Anna Birtwistle, CM Murray LLP 17 May 2011 CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law Key issues for Expatriate Assignments and UK employment rights

City of London is the world’s leading international banking sector Currently 1,117 firms in the financial sector are majority foreign owned CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law CountryNo. of Foreign owned financial services companies in the UK USA548 Switzerland67 Germany 57 France53 Japan42 * Source IMAS *

Overview 1.Red flags in managing international employment arrangements 2.Which country’s laws apply? 3.Choosing the most suitable type of contract 4.Top 10 key provisions for expatriate assignments CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Red Flags in managing international employment arrangements The contracts rarely tie up No one has thought about the end of the secondment Not following procedures or allowing enough time Overseas line managers CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Red Flags in managing international employment arrangements Cultural sensitivities –Religion –Business etiquette Language Pre-departure training CM Murray LLP: Specialists in Employment and Partnership Law CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Which country’s laws apply Some Key Concepts: Governing Law: the law to interpret the employment contract (choice of parties) Mandatory Laws: compulsory employment laws (these generally cannot be chosen) Jurisdiction: The question of whether or not the Court Tribunal can hear the claim CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Governing Law (Applicable Law) Rome I Regulation Article 3: Freedom of choice but no derogation from mandatory laws Article 8 governs individual employment contracts: –Parties free to choose the law governing the contract BUT such choice may not result in depriving the employee of the protection of mandatory laws –Where parties have not chosen the governing law, the contract will be governed by the law of the Country in which, or, failing that, from which the employee habitually carries out work. Article 21: The governing law may not be applied if it is manifestly incompatible with the law of the forum. Contractual Obligations: Rome convention-pre17 December 2009 Rome I Regulation-post 17 December 2009 Chunilal v Merrill Lynch [2010] EWHC 2720 Duarte v the Black and Decker Corporation [2007] EWHC 2720 Non-Contractual obligations: Rome II Regulation CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

What are mandatory laws? Laws that cannot be derogated from e.g. in the UK: rights on termination, notice on dismissal, working time, discrimination protections and right to the minimum wage How to determine which country’s mandatory laws will apply: –Where employee habitually carries out work; or –Country in which business through which employee was engaged is situated; or –Some other country if it is more “closely connected” with that country. Posted Workers Directive CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Contracts of employment: Employer can only sue in employee’s country of domicile Employee has choice of suing: –In employer’s EU domicile/deemed domicile –EU place where employee habitually carries out work; or –If no such place, the EU place of hire Samengo – Turner V Marsh & McLennon (services) Limited [2007] EWCA Civ 723 Brussels I Regulation: –Defendant domiciled in EU –Civil or commercial matter UK: Civil Jurisdiction and Judgments Order 2001 Pre dispute “exclusive jurisdiction” clauses will not work! CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law Jurisdiction: Where can claims be brought?

Extra territorial reach of UK statutes Domestic employment law –ERA 1996 –Lawson v Serco European derived law –The “Bleuse” Principle: Construe territorial scope to give effect to directly effective EU rights Discrimination –Pre EQA Test set out by statute However note application of Bleuse principle in MoD v Wallis and Grocott [2011] EWCA Civ 231 –Post EQA Lawson v Serco, pre EQA test or apply Bleuse principle? Lawson v Serco 3 broad categories 1.Standard cases – employee working within Great Britain 2.Peripatetic employees e.g. pilots; and in exceptional circumstances, 3.Expatriate employees in following categories: - British enclave - Posted abroad for purposes of a British business - “Equally strong” connections with Great Britain/British employment law (Serco Ltd v Lawson, Botham v Ministry of Defence and Crofts v Veta [2006] UKHL 3) CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Ultimately tax, social security or immigration led Length of assignment Division of responsibilities between host and home country company Intercompany agreement on secondment? Options: Secondment Dual/multiple contracts Local employment contract International standardized contract tailored to local laws CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law Choosing the most suitable type of contract Secondment Home Company Host Country Company Employee Intra Company agreement

Top 10 key provisions for expatriate assignments Immigration Assignment and continued employment to be conditional upon obtaining and retaining appropriate immigration documentation Pay and Benefits Do pay and benefits need to be suspended in employee’s “home” contract? In what currency/ies should employee be paid? Preserving pension issues Is a provision required in the expatriate agreement to preserve pension rights? Will the employer continue to make payments into the employee’s pension fund during the assignment? Tax Does tax equalisation or protection need to be considered (e.g. if the employee will be subject to a higher tax regime in the host country)? Are there any taxation issues that might arise at the end of the assignment? Relocation costs Should a cap be included in the agreement as to the cost of shipping/storing of belongings? CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Top 10 key provisions for expatriate assignments Allowances Should relocation, cost of living, disturbance (out of pocket) and/or hardship allowances be provided? Accommodation Consideration to be given to level of contribution towards rent. Is the company willing to pay for the services of a rental agency/make a contribution to temporary accommodation costs prior to the employee finding permanent accommodation? School fees Specify the level of any contribution to schooling fees of the employee’s children. Length of secondment and period of notice Include a clause clearly defining the anticipated length of assignment but allowing termination on earlier notice. Will the company consider allowing the employee to be localised at the end of the assignment? Consideration to be given to the level of and circumstances in which repatriation costs will and will not be paid. Company handbook Ensure that the contract identifies the rules by which the individual will be governed when working abroad and make sure that any global handbooks which are stated to apply to the expatriate are consistent with local laws. CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law

Speaker Details Anna Birtwistle CM Murray LLP 37 th Floor One Canada Square Canary Wharf London E14 5AA United Kingdom If you have any questions, please do not hesitate to contact: Phone: (0) Website: CM Murray LLP: Specialists in Employment, Partnership and Business Immigration LawCM Murray LLP: Specialists in Employment and Partnership Law