Working in Several Countries: The Legal Challenges

To increase the effectiveness of business operations, working in several countries and posting abroad have become a common feature for the majority of big or middle-sized companies. 

Elena Chorvátová, Managing Associate, PETERKA & PARTNERSElena Chorvátová, Managing Associate, PETERKA & PARTNERS (Source: PETERKA & PARTNERS)

There are many legal aspects to be considered before making a decision on the specific structure of international mobility. It is also an area where legal questions cannot be isolated from the tax or social security impact. Below, we outline some of the aspects usually considered in these matters.

Legal issues/Different set-ups

From the Slovak perspective, employees with regional functions can have different statutes: an employment contract with a Slovak company with the place of work in Slovakia but with business trips abroad, or a Slovak employment contract and an independent separate contract with a foreign entity or secondment to a foreign entity. When deciding on the structure of sharing staff between several entities, several questions should be taken into account including which entity will profit from the work activity of a particular employee or which entity will give instructions and supervise the work.

For all options, the governing law is a key question. Within the EU the choice of governing law has several limits under the Rome I Regulation. So, when several jurisdictions are at stake it is worth having an overview of how certain matters are addressed in local laws, e.g. post-termination restrictive covenants and their enforceability,  or other particularities of local law, case-law or practice. In this context, experts with regional know-how and coverage can provide companies with tailor-made solutions and advice.

Regarding posting workers to other member states, also specific EU law must be taken into account. According to the Directive concerning the posting of workers within the framework of the provision of services  workers posted to the territory of another EU member state must be provided with the same terms and conditions of employment - so-called hard core provisions - that apply in the state where they are posted, covering among others maximum working time and minimum wage. In this context, for example, a general minimum wage has been implemented in Germany as of 1 January 2015. Such minimum wage can apply not only to German employers but also to employers situated abroad if they employ employees in Germany, including posting situations. 

In addition to a guarantee of statutory minimum conditions, which are not an issue for higher level employees, the requirement of comparable conditions may apply if there is a temporary assignment from one employer to another.

Regarding seconded employees, payroll set-up can be different from case to case as also can be the structuring of cost reinvoicing between the legal entities concerned. International mobility compliance issues, such as personal data or residency permit formalities need to be tackled as well. For managing employees working in several locations or working for several entities, their competence to act towards staff and decide on matters of other entities should be defined.

Coordination of social security/Principle of one legislation for insurance within the EU

For employees posted to other EU/EEA member states (or Switzerland) it is also necessary to ascertain in which state the related social security and health insurance contributions must be paid. The principle of applicable EU regulations is to have determined only one applicable legislation.

Tax implications

Tax aspects and their optimalization are one of the most complex matters to deal with when structuring work in several locations. Impacts from both sides, employees as well as the company, should be analysed. Depending on the jurisdiction, double taxation treaties must be consulted in addition to local laws. Among the common issues to tackle is the risk of permanent establishment or cost-reinvoicing. Sharing employees between entities and their mobility is usually connected with transactions that should be reflected in transfer-pricing documentation which has become of more interest also for the Slovak tax authorities.

In this context the concept of economic employer for the hiring out of labour (important also for taxation of employee’s’ income in host country and reinvocing between home and host employer) has been changed in Slovak law in 2014 to cover also executive directors.

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As mentioned above, legal, social security, cost calculations and tax issues must be taken into consideration when dealing with the employees’ international mobility. From a practical point of view, coordination between departments in several jurisdictions and regional know-how might be the key to successful implementation.  

By Elena Chorvátová, Managing Associate, PETERKA & PARTNERS

Peterka & Partners

This article is for information purposes only. Under no account can it be considered as either a legal opinion or advice on how to proceed in particular cases or on how to assess them. If you need any further information on the issues covered by this article, please contact PETERKA & PARTNERS, Tel. +421 2 544 18 700; E-mail:;

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Founded in 2000, PETERKA & PARTNERS has grown into a full-service law firm with over 150 lawyers and nine offices in Prague, Bratislava, Kyiv, Sofia, Moscow, Bucharest, Warsaw, Minsk and Budapest and has built up a highly regarded practice within the CEE region.

PETERKA & PARTNERS has been consistently ranked among the best practices in the leading publications on the legal services market, such as Chambers, Legal500 and IFLR1000.

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