What social protection for an expatriate?
Unlike posting, expatriation involves changes in the rights and social benefits of your employees.
In all cases, depending on the country of expatriation, the employee may benefit from the social protection of the country in which he will be working.
What is social protection abroad?
Social protection refers to all collective provident mechanisms, allowing individuals to cope with the financial consequences of “social risks”. Social protection is based on several types of mechanisms:
- Social benefits paid directly to households. They can be in cash or in kind. For example retirement pension or reimbursement of health care.
- Social service provision, which refers to access to services, provided at a reduced price or free of charge (eg nurseries, hospitals, etc.).
In the context of expatriation and the employer’s obligation to ensure the safety of its employees, the expatriate’s social protection covers social benefits in particular:
- Accident at work and occupational diseases
- Old age and unemployment
Voluntary insurance for an expatriate
By expatriating abroad, the employee ceases to depend on the social security of his country of origin. He must fall under the social protection system of the country in which he works.
If the social protection enjoyed by your employee is not sufficient in the country of destination, he can contribute on a voluntary basis; in addition to his compulsory affiliation in his country of work. This is private insurance.
We find different mechanisms in most countries with an appropriate choice to make in terms of health insurance for the expatriate:
Choose expatriate insurance to compensate for the inadequacy of medical infrastructure
In the situation of a weak local health system, you need to purchase comprehensive insurance that will practically “replace” the local health system to cover the expatriate’s health costs. In some countries, the expatriate may benefit from local public insurance. However, in many cases it turns out to be insufficient. It requires taking out insurance that can cover all expenses as well as repatriation to other countries allowing treatment in accordance with international medical standards. The case for countries like Cambodia, Vietnam, Salvador.
Choose expatriate insurance to compensate for the lack of local public insurance
A support system that exists but only for locals, and not expatriates. For example, depending on the visa obtained, an expatriate in Singapore may not have access to public insurance. This is also the case in China. Here again, the employee must have private insurance.
Choose expatriate insurance to facilitate access to care and speed up coverage
Private insurance for an expatriate is strongly recommended also in countries with a public system but insufficient in relation to the needs. The biggest dysfunctions often concern access to care and the slowness of the process. Thus in the United Kingdom, the public system (National Health Service) limits the remainder to be paid but imposes on you sometimes very long waiting times and does not leave you the choice of the specialist. The same is the case for Mexico where the waiting time can be long even in an emergency
Choose international health insurance in addition to a local compulsory insurance scheme
This is the case in some countries such as France or Canada where there is a quality local public system that does not cover certain care provided that you can benefit from it as an expatriate. Membership in the local public system is often linked to the expatriate’s residence permit and / or the length of their stay. Even if the public system remains efficient, it will always be essential to take out additional insurance for your expatriate employee. Taking out additional private insurance is strongly recommended in order to allow your employee to be properly reimbursed for their medical care abroad. Also in Switzerland where dental and optical care are not covered by compulsory health insurance, it is strongly recommended to choose additional insurance.
Unemployment situation during expatriation
The employee works in a country of the European Union:
He will benefit from unemployment insurance in the country of expatriation.
The employee works outside the European Union:
Depending on the employee’s country of origin, he or his employer may register before departure for a voluntary scheme contributing to insurance allowing him to be compensated in the event of unemployment.
Retirement for expatriate employees
As an expatriate, your employee must contribute to the pension funds of his host country. Periods spent abroad therefore count towards retirement. However, periods spent abroad are taken into account differently depending on the country of expatriation.
The rule is that expatriation within the European Union will allow the accumulation of pension schemes so as not to be penalized. If expatriation takes place outside the EU, you have to look at the agreements signed between the countries. If retirement is one of the points of agreement with the country of expatriation, recognition of the duration of expatriation abroad will be easier. Otherwise, variable compensation mechanisms must be put in place depending on the employee’s country of origin.
The calculation of pensions
To calculate the pensions due by each country, the plans use the most favorable amount between the results of the following 2 calculations:
- 1st calculation: the “national” pension. In each country, the pension to which the worker would be entitled is calculated by applying only national legislation, taking into account only the periods of contribution in that country.
- 2nd calculation: the “community” pension. The pension to which the worker would be entitled is calculated taking into account all of the quarters completed in all the countries of the Union. This amount is then reduced in proportion to the time contributed in the country.
The higher of these 2 amounts, for each country, is used. The pensions of the different countries are then added to give the total pension. Each country pays its share of the pension directly.
Please note, retirement is not granted automatically, the employee must request it.
By leaving their country of origin, your employee does not waive all social security coverage. Health, unemployment, retirement… everyone has the right to social protection. However, some factors vary from country to country; you will therefore have to familiarize yourself with new procedures.