What are the differences between secondment and expatriation?

International employee mobility is a major issue for many companies, which see sending their staff abroad as a way to optimize performance. However, the mechanisms that enable this mobility are numerous and varied. Among the most common are secondment and expatriation, two statuses that, while sharing similar objectives, present important differences.

Definition of the concepts

Secondment and expatriation are two forms of international mobility that allow an employee to work in another country, but the conditions and legal implications of each framework differ.

Secondment

Secondment refers to the situation in which an employee is temporarily sent to work abroad while remaining under the authority of their original employer. This type of international assignment is intended for temporary missions, limited in time and geographical scope.

In this context, the employee keeps their original employment contract, and the home company remains legally responsible for its obligations, particularly in terms of remuneration, social protection and taxation.

Expatriation

Expatriation corresponds to a situation in which the employee is transferred in a more permanent or semi-permanent way to another country. They may be hired by a subsidiary of the company in the host country or have their employment contract modified with an addendum stipulating new conditions related to the assignment abroad.

Unlike secondment, expatriation is often seen as a longer-term solution. It can last for several years, or even lead to permanent settlement in the host country.

Administrative and practical differences

The distinctions between secondment and expatriation go beyond their basic definitions. These statuses involve specific legal frameworks and administrative implications.

Social security coverage

When an employee is on secondment, they remain affiliated with the social security system of their home country. This means they continue to contribute to and benefit from the social protection of their home country. This continuity can be advantageous, as the employee retains their original social rights while being covered during the assignment abroad. However, this situation is generally limited to a specific period (usually between 6 months and 5 years).

For expatriation, an employee is subject to the laws of the host country. They must generally join the local social security system, which may result in additional costs if the host country’s system is more expensive or less favorable than that of the home country. In such cases, the employee may also take out private insurance to supplement local coverage, particularly for health or welfare benefits.

Taxation

An employee on secondment usually continues to pay taxes in their home country, even if they work abroad. However, this principle may vary depending on the tax treaties between the countries involved. These agreements, often based on the OECD model, aim to avoid double taxation by determining which country has the right to tax the employee’s income.

In expatriation, the employee generally becomes a tax resident of the host country. This means they are subject to local income tax and must declare their income in the country where they live. If a tax treaty exists between the countries involved, it can help avoid double taxation. However, expatriates may also benefit from tax advantages, such as exemptions on certain allowances.

Employment contract

In the case of secondment, the employee remains under contract with their original employer. The employment contract is not modified, which ensures continuity of rights and obligations regarding pay, leave and working conditions. The home employer remains responsible but must comply with the host country’s labor laws in terms of working conditions (working hours, minimum pay, etc.).

Expatriation often involves signing a new employment contract or an addendum to the original contract. This expatriation contract may be governed by the host country’s labor law or by an international agreement setting specific conditions (expatriation allowance, coverage of expenses, etc.). The expatriate status allows employees to receive additional benefits, such as allowances for cost of living or remoteness, but the company must comply with the host country’s labor and remuneration laws.