Sending an employee on an overseas assignment can be a rewarding experience for both parties – employers can rest easy that a trusted employee is working on the overseas project, and employees stand to gain the knowledge and experience that international postings can offer.
Yet all too often employment relationships needlessly end because poorly executed overseas postings turn sour. One area in particular that frequently causes grief for employers is being unexpectedly slapped with a returned employee’s request for sick leave or annual leave, despite the employee not having been in the country for a period of time in order to accrue it.
For one employment law expert, a common problem is that employers get bogged down in the details of the move itself, instead of ensuring the home contract is legally put on ice. As an example, an employee could be assigned to a two-year posting in the UK, and legally request upon their return to redeem the annual leave that had accrued while they were away. In poorly planned contracts, this is something that can easily occur.
Yet it needn’t come to that, David Cross, partner Norton Rose, told HC. “If somebody was being assigned out of Australia on a secondment to the UK, you could validly bring about a situation where their Australian contract of employment would exist, but it would be in a state of suspended animation. Because the person isn’t rendering any kind of work for the employer in this country, they wouldn’t accrue annual leave or sick leave – things would just stop still for the period of time that they were away,” Cross said.
Another issue which has left many employers in the lurch is not factoring in the continued long-service leave entitlements that accrue whilst an employee is abroad on a secondment. Long service leave legislation differs from state to state, but as a case in point, under section 4, subsection 12 of the NSW Act, Cross said that the period of service spent working at a related overseas business is likely to be counted as a period of continued service. “Assuming [an employee had] been working abroad for a related business, although they haven’t been accruing annual leave or sick leave, when they come back they’ve got to be given credit for the period that they were away working for that related business for the purpose of assessing their eligibility for long service leave,” he said.
As an example, Cross said that an employee may have worked in Australia for five years before going to the UK for three years to work for the same company, then they return to Australia; they would be looked upon as having worked an eight year period of service. “They work here two more years and they hit the magic 10 years and qualify for long service leave.”
It is imperative that HR applies just as much diligence to crafting the frozen Australian employment contract as is afforded to writing the overseas contract.