The international mobility of workers not only involves temporary assignments but also expatriation processes in which professionals relocate for an extended period to another country. This change entails significant labor implications that companies must properly manage to ensure regulatory compliance and employee security.

At Adlanter, we thoroughly analyze the main labor obligations in expatriation, from contract formalization to the application of social security regulations. What are the key aspects that companies must consider when expatriating a worker?

 

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Contract formalization

The reality is that, in Spain, labor expatriation is not regulated by a single specific law but is governed by a set of regulations covering different aspects, such as labor relations, social security, and taxation. From the Workers’ Statute to the General Social Security Law, various regulations define the working conditions of assignments abroad. According to the Madrid Chamber of Commerce, expatriation is the temporary relocation of an employee for at least one year to another country to carry out their professional duties.

To establish a legal framework for expatriated workers, it is mandatory to formalize a contract in the destination country that complies with local legislation. Negotiation between the parties is crucial in these situations. Common topics include whether the employment relationship should be governed by Spanish law or the regulations of the destination country. It is important to note that, in the absence of an agreement, the labor laws of the country where services are performed will apply.

Possible scenarios

Depending on the specific circumstances of the expatriation and agreements between the company and the employee, three contractual formalization scenarios may arise:

  • Dual employment, provided that international Social Security regulations allow it. In this case, the worker maintains their contract in the home country and signs a new contract in the destination country.
  • Suspension of the contract in the home country and formalization of a new contract in the destination. This option is commonly used for short-term expatriations, allowing the original contract to be reactivated upon the worker’s return.
  • Termination of the contract in the home country and signing of a new contract in the destination. This model is used for long-term or permanent expatriations, where the employment relationship with the company in the home country is definitively ended.

 

Alternatives for employment in the destination country

Formalizing a contract in the destination country is a crucial step in expatriation, but it does not always follow a single model. Several options exist:

  • The first alternative is that the company has a local branch in the destination country. In this case, the company can handle the hiring process and fulfill labor obligations.
  • The second alternative is that the company registers a representative office or a permanent establishment to meet labor, administrative, and social security obligations. Choosing the right entity depends on the worker’s role in the destination country and the company’s planned activities. Conducting a preliminary analysis is highly recommended to determine the most suitable option.
  • Finally, the third alternative is using an Employer of Record, a company hired to manage employment obligations in the destination country. However, it is important to note that in some countries, this figure is illegal. Many nations, including Spain, do not recognize this arrangement, categorizing it as an illegal assignment of workers.

 

How should worker expatriation be managed?

Expatriation involves significant labor obligations that must be properly managed to avoid legal risks. Contract formalization and the different options available for companies to carry out hiring in the destination country are key aspects.

✔️​ At Adlanter, if you need support in managing the international mobility of your workers, contact our team of experts to assist you throughout the process.

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