Cross-border assignments are becoming increasingly popular with multijurisdictional employers, in order to attract employees, “up-skill” their workforces, and fill labor or skill shortages. Such assignments may be carried out by way of a transfer of employment, whereby the employee’s original employment contract is terminated and a new agreement is formed with a related entity in the foreign jurisdiction. Alternatively, the employer may “second” or “loan” its employee to a host company, with the original employment contract remaining in place but subject to the terms of a secondment agreement between the employer and the employee and a separate agreement between the employer and the host company.
Employers that transfer or second their employees to foreign jurisdictions will need to consider a number of issues, including migration and taxation requirements as well as local employment and discrimination laws. A key issue for employers is to ensure that their employees receive the benefits to which they are entitled by law, both at home and abroad, without incurring additional tax and other expenses. This article will focus on the entitlements to annual leave and long service leave that are due to employees who are transferred or seconded to work in Australia.
An employer that seconds or transfers an employee to Australia will be required to provide that employee with his or her minimum entitlements to annual leave under the Fair Work Act 2009 (Cth) (“FWA”). The employee will progressively accrue a pro rata amount of four weeks’ annual leave per year for the period of time worked in Australia. The employer should ensure that any contractual entitlement the employee may have to annual leave is coordinated with or expressly set off against the employee’s statutory entitlements under the FWA. It is also important that the relevant contractual arrangements clarify that the employee is entitled only to the public holidays that are declared in the Australian state in which the employee is working, not those to which he or she would be entitled in his or her home country.
In contrast, although an employee’s long service leave entitlements will vary within each Australian state or territory, employees who can be characterized as “temporary” or “expat” workers generally do not accrue long service leave for the period in which they are working in Australia. Instead, an employer will need to consider whether the employee’s service while in Australia will count towards any similar long service entitlements under the law of the employee’s originating jurisdiction.