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Off-boarding Foreign Assignees

One of the inevitable outcomes of sending employees on an international assignment is the occasional need to off-board or terminate the employee.  There can be a number of reasons why an expat employee may be terminated, and there are often specific justifiable causes, or even agreed and amicable terminations.   A successful off-boarding process will depend on whether the employment ends while still in the host country or after a return to the home country, company policy and which country’s employment laws will be applied.

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Overview of Off-boarding

Off-boarding an employee on assignment needs to be handled in a way that protects the interests of both the employer and employee.  This article will primarily address the complete termination of employment, and not instances of repatriation with continued employment in the home country.

In some countries, such as the US, termination processes and reasons will be spelled out in the employment contract, and a company may wrongly assume that those terms will control off-boarding of employees abroad.  However, many countries have statutory termination rules that will supersede contract terms, even if the employee initially agreed to the terms.

Since most jurisdictions require that long-term foreign employees are payrolled and sponsored by a local entity, the employee will also enjoy the protections of host country labor and employment laws.  This becomes a factor in the event that an employee feels entitled to additional payments or reimbursements upon the end employment.

Reasons For Termination of an Employee on Assignment

Termination With Cause

Only a few select countries such as the US, use an “at will” employment approach which means that no cause has to be shown to terminate an employee.  Unless there is evidence of discrimination or workplace retaliation, the employee has no right to challenge the termination.  Other countries give employees a wider range of statutory rights, and one of those is the need for an employer to demonstrate cause for a termination.  Any termination that occurs on foreign soil with a locally sponsored and payrolled employee, must meet one of the host country statutory causes.  Examples include fraud, drug use, criminal activity or acting contrary to the company’s business interests.  The requirement of cause is really only important if the employee contests the termination.

Termination Because of Business Scenario (redundancy)

In some cases, the employee’s role may be eliminated since the job function is no longer required, or there is duplication of work roles with another employee.  Termed ‘redundancy’, this reason for termination is based on business reasons, but may still grant the employee rights to statutory notice periods and even severance to compensate for the loss of position.  This can present a dilemma for companies that are reducing their business presence in a country and must eliminate one or more similar positions.  Local redundancy laws could result in unanticipated off-boarding expenses to meet required employee payments.

Termination Because Assignment Ends (repatriation)

When an assignment ends with repatriation, but no continuing employment in the home country, and employer should pay special attention to host country termination laws.  Although this situation may seem straightforward if the employee’s role was tied to the foreign market, it should be noted that a few countries, such as China, will view even simple repatriation as a legal termination within their country.  A simple departure from the country following an assignment will require statutory allowed causes and adequate notice.   Failure to follow those rules could give the employee rights to challenge the termination or claim statutory severance, even if that was not part of the employment contract.

Termination Due to Employee Circumstances (resignation)

If an employee elects to terminate the assignment along with their position, there is really no issue with host country laws if the departure is related to resignation from the company.  It is important to document the circumstances along with a formal letter of resignation to prevent any future complications if the employee decides to pursue statutory severance or bonus pay.

The Importance and Benefits of a Clear Policy and Procedure

When an employee is being off-boarded there is always the risk that for some reason they will have a grievance, or attempt to make a claim for additional payment based on statutes in the country of assignment.  In truth, employees on foreign assignment can avail themselves of laws and remedies in both the home and host country.  For this reason, having clear policies and procedures in place for overseas assignments can save the company both time and money.

By having a set policy a company creates clarity about the limits and endings of all assignments, and transparency for expectations and outcomes for both employee and employer.  This reduces the risk of an employee being dissatisfied due to a misunderstanding of how off-boarding will proceed, and should serve to speed the process.

What an Off-boarding Policy Should Try to Achieve

The policy for off-boarding should be comprehensive enough to cover the essential elements of termination, final payments, benefits and repatriation.  Although the employment contract may address some items, it is helpful to have a backup policy in case of omissions, since most contracts will reference written employment policies in some way.  The key objectives of the policy include:

  1. Business continuity: Despite the employee’s departure, all work relationships, client communication and information technology is transitioned to the next employee.
  1. A fair result for all concerned: Policies should give equal weight to both employee and employer priorities, so that no party is unfairly disadvantaged by the termination.
  1. No compliance risk: The policy should reflect host country laws to avoid any instances of non-compliance.  This should include work permit deregistration, proper notice periods and any severance pay.
  1. The employee accepts the end of employment: Not all terminations are amicable, but ending foreign assignments should be agreed to by all parties to ensure a smooth transitions and repatriation to the home country.

Basic Principles to Follow for Successful Off-boarding

Contracts: The employment contract will be a consideration in any termination, since there may be terms that pertain to employee salary and benefits, severance, treatment of intellectual property and non-compete clauses.  Depending on contracts and pay structure, a company may need to consider home country regulations as well as host country termination laws.

Repatriation: Except for terminating with cause or resignation, the preferred route is to repatriate the employee and close out their host country affairs before termination to avoid any conflicts or compliance issues.  This ensures a seamless exit from the country, and reduces stress on the employee and their family.

Ongoing Communication:  Former employees can become a source of future business contacts and can even perform consulting or advisory work as independent contractors.  By facilitating a successful off-boarding process, an employer can secure the employee’s good will and potential support of the business.

Summary

Off-boarding international assignments requires careful consideration of both home and host country employment laws, as well as the relationship with the employee being terminated.  Most problems can be avoided by planning a termination ahead of time, communicating with the employee and openly reviewing the specifics of the termination.  Following these principles will serve the interests of both employer and employee for a successful conclusion to the assignment.

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