An employee in Europe has many advantages in terms of social protection.
He benefits from health insurance, provident fund, basic pension. Also family benefits (not available in all European countries) and unemployment insurance (very variable depending on the country). Is this still the case if the employee goes to work abroad?
As soon as a company grows, international mobility is often considered for some employees. The question of their future status then arises: posted employee or expatriate employee? The origin of the company and the duration of international mobility are the main criteria used to differentiate these two statuses.
The status of seconded employee
Considered as a seconded employee when he:
- Works for a company which has its head office or at least one establishment in the country of origin
- Hired in the country of origin
- Goes to work abroad temporarily for a specific period of time
- Remain under the subordination of his original employer
- Continues to receive remuneration from it
Regarding social protection, the posted worker continues to benefit from the original social security system and the single old-age insurance system.
The maximum period of posting varies depending on the country in which the posted worker is located. Taking the example of France, here are the maximum periods of secondment:
- EU / EEA / Switzerland: the legal period of secondment is 2 years (an extension of the secondment is possible under an exceptional individual agreement)
- Countries that have signed a bilateral social security agreement with France: the maximum period of secondment is different depending on what is provided for in the agreement. It can last between 6 months and 5 years. Beyond the periods provided for above (maximum period of secondment + extension), the employee will lose their secondment status
- Countries outside the EU / EEA / Switzerland that have not signed an agreement with Social Security: the duration of the posting is that provided for by French law. It is for 3 years, renewable once, ie 6 years at most. Beyond this 6-year period, the employee will be considered an expatriate.
The status of expatriate employee
An employee has the status of expatriate:
- If he is hired directly from abroad
- If the employer has not chosen the posting regime
- Because he has exceeded the maximum period of secondment
By choosing expatriate status, the company and the employee agree to suspend or even terminate the initial employment contract.
Two options as to the nature of the contract:
- An employment contract from the country of origin if the employee is recruited to work abroad or if he is sent there for an indefinite period.
- A local contract concluded with the company in the host country, after suspension of the initial contract if the employee is sent abroad for an indefinite period. The suspended employment contract is reactivated at the end of the mission, upon return to the country of origin.
What social protection for the expatriate employee?
The expatriate employee is affiliated to the social protection system of the country of expatriation. Depending on the local regime of the country of expatriation, the expatriate must take out additional health insurance. This insurance provides sufficient coverage or even similar to that enjoyed by the employee before his expatriation.
Cross-border employee status
A frontier worker is a person carrying out an activity, whether employed or not, abroad, in a country to which he travels daily or at least once a week. In order to benefit from the status of frontier worker, the latter’s domicile must in principle be located in a so-called border area, generally located less than 30 kilometers from the border.
The frontier worker is affiliated to the social security system of the country of employment. He must therefore pay his social contributions there. However, he is entitled to healthcare on both sides of the border (country of residence and country of employment).
What is the best status for an employee abroad?
The status of seconded and expatriate do not have the same impact on social and tax levels. You must take the time to think it over to determine the most suitable solution, both for the company and for the employee.
Expatriation using private contracts to support the employee abroad often offers better coverage at a lower cost to the company. Expatriation also allows more flexibility and contractual negotiation with the employee directly. It is nevertheless essential to prepare for this change in advance, to study precisely the local conditions of social protection.
The seconded status is often interesting for employees going abroad for short periods (less than 2 years). The secondment status has a much higher cost for the company. The secondment mainly concerns people with specific skills essential for the development of the company.
Mondassur offers insurance solutions for all statuses. On secondment or expatriate, we offer international insurance adapted to all situations for your employees. Contact us for personalized advice on the social protection of your employees abroad.