The modern workforce is one of increasing international mobility. In New Zealand, our workforce is already heavily reliant on skills from overseas. New Zealand businesses and companies are increasingly looking abroad to recruit top executives and skilled employees. The “Christchurch rebuild”, following the February 2011 earthquake, provides a clear example of the effect the new global workforce has on New Zealand. During the first six months of 2013, it was reported in Stuff News, Christchurch Gains 22 Migrants a day, 27 July 2013, that 22 skilled international migrants joined the rebuild each day.
The international mobility of the modern workforce is only set to increase. Research from PwC’s Talent Mobility 2020: The next generation of international assignments, 2010, shows that the number of people working outside their home country will increase by 50 percent between 2010 and 2020. To this extent, the future of our workforce (for employers) and the global opportunities (for employees) looks exciting. however, moving employees around the globe comes with its own set of legal challenges from an employment law perspective. Therefore, it is important that during periods of international mobility, employers document their arrangements carefully and remain cautious about any disparate treatment between local employees and secondees.
SHORT-TERM INTERNATIONAL TRAVEL/BUSINESS VISITS
If an employer only envisages periods of short-term travel abroad for an employee (essentially “visits”) it can be fairly straightforward to document. We recommend a clause in the relevant employment agreement that makes it clear to the employee that they will be required to spend a good deal of their time travelling to other countries. We also recommend seeking specialist tax and immigration advice in the relevant jurisdictions to ensure compliance with local laws.
If an employer plans to relocate an employee for an extended period of time (say three months or more) it is often labelled a secondment. A secondment can be described simply as a temporary “loan” of an employee. Secondments can take place through a number of different scenarios, both nationally and internationally. however, sending employees on secondment to work in a different jurisdiction often poses complex considerations for employers. Ideally, such arrangements should be facilitated through an assignment/ secondment agreement. A secondment agreement is a contract or letter designed by the existing, or “home”, employer that sets out the terms under which the employee will be seconded to work for the “host” employer.
It is vital that the secondment arrangement is properly documented and agreed from the outset to avoid uncertainty and unexpected costs or liabilities. The following points are just some of the questions employers should ask themselves when:
- Drafting secondment documentation for employees heading off on overseas secondments; or
- Considering secondment documentation that has been drafted in another jurisdiction for an employee seconded to New Zealand.
- How long is the secondment and how/when does it end? It is important to set out the duration of the secondment, as well as what will happen when it ends. Issues such as who will be responsible for relocation costs, what will happen if there is a redundancy situation, or the employee becomes incapacitated, need to be carefully documented. Any agreement should state how the secondment will terminate and whether the employee has a guaranteed return to their previous role with the home employer after the secondment.
- Are there any minimum code requirements in the host country? employment laws vary between different jurisdictions. In some jurisdictions, compulsory minimum entitlements available to employees who are working in the jurisdiction (even if temporarily), such as sick pay, holiday entitlement and rights on termination, will apply irrespective of the employees home country. employers should seek local employment law advice to ensure the secondment agreement meets any minimum code requirements in the host country.
- Who will be the employer during the secondment? Generally, the employee who is on international assignment will remain an employee of the home employer and the secondment will not sever the contractual link between the employee and the home employer. This should be clearly spelt out in the secondment agreement, together with what rights and obligations the host employer will have during the period of secondment.
- Who will the secondee report to and who will supervise? This is particularly important in relation to managing performance and misconduct issues. All parties should understand who is responsible for what, and who they are responsible to, during the period of secondment. The employee should be clear as to who the decision maker is with regard to their employment whilst they are on international assignment.
- What about confidentiality/intellectual property obligations? The secondment documentation should expressly set out or refer to any on-going confidentiality and/or intellectual property obligations the seconded employee may have to their home employer. many employers overlook the fact that the employees will need to agree to separate binding legal obligations with regard to confidentiality and/or intellectual property to the host employer. This can be done within the secondment agreement/letter or by separate deed.
- Who pays, where is it paid and what is the effect on pension arrangements? The secondment documentation should state who is responsible for paying the employee during their secondment. Is the host employer paying on behalf of the home employer for the duration of the assignment or will the employee continue to be paid by their home employer? The documentation should also state whether the employee will continue to receive or accumulate any benefits they would have been entitled under their individual employment agreement with the home employer while on secondment. Minimum code obligations may have a bearing on these arrangements.
- Do we need specialist advice? Specialist immigration and tax advice should be sought, as well as advice on any relevant local laws that may apply.
One particularly interesting challenge associated with international secondments is the potential for race discrimination, which includes discrimination on the grounds of ethnic or national origin. The risk of discrimination in secondment arrangements is twofold. either those employees on international assignment are treated less favourably by the host employer than local employees or vice versa – the seconded employees are offered enhanced benefits by the host employer that local employees are not offered by virtue of the fact that they are on an international assignment. For example, a seconded employee might be offered full healthcare benefits, whereas local employees are not offered this on the basis that they are entitled, as citizens, to access a free national health service. As most employers will be aware, discrimination on the grounds of race, ethnic or national origins is prohibited by the Employment Relations Act 2000 and the Human Rights Act 1993.
While discrimination claims are on the increase in New Zealand, there is no case law that specifically deals with discrimination in the context of secondment arrangements. however, if an employee were to bring a discrimination complaint, they would need to identify a comparator real or hypothetical) who is of the same or substantially similar qualifications, experience or skills and employed in the same or substantially similar circumstances. Using the example above, this is relevant as if a local new zealand employee did make a discrimination claim on the basis of not receiving the enhanced health benefit. They would be using the international secondee as the comparator, as it is the secondee who is receiving the enhanced health benefit.
The United Kingdom case Wakeman & Others v Quick Corporation  All ER (D) 158 dealt with race discrimination in the context of internationally assigned employees.
In Wakeman, the Court of Appeal (CA) accepted that it may be lawful in some circumstances to pay local employees and secondees different rates of pay. This case concerned english employees who were employed by a Japanese company in London. They were paid less than those employees who were seconded from Japan to work in London, and as a result raised a race discrimination complaint that they were being treated less favourably because they were not Japanese. The cA held that the differences in pay were due to factors such as market rates in Japan and enhancements for secondees to account for the cost and inconvenience of temporarily living and working abroad. The CA said that the circumstances of the local employees and the secondees were materially different and that the secondees were therefore not appropriate ’comparators’ for the purposes of establishing a discrimination claim.
This case highlights the fact that secondees are often subject to quite different working arrangements/contractual terms and therefore are arguably not appropriate ‘comparators’ for the purposes of establishing a discrimination claim. however, it will ultimately depend on the terms and conditions outlined in the relevant secondment documentation – reinforcing the need for employers to get their documentation right. For example, making it clear that remuneration is to be paid by the host country on behalf of the home employer, that any additional benefits received are to acknowledge the relocation to a foreign country, and that the secondee remains an employee of the home employer, are all distinctions that should be made by employers when drafting secondment documentation.
Secondments have proved, and will likely continue to prove, successful for many businesses, both within new zealand and globally. however, it is important that they are managed carefully. employers need to invest appropriate time in the planning and documentation of all secondments to ensure their success.