• Expatriates Are Not All in the Same Boat
  • April 12, 2010 | Author: Marijke Granier-Guillemarre
  • Law Firm: Sarrau Thomas Couderc - Paris Office

    The terms of the seconded or expatriated employee's return are determined either by the national collective bargaining agreement applicable to the company or by the employment contract.

    The secondment or expatriation amendment must therefore be very specific on this point. Where employees are seconded to a foreign subsidiary by their parent company, the law provides that the latter must, if the subsidiary lays them off, repatriate them and provide them with a new job that corresponds to their previous duties. If the parent company also intends to lay off the employee, it will have to comply with the French procedure by invoking a ground different from that cited by the subsidiary and take into account the salary and years of service with the subsidiary when calculating severance payments.

    Employees that are seconded by their parent company or expatriates working for foreign companies in a European Union country: not all of them enjoy the same rights. From an employment law perspective, secondment is when the original employment contract of the employee sent abroad is maintained with the French employer. The employee therefore leaves to perform a mission having a limited duration. The date of return to France is determined in advance. The relationship of subordination with the French employer remains strong. An amendment to the French employment contract sets out the terms and conditions of the secondment.

    Negotiated amendments

    However, in the case of long-term expatriation, the relationship with the French employer cannot be maintained. An expatriation amendment providing for the termination or suspension of the original contract is therefore signed. At the same time, an employment contract under local law is concluded with the host company, to which the employee now reports exclusively.

    Before sending its employees to another EU country, the employer generally negotiates their remuneration with them (and, in particular, the payment of an expatriation bonus).

    Within the framework of the mobility amendment, account is taken of the removal from the national territory (coverage of the costs of the removal, round trips to France, schooling of children, accommodation and vehicle costs), the standard of living of the host country, local difficulties (political situation for example), and local social welfare and taxation conditions.

    If they are sent to another country of the European Union, French employees remain affiliated with the French social security regime and do not need to join the local regime. Their pay slips are issued by their company which, in France, continues to insure them against all risks: sickness -- maternity, unemployment, old age, death, incapacity, work-related accident, and occupational disease. The term of the secondment is 12 months, which may be renewed once (derogations are possible if the mission exceeds two years).

    In practice, before they leave, employees that are seconded to a European subsidiary of their group must obtain an E101 form. They pay their contributions in France and may receive medical care in the host country. They benefit from the daily sickness allowances paid by the French health fund.

    Expatriates, for their part, no longer come under the social welfare regime of their home country. They are subject to the social security legislation of the host country. Thus, if they reside in the State where they work, they benefit from the cash and in-kind benefits of the host country's health insurance system.

    Voluntary insurance

    Although they are obliged to adhere to the local social security system, which may be more or less advantageous depending on the country, employees may wish to be guaranteed an acceptable level of benefits and continue, despite the expatriation, to pay into a retirement fund. To do so, they must use the voluntary insurance system.

    In France, this social protection is provided by three funds. The Caisse des Français à l'Etranger (fund for French citizens abroad ¿ CFE) covers social security risks (illness, maternity, invalidity, occupational accidents and occupational diseases as well as basic retirement benefits). The GARP covers the risk of unemployment (it should be noted that the employer must insure its expatriate employees against the risk of redundancy). Finally, the Casisse de Retraite des Expatriés (pension fund for expatriates ¿ CRE) and the Institut de Retraite des Cadres et Assimiliés en France et de l'Exterieur (pension fund for executive-level employees in France and abroad ¿ Ircafex), which are affiliated with the Arrco and Agirc institutions respectively, cover supplementary pensions. The employer may still pay some or all of these costly contributions.

    As far as the basic pension is concerned, periods served in EU countries are taken into account by the Member State in which the insured person wishes to receive the pension. However, this coordination of pension systems between EU countries does not concern supplementary pensions. Consequently, persons scheduled to leave are advised to voluntarily adhere to the CRE and Ircafex institutions.