When it comes to ex-pat or local employment contracts, they can be as varied as the ex-pats themselves. Different companies can look at these contracts differently.
A local contract usually refers to a foreigner hired by a company while visiting, working, or living overseas. An ex-pat employment contract is usually for an ex-pat whose company asks them to work overseas; the employee has specific skills that the company needs for their overseas operations.
The local and ex-pat employment contracts can differ greatly from company to company and country to country.
Local Employment Contracts
The local employment contract usually refers to a foreigner who has been hired to work for a company while they were working, living, or visiting overseas. The foreigner applied for the job and received it.
A local hire can also be considered an ex-pat, but usually, they are on a local contract and not an ex-pat employment contract.
When a company agrees to hire a foreigner while you are overseas, the company will usually help handle your local working permits and residency requirements for you and your family.
Here are things a company can include in a local employment contract:
Employment Laws – The local employment contract is a regular employment contract that is usually subject to the local employment laws. Depending on the laws of the country you are at, as a foreigner, not all employment arbitration and other laws may apply to you. In other words, if you get fired, you may not have the same recourse as a citizen of the country where you are working.
Salary – Usually, your salary is paid into a local bank; some companies will agree to pay you into an overseas bank account.
Taxation – Some companies will agree to help you pay double taxation if you need to pay tax in your home country and the country you are now working in.
Insurance – Many local employment contracts will include health and some other insurance for you and your family. If the country you live in offers excellent medical care to all residents, this may not be included.
A local employment contract can also include many things that an ex-pat employment contract has. Some companies may add in a repatriation clause in that if you do not work for them, you need to go home. This could have to do with the legal requirement of the country or your working permit.
What is in the contract will depend a lot upon your position, the country where you are working, the legal requirements of the country, and the employment policy of the company you are working for. Before you sign a local employment contract, check all this out carefully.
In Asia, I have seen some very high-level people negotiate into their contracts for the company not to pay their housing but instead to pay extra salary; they wanted to buy a house and have the company help pay for their housing payment in the country they were living.
Expat Employment Contract
The Expat employment contract is exactly as the name implies; it is a contract for an ex-pat who has been asked to live and work overseas for a period of time.
Not always, but generally speaking, the ex-pat who has been asked to live and work overseas has been in the company or industry for a while, and they have a specific skill that the company needs overseas. These skills can be as varied as the companies themselves but usually include language, leadership, or technical skills.
In an ex-pat employment contract, the company views the ex-pat as essential to help the company’s overseas operations. Because they view the ex-pat as essential, they are usually willing to move their family overseas and pay all the other fees.
Some companies may hire an ex-pat already in the country as they look to fill a position. Others may recruit those working for a competitor or a similar company to fill the position they need.
Here are things a company may include in an ex-pat employment contract:
Employment Laws – In the contract, it could state the ex-pat is subject to the employment laws of their home country. This can be because they were hired in their home country and then sent overseas to work. The company may include a repatriation clause in that the employee must return to his home country once the contract is finished.
Salary – The company may pay salary in the US or other country bank account or the bank account of where the ex-pat is living and working. Many times they will pay a combination of salary payments both overseas and in the account of the country, you are living and working.
Taxes – Some countries have double taxations agreements which means that ex-pats do not need to pay double taxes to live and work in their country. If the country does not have this agreement – as the United States does not – many times, an ex-pat employment contract will take this into account.
Home Leave – Usually, an ex-pat employment contract has some home leave for the ex-pat and their family included in the package.
School Fees – International school fees can be costly; in an ex-pat contract, the school fees for the children are usually included.
Housing – A ex-pat package also usually includes some housing allowance. Some of the packages have a limit, and others do not limit the housing fees.
Car and Driver – Many ex-pat packages, especially those in 3rd world countries, include a car and driver. Sometimes the car and driver are part of the company, meaning the ex-pat needs to travel frequently and use the car to go to a factory or out-of-town locations. Other times it is a car for the family to use. In some places, the roads are dangerous, so the company does not want the ex-pat or their family to drive or take local transportation.
Insurance – Most ex-pat packages include insurance. The insurance can range from excellent health and evacuation insurance to other things such as kidnappings, security, etc. This will depend on the company and where the ex-pat is working, and how dangerous it is.
Moving expense – The company usually has a moving expense allowance to allow the family to ship over their personal belongings. Some companies allow an ex-pat to bring over all their furniture and other household items. Other companies will give the ex-pat furnished apartments or houses and only want them to ship over clothing and other personal items.
Not all ex-pat packages will include these things, and many of them will include extras besides these things I have listed. An ex-pat’s contract can be as varied as the ex-pat, company, and country they are working in.
The package will usually take into account the level of the ex-pat. Some ex-pats are top managers of a company, so they will have a package, housing, home leave, and other things to reflect this. Others may be more mid-level and will usually have the package to reflect this also.
Many ex-pat packages have a time limit or a clause that the ex-pat can not stay in the country once the contract is completed and must come home to the parent company. Or it could also have a non-compete clause that they cannot leave and work with a competitor.
Local Vs. Expat Employment Contract
There are differences between a local employment contract and an ex-pat employment contract.
Many contracts are a hybrid between these two contracts. For example, a local employment contract could also include paid home leave and school fees.
The contract will depend on what you negotiate and how much the company needs you to help them with their overseas operations.
The higher your position’s level, the more chance you will get extra benefits in your contract; if you just graduated from college, the company may not give you all the extra employment benefits.
For a company to hire and bring in an ex-pat is very expensive. This is why in Asia over the last 10 years, I have seen a trend in that fewer ex-pats are coming with a full package. In many countries, companies can now find qualified local staff; many of these local staff have the US or foreign educations so they are hiring as many ex-pats as they once did.
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