

Why Repayment Agreements Matter

Employee repayment agreements can offer vital protection for businesses, safeguarding against the premature departure of relocated employees. These agreements help by clearly showing what expenses are expected to be reimbursed and setting clear rules right at the start of the relocation process. A best practice is to review the repayment agreement with the employee to ensure an understanding between both parties. This way, everyone knows what to expect, and it discourages people from leaving too soon. They offset relocation costs and foster a shared understanding between employees and employers.

These agreements establish a mutually beneficial partnership, mitigating misunderstandings and disputes while fostering harmonious working dynamics. Overall, repayment agreements play a crucial role in safeguarding businesses and facilitating productive collaborations.

While Carroll recommends companies use repayment agreements, he does not think they play a big role in increasing long-term retention. “In my opinion,” Carroll says, “it does not do much for long-term retention of employees, because those who are considering termination will either terminate during the period of repayment or wait until after it expires.”

Rather than a tool for improving retention, Carroll views repayment agreements as a way for businesses to safeguard their investments. It should be noted that some in the industry have a different view or take a different approach and believe that repayment agreements serve as a retention tool and help the company achieve their return on investment by reducing resignations during the repayment period.  

Creating the repayment agreement is only the first step of the process. For many companies that use repayment agreements, a triggering event—early resignation, for example—is a complicated process. Carroll says that he has seen a trend of companies that partner with their relocation management company (RMC) or other external collections agencies and internal legal departments to manage the collections process and to increase capture rates.

Mitigating Risks With Repayment Agreements

Employers in Singapore may face retention concerns due to the flexible nature of Singapore’s Overseas Networks and Expertise (ONE) pass, which lacks employer binding . Meanwhile, Hong Kong’s Top Talent Pass Scheme (TTPS) competes with Singapore’s visa program, offering similar flexibility but stringent eligibility. Both ONE Pass and TTPS are expected to attract skilled professionals due to their accessibility and sponsorship-free process; these flexible visa programs raise worries about talent loss and financial implications for employers.

To mitigate risks associated with the Singapore ONE Pass and Hong Kong’s TTPS, organizations can implement relocation repayment agreements. These binding documents outline reimbursement terms and clarify early termination or resignation cases. By implementing such agreements, organizations address financial implications and promote transparency in relocation assistance.

Whether utilizing the Singapore ONE Pass or Hong Kong’s TTPS or not, employers face potential risks when relocating employees. To mitigate these risks effectively, it is advisable for all employers to incorporate repayment agreements into their mobility programs. It is imperative that companies engage legal, HR, compliance, and payroll for guidance on local employment contracts and payroll deduction rules when implementing a repayment agreement globally, as each country and local jurisdiction may have nuances that may impede deducting relocation expenses from an employee’s paycheck or collecting payments.

Growing Employee Concerns About Repayment Agreement Practices

Implementing and enforcing a repayment agreement also often results in adverse impacts for impacted employees. Individuals departing their position prior to fulfilling the terms of the agreement can be required to repay many thousands of dollars back to their employer, which, depending on their personal circumstances, may result in a significant financial hardship or lead to credit and/or legal issues if the claim remain unresolved. Critics also point, as outlined in a New York Times magazine article, to the adverse impact on employees choosing to remain in their positions due to agreements, potentially missing opportunities for professional and/or financial advancement due to the associated financial and/or legal risks of doing so. 

Employers are increasingly facing challenges in terms of enforcing and collecting based on repayment agreements. Additionally, a number of lawsuits and complaints have been filed by impacted employees in U.S. courts and with U.S. Government agencies, and these cases have raised the risks for employers in managing repayment agreement programs.

U.S. Government Agencies Focusing on Repayment Agreements

As indicated in the aforementioned article, U.S. government agencies are increasingly scrutinizing the practice of repayment agreements and their impacts on employees. Numerous federal agencies, including the U.S. Department of Labor, have gotten involved with individual cases related to repayment agreements. The U.S. Consumer Financial Protection Bureau (CFPB) released a report in July 2023 on the topic of employer-driven debt, with CFPB Director Rohit Chopra being quoted on the report’s launch that “employer-driven debt poses the risk of suppressing wages and forcing workers to stay in jobs they do not want.”

