International Mobility within the Oil and Gas

From an employment perspective, a number of key factors must be considered:

• Employment documentation: To regulate and manage the employment, three documents should be put in place: (i) employment contract with the management services company; (ii) secondment agreement; and (iii) local employment contract with the local entity.

• Payment of wages: Often the local jurisdiction into which the employee is seconded may require wages to be paid locally and consideration can then be given on whether or not to split payroll. There may also be restrictions on transferring money out of the jurisdiction.

• Tax: some employers operate an equalisation system which employees need to be aware. In certain instances, it can push employees to localising their contracts. Otherwise the employees may need specialist tax advice regarding continued taxation in their home countries or country of residence.

• Immigration authorisations: Often to obtain a work permit and a residency authorisation, a local contract in the local language must be executed with a local entity resulting in employer specific work authorisation being granted. Key considerations for authorisation are the employee’s educational and professional qualifications and the job title. It may be that the job title is changed in order to secure authorisation.

In other cases, local restrictions may mean that the required job title is not granted due to the authorities’ view that the employee’s educational and professional qualifications do not correlate to the application for immigration clearance made. In many GCC countries, not having a title including ‘manager’ will limit the ability to obtain business visas for travel in the region

• End of Service Benefits: In many jurisdictions (certainly in the Middle East) this is a statutory termination benefit and is payable for all employment terminations (e.g. even when the employee resigns) other than for ‘cause’ terminations. This is a cost that has to be factored into the secondment.

With this model of employment, internationally mobile employees will have one underlying employment contract under which certain benefits can be carried between jurisdictions when assignments or rotations change.

Caution needs to be exercised as the requirement for a local employment contract means that if terminated, employees could bring dual employment claims.

Very often practical measures can be used to mitigate the risk of dual claims and also to manage an employee’s exit in order to negotiate a mutually acceptable termination.

Sara Khoja, Partner
Sara joined Clyde and Co›s Dubai office in 2008 establishing the specialist team. She provides employment advice for the Middle East region, in particular the GCC member states. She has worked with multinational clients in a variety of sectors but with a primary focus on the oil & gas, the hospitality, the technology media and telecommunications, the professional services and the insurance sectors.