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Project-based assignments are strategically important for companies, but they also present considerable challenges. Only with forward-looking planning, clear processes and legal safeguards can the various risks be minimised.
In principle, this type of assignment involves the same challenges and risks as any other assignment. The only complicating factor is that the assignment does not always take place at an affiliated company, but often at a customer's premises.
As a company, you do not always have a choice as to which employee you can assign to the relevant projects, as the focus is on the qualifications, knowledge and experience of the employees. Furthermore, employees do not always want to be assigned to a project abroad.
In addition to choosing the right employee, there are a number of other challenges, which we would like to briefly discuss below.
1. Legal complexity
When working abroad, you are always confronted with at least two different legal systems: the legal system of the country from which the employee is sent (hereinafter referred to as the home country) and the legal system of the country in which the employee is working.
This leads to the following issues, among others:
- Drawing up an assignment contract/secondment agreement
- Different national labour law requirements: including minimum wage, working hours, rest periods, holiday entitlement
- Applicable law in an international context (Rome I Regulation, AEntG)
- Legal certainty for project-related employment (distinction from temporary work/ subcontracting)
2. Social security law
During the assignment abroad, the employee should, as far as possible, remain subject to the social security system to which they were subject prior to the assignment abroad. Different regulations apply depending on the nationality of the employee, their country of origin, country of residence and country of assignment, as well as the duration of the assignment. In this regard, it is important to clarify before the assignment in which country the employee is insured and what the scope of insurance or insurance cover is.
- Obtaining the A1 or the certificate of coverage (CoC)
- Check the period of validity; this may be a problem for longer-term projects.
- Incomplete social security coverage in the home country in the absence of bilateral agreements or social security affiliation in the country of assignment
- Complicated documentation and checks by foreign authorities
3. Tax risks
Depending on the duration of the assignment, working abroad may result in tax liability at employee level or a risk of establishing a permanent establishment for the sending company. It is therefore important to analyse the situation carefully before the assignment.
- The 183-day rule under double taxation agreements is often misinterpreted
- Risk of double taxation
- Establishment of a permanent establishment abroad, which can have significant tax consequences for the company
- Unclear responsibility for withholding income tax/withholding tax
- Obligation to file a tax return
- Higher tax burdens and thus the need for tax equalisation
4. Residence and work permits
It should be clear to everyone that, as a rule, an employee who is assigned to a project in another country requires a corresponding work permit. This work permit may vary depending on the country of assignment, the duration of the assignment and the nationality of the employee.
However, for certain tasks (including negotiations with customers and project supervision), the question may arise as to whether a work permit is actually necessary. There is no general answer to this question; it depends on the country of assignment.
In practice, the project contract poses the greatest challenge for project assignments with a customer.
- Within the EU: Posted worker notification – different regulations in different countries. Some countries apply the regulations more strictly than others (France, Belgium, Italy and Austria are very strict).
- Outside the EU: Obtaining a work permit and, in some cases, a visa. In some cases, lengthy approval procedures are involved.
5. Administrative requirements / labour market controls
Not only in Switzerland, but also in other countries, the number of labour market controls to prevent illegal employment and salary dumping has increased. For this purpose, certain documents must be made available to the employee for their assignment abroad:
- Mandatory documents: employment contract, proof of salary, A1/CoC, proof of working hours – these often have to be kept on site
- Different formal requirements and language requirements depending on the country of assignment
- Penalties for non-compliance: if the requirements are not met, fines are usually imposed as a first step, followed by further measures
6. Communication and coordination
Good and coordinated communication and coordination are essential for the success of an assignment abroad.
- Coordination between HR, project management and assignees as well as the host company/customer
- Unclear internal responsibilities (e.g. who organises travel, accommodation, registration?) often lead to problems
7. Costs and effort
When estimating the planned time frame, project assignments should always be approached with a certain degree of caution. Projects often start later than planned or are delayed, which requires a flexible response, especially if the project is taking place at a customer's site. Any additional expenses or tasks that may arise as a result must be planned in advance or taken into account:
- High travel costs, accommodation, expenses
- Hidden costs due to administrative work, compliance measures
- Possible project delays
8. Integration and employee motivation
Not every country is the right place to work for every employee and will lead to the successful completion of the project assignment. In addition to professional qualifications, cultural aspects and the openness of the employee should also be taken into account before selecting an employee for a project assignment. Here are a few of these points:
- Settling in the host country (cultural, linguistic)
- Isolation or lack of social connections
- Loss of motivation if there is a lack of support or prospects for returning home
9. Occupational health and safety and duty of care
Even during an assignment abroad, employers have a duty of care towards their employees. This is all the more important when the project assignment takes place at a customer's premises:
- Compliance with local safety regulations
- Checking healthcare in the country of assignment
- Check the need for international insurance
- Employers are generally liable for the welfare and health protection of their employees, even during assignments abroad
10. Return management and follow-up
Depending on the duration of the assignment abroad, more or less planning and coordination will be required with regard to the employee's return. However, it is always important to keep an eye on the end of the assignment.
- No regulated reintegration management
- Loss of expertise or integration upon return if no consideration has been given beforehand to how the expertise acquired by the employee can be utilised
- Lack of planning for career prospects after assignments abroad (especially for longer-term assignments)
Conclusion
A successful project assignment abroad depends on forward planning, clear responsibilities and compliance with all legal requirements. Companies that take a strategic approach to project-based assignments abroad not only ensure legal certainty, but also promote the satisfaction and performance of their employees on site. Only those who keep an eye on both the administrative hurdles and the human aspects of project assignments abroad can implement projects abroad successfully, efficiently and sustainably.
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.