Potential actions have also occurred on the regulatory level. The U.S. Federal Trade Commission released a proposed rule in January 2023 that included provisions for barring practices, including training repayment agreements (TRA), that it deems to be “de facto” noncompete clauses. While relocation-related repayment agreements were not explicitly called out in the rule, the broad scope wording in the rule could extend to impact relocation-related agreements depending on the scope of a final rule. The FTC is currently reviewing comments received on the proposed rule and no timeline has been announced for releasing a final rule.

The Role and Risks of Repayment Agreements

For many employers, crafting a thoughtfully structured repayment agreement can help to safeguard their investments in relocating employees or facilitating international assignments. Such agreements bring clarity to the terms of the relocation or assignment, solidifying the commitment of employees to the company for a specified duration after the completion of their task. The kind of repayment agreement put in place depends on the company’s goals and culture, but the key is to have a sustainable and consistent repayment process in place.

In a highly competitive talent market, these repayment agreements play a role in averting immediate employee defections to rival firms upon concluding an assignment. As part of a comprehensive relocation program, these agreements serve as an additional tool to formalize and enhance efficacy, enabling companies to pursue their talent management objectives.

This practice, however, is not one without risk for employers. Repayment agreements can significantly affect impacted employees and are increasingly under the scrutiny of government regulators. Further U.S. government activities in this area are likely, which could change what employers can or cannot do related to repayment agreements in the future.

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Employment in Moscow

At a Glance:

• To find work in Russia’s capital, ask your current employer about a company transfer or check out a Russian job site.
• The work permit process is long and complicated, so start early and be patient!
• Your employer will take care of your social security contributions, although we would recommend acquiring private health insurance in addition to this.
• Russia has double-taxation treaties with a number of countries, so check if this applies to you.

Moscow is Russia’s undisputed economic and financial center. Greater Moscow’s workforce produces over a quarter of Russia’s entire GDP. With an unemployment rate of just 1.3% in 2017, the capital has the lowest unemployment rate in all of Russia.

Many of Russia’s largest companies have their headquarters and the majority of their staff working in Moscow. Nearly all multinational corporations which have entered the Russian market are based in the city as well. This makes Moscow an attractive option for expats from all over the world.

As the city is Russia’s capital and major political center, another large share of the expatriates in Moscow are diplomatic staff, foreign correspondents, and employees of cultural institutions. There is also a high demand for foreign native speakers working as language teachers.

Moscow’s Main Industries

Moscow’s economy has changed drastically since Soviet times, when the city was reliant on its manufacturing and engineering activities. Nowadays, the service sector employs many Muscovites, thanks to the city’s growing tourism and retail industries. Moscow is also Russia’s financial center: it is home to the Moscow Exchange (the national stock exchange) and almost all of the country’s major banks, including Sberbank, which is the largest in Eastern Europe.

Despite the decline in Moscow’s manufacturing sector, the city is still a major industrial center of Russia and home to the national headquarters of many major companies, with mechanical engineering, food processing, and research and development (R&D) being the most prominent sectors.

Looking for a Job: Search Wisely

Depending on your background and qualifications, realizing your dream of working in Moscow may or may not be easy to fulfill. There is a high demand for foreign experts, but it is generally limited to specific sectors. Skills in the fields of construction, business development, IT, and finance are much sought after.

Your most promising option for working in Moscow is to check directly with companies from your home country or multinationals in your field which are doing business in Russia, as these are the most likely to hire expats.

Alternatively, there are many online recruitment consultancies which can help you find a job in the capital to match your qualifications. If you would like to go job-hunting on your own, you might find the following websites useful:

• The Moscow Times Career Center
• SuperJob.ru (website in Russian)
• HeadHunter.ru
• JobsinMoscow

Remember that due to work permit quotas, locally advertised jobs may not always be an option for expats.

Moscow: Work Permits and Social Security

Priorities: work permits.

Getting the necessary work permit for Russia is a complex and time-consuming procedure. The country has a quota regulation for foreign workers. Companies wishing to employ foreign staff have to submit an application specifying the number and nationality of employees they wish to hire a year in advance.

If a potential employer’s request to hire foreign employees is granted, job vacancies have to be registered with the authorities. If no local candidate has been found within a month, the company receives a corporate permit. Now, the application for an individual work permit can be filed. This requires translated evidence of qualifications and a health certificate. In a best-case scenario, this process takes three months.

