Meaning
Temporary personnel transfers occur when an employer sends an employee to work for a foreign affiliate while maintaining the original employment contract. In international corporate groups, cross-border labor secondment enables the transfer of technical expertise and managerial oversight across borders. This arrangement maintains the continuity of the home country employment relationship.
Employment Relationship
Dual contract structures are frequently utilized to manage the legal obligations arising under two separate jurisdictions. During a cross-border labor secondment, the employee remains on the home country payroll, but the host entity directs day-to-day operations and provides on-site supervision. This structure ensures that the worker maintains accrued pension benefits and seniority in the home jurisdiction while complying with local host country labor laws.
The secondment agreement must clearly allocate the responsibility for worker compensation, performance evaluation, and disciplinary actions between the two corporate entities.
Tax Liability
Foreign tax authorities may view the presence of an expatriate worker as a trigger for corporate income tax. If the assignee negotiates contracts or holds power of attorney, the foreign affiliate risks establishing a permanent establishment in the host country.
Exit Allocation
Termination clauses must define which entity bears the cost of repatriation at the end of the assignment. If the secondment terminates early, the home entity must absorb the return costs or offer a comparable role to the employee to prevent wrongful dismissal claims.
