There is still debate about which law must be enforced to the expatriate employee, that is, the one that was transferred from multinational company to work in our country and vice versa.
The word expatriate comes from Latin "ex" (without) and "patriate" (homeland, nation) that means "the one who is away from homeland". In these terms, an expatriate is a person who temporarily resides in different country or culture compared to the place he was educated and grew up or resided. However, the corporate culture uses the word expatriate to refer to the employee who was transferred to work in another country.
Under the principle of employment relationship continuity, in the cases of intracompany employee transferences, even the international one, the employment contract is maintained. Nevertheless, it is important that the transference is always implemented with the employee consent.
The question is: under which legislation is the employee who was transferred to work in another country, the Brazilian or the one of the country where he has been allocated?
To answer that question it is necessary to define first if it is a situation of permanent or temporary transference.
In the cases of temporary transference, that is, that in which there is a predetermination of the transience service and the employee is still legally related to the company that sends him to work abroad, there is no debate in legal theory and case law about which legislation must be enforced.
Under this assumption, the transferred employee has to be under the law of the country where the employment contract was agreed, because it is no longer appropriate the foreign law enforcement when the work period in the other country is delimited.
With regard to the permanent intracompany employee transference, the rules of Private International Law and Brazilian case law still diverge from which legislation must be enforced.
Some legal scholars and judges argue that in the situations of permanent employees international transference, they must be under the law where the contract is performed, that is the country to where the employee has been transferred. These jurists base their arguments in Article 198 of the Bustamante Code – that promulgates the Private International Law Convention of Havana - which establishes that industrial injury and social protection of workers legislation is territorial.
In accordance with these jurists opinion, enforcing the legislation where the contract is performed avoids the payment of different salaries and benefits to a single employee, which could offend the Principle of Isonomy. Otherwise – expatriate under the law of his home country – the expatriate alone would earn a different salary from the others inside the same company.
On the other hand, the current majority s understanding in the Superior Labor Court is to enforce the Brazilian and the foreign law to expatriates where each one of them are more favorable, in accordance with Law 7,064/82.
The Law above mentioned, in its Article 3ª, Item II, states that the company responsible for the transferred employee's employment contract has to ensure the Brazilian's labor protection law enforcement, regardless of the enforcement of the law where the contract is performed, in the points where it is not incompatible with this Law, when it is more favorable than the territorial legislation in the set of laws and with regard to each subject.
According to the Superior Labor Court the exclusively use of the law where the contract is performed – as provided by Article 198 of the Bustamante Code – must be enforced only in cases of workers hired in Brazil to provide services directly abroad, in other words, it wouldn't represent a situation of employee transference but just a specific hire to work directly in another country.
In the case of worker that has been hired and provides his services in Brazil, with a subsequent international intracompany transference, the Superior Labor Court understand that the Brazilian law is going to govern the employment contract, respecting the more favorable rule of the country where the employee is allocated, if there is one, and just during the residence period in this place.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.