An exception to this lengthy process, however, is in the highly qualified specialist category, which is not subject to quotas or corporate permit requirements. Highly qualified specialists are foreign professionals in a particular sector, and eligibility for this category depends on their wage. If working in the educational or scientific fields, you need to earn more than 1 million RUB (approx. 17,600 USD as of 2017) per year, and this rises to 2 million RUB (35,300 USD) if working in any other sector. However, if you are planning on working in one of Russia’s Special Economic Zones (SEZs) , you only need to be earning 700,000 RUB (12,300 USD) per year. Visas for highly qualified specialists are issued for up to three years at a time, with an option to extend it for a further three years. The visa simply requires an application to the state application body, and the authorities must consider it within 14 days.

It’s a Different Story for CIS Nationals

Unlike other nationals, workers from Commonwealth of Independent States (CIS) countries do not need to go through such a lengthy and complex process. They need to apply for a work patent within 30 days of their arrival in Russia, and have 30 days in which to confirm their knowledge of the Russian language, history, and legislation in an exam. Only once the exam has been passed can they receive the work patent.

  After receiving the patent, they have 60 days to find local employment. They can then work for up to twelve months, and the patent is renewable once.

Everything You Need to Know about Taxation

All expats working in Moscow are liable to pay Russian income tax. Non-residents are taxed only on their income from Russian sources. In this case, the tax rate for all types of income is 30%.

If you live in Russia for at least 183 days during a 12-month period, you are considered a resident under Russian taxation law. Tax residents are taxed on all their income, including income from non-Russian sources. Since the tax reform of 2001, there is a flat income tax rate of 13% for most types of incomes.

One exception is the abovementioned highly qualified specialist immigration category. Expats who have entered the country on this visa are eligible for the standard personal income tax rate of 13%, even before officially becoming a Russian tax resident. Additionally, Russia has signed double taxation treaties with a number of countries .

The Social Security System in Moscow

Everyone employed in Russia must be insured through the social security system — however, it is up to your employer to pay the contributions, so you do not have to worry about this responsibility. Social security in Russia is fairly comprehensive, covering unemployment, unexpected sickness, and an old-age pension, among other things. However,  we would recommend getting additional private health insurance on top of this, as the country’s state medical facilities leave a lot to be desired.

Professional Qualifications for Moscow

Teaching english as a foreign language.

Teaching English as a foreign language is a very popular option for young people who would like to gain some international experience in Moscow as well as native speakers who cannot find a position in their original profession. In recent years, a large number of private language institutions have sprung up all across the city. The demand for foreign language teachers is continually high, and chances are good for native speakers of languages such as English, French, Spanish, or German to find a teaching position.

On the downside, teacher salaries are usually not the most competitive. Before you accept a teaching post, carefully check the conditions you are offered. Finally, research the reputation of your potential employer — stories of scams are quite frequent.

Language Skills: Don’t Expect Too Much

English skills are a lot less common in Moscow than they are in many other European capitals. The average taxi driver or shop assistant probably knows a couple of English words at the very most. To make daily life easier, it is strongly recommended to learn at least some basic Russian for your life in Moscow.

In the business world, on the other hand, English is more widely spoken. Some positions, especially those in Russian companies, require knowledge of both Russian and English. For those working for one of the many multinationals, however, fluency in just English is often sufficient.

How to Behave in the Moscow Business World

In the Moscow business world, assertiveness and patience are assets in meetings and negotiations. Although meetings should be arranged well in advance, it is not unusual for them to be rearranged with short notice. Punctuality is not as important as elsewhere, and side conversations in meetings are acceptable. If circumstances are favorable, business deals may be concluded extremely spontaneously. Expect things to go a lot slower, though, when dealing with government agencies.

Dress formally and conservatively while in Moscow. Pay attention to your shoes and make sure they are always polished. The shoes are what many Russians will look at first when sizing up a new acquaintance.

A thing which often confuses newcomers is the use of Russian names. Every person in Russia has three names: a first name, a patronymic (a middle name derived from the father’s first name), and a family name. In formal situations, people should be addressed by their title and last name. For closer acquaintances and business relations, however, calling someone by their first name and patronymic is both affectionate and polite.

