International mobility will be an increasingly important issue as the industry looks to bring in new workers and diversify its existing pool of talent, understanding how to create an international workforce will be critical to success
Securing skilled employees and operating an integrated global business have long been key considerations for those within the oil and gas sector; with a naturally long lead in time for key talent to develop expertise and skills.
Many businesses will operate a model whereby a core group of key employees are employed by a management services company and then seconded into various jurisdictions in which the multinational operates, often with rotating secondments of 2-3 years.
This process is particularly useful in the Middle East and enables employees to work across operations, gain market expertise and also transfer key know how and skills to local operations.
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. This third document is significant and it is important that all three documents work together and are not contradictory;
● Payment of wages: where will wages be paid? Locally or in the employee’s home country? 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 a tax equalisation system of which employees will need to be aware and which can in certain instances push employees to localising their contracts. Where no such system applies, the employees may still require specialist tax advice regarding continued taxation in their home countries or country of residence (for example US green card holders);
● Immigration authorisations: often to obtain work permit and residency authorisation a local contract in the local language must be executed with a local entity which will result in employer specific work authorisation being granted.
Key considerations for authorisation are the employee’s educational and professional qualifications as well as job title. It may be that the employee’s 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, failure to have 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 forward from jurisdiction to jurisdiction when assignments or rotations change (for example retirement plans).
However, caution also needs to be exercised as the requirement for a local employment contract means that employees could if terminated, 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; for example permitting the employee to see out an entire tax year so that he is not prejudiced when returning to his home country, maintaining a local visa so that employees’ children can see out the academic year or offering outsourcing services and relocation allowances to help repatriate the employee.
About the Author
Sara Khoja qualified in England and Wales in 2002 and specialises in employment law. She 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 Arabian Gulf Cooperation Council 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.