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Rep. Foushee, Rep. Flood Introduce NIL Reform Bill for International Collegiate Student Athletes

WASHINGTON, DC (April 15, 2024) — Today, Congresswoman Valerie Foushee (NC-04) and Congressman Mike Flood (NE-01) introduced the Name, Image, and Likeness for International Collegiate Athletes Act , bipartisan legislation to modify F-1 visas and allow employment authorization for international student athletes who enter into endorsement contracts for the commercial use of their names, images, and likenesses.

“There are over 25,000 international student athletes nationwide participating across NCAA sports, with over 150 in North Carolina’s Fourth District alone. Since 2021, these athletes have been prohibited from profiting from name, image, and likeness contracts in the same manner as their American counterparts,” said Congresswoman Valerie Foushee . “I’m proud to join Congressman Flood in introducing this bill that will modify F-1 visas to allow international student-athletes to profit from NIL agreements, without worrying about these agreements affecting their visa status.” 

“International students already can pursue part time employment during college. This legislation seeks to ensure that international collegiate athletes also have the opportunity to receive compensation in Name, Image, and Likeness promotions,” said Congressman Mike Flood . “Thank you to my colleague Rep. Foushee for co-leading this with me here in the House, and I look forward to working with her as well as Senators Ricketts and Blumenthal on passage of the Name, Image, and Likeness (NIL) for International Collegiate Athletes Act in the coming months.” The bill text can be found here . The bill text for the Senate companion, S.3054, by Senator Ricketts (R-NE) and Senator Blumenthal (D-CT) can be found here .

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Virginia-based defense contractor pleads guilty to bribery conspiracy involving government contracts worth more than $100 million

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Date: April 16, 2024

Contact: [email protected]

SAN DIEGO — Cambridge International Systems, Inc., a defense contractor headquartered in Arlington, Virginia, pleaded guilty in federal court today, admitting that it participated in a bribery scheme with the company’s former Executive Vice President Russell Thurston, and former Naval Information Warfare Center employee James Soriano, among others.

According to Cambridge’s plea agreement, the company — acting through Thurston and an unnamed employee — gave various things of value to Soriano, including jobs for Soriano’s family and friends, meals, and a ticket to the 2018 MLB All Star Game held at Nationals Park in Washington D.C. One of the friends hired by Cambridge, Liberty Gutierrez, was giving Soriano $2,000 a month from her Cambridge salary, according to Gutierrez’s plea agreement.

In return, Soriano, acting in his position as a contracting officer’s representative at Naval Information Warfare Center ensured that Cambridge was awarded two large task orders. Soriano further ensured Cambridge was able to capture a steady stream of government funds by approving various projects on the task orders after they were awarded the contract, including more than 70 projects on one of the task orders. As a result of the conspiracy, the government obligated more than $32 million on one of the task orders and over $100 million on the other.

Soriano also allowed Cambridge employees to draft various procurement documents for him, even where the company was competing for the contract against other bidders. Thurston and Soriano worked together to remove document properties so other government employees would not know of Cambridge’s involvement in drafting the documents.

Cambridge admitted that the company made a total profit of $7,429,995.23 as a result of the conspiracy. Cambridge is next scheduled to appear before U.S. District Judge Todd W. Robinson for sentencing on July 3, 2024.

“Service members depend on the honesty and integrity of our nation’s defense contractors to be able to do their jobs,” said U.S. Attorney Tara McGrath. “A business model based on fraud is both illegal and undermines the fairness of the system.”

“Cambridge International Systems, Inc. demonstrated a culture of complicity in undermining the defense contracting process,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation (CI), Los Angeles Field Office. “CI is committed to supporting investigations into activities that can harm national security, whether directly or indirectly, and to working with our law enforcement partners to ensure our warfighters are protected from this sort of corruption.”

“The guilty plea of Cambridge International Systems, Inc. is a constructive step towards holding the company accountable for its active participation in an illegal scheme that corrupted the government’s acquisition processes,” said Bryan D. Denny, Special Agent in Charge of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service, Western Field Office. “Such illicit actions ultimately waste invaluable U.S. taxpayer money and degrade American warfighter readiness.”

“Bribery and procurement fraud within the Department of the Navy threatens warfighter safety and perpetuates unfair contracting practices that negatively affect honest businesses,” said Special Agent in Charge Greg Gross of the NCIS Economic Crimes Field Office. “NCIS and our partners remain committed to exposing those who abuse the procurement process for personal gain.”

CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.

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