Once the employee has agreed in principle to move, the most important step you as the employer can take is to ensure that all the terms associated with the move are properly recorded and agreed. It's surprising how often such things are left to the joint good faith of the parties and rather less of a surprise how often that turns out to have been a mistake. There is no substitute for a proper written relocation agreement, especially where the relocation is overseas.
Terms to consider in such a case include:
- What currency will be used for the employee’s pay? Will he/she and/or the employer have any protection against exchange rate or cost of living fluctuations which may greatly affect the value of his salary to him or the cost of it to the employer?
- What expatriate benefits will they receive? Common provisions include tax equalisation, tax advice costs, housing, car, schooling, accommodation, the maintenance of NI and/or contributions in the UK, home flight costs and international-level insurances. If the relocation is extended, at what point does the employee move to a local package and lose some or all of these?
- How long is the relocation for? If notice can be given to terminate it before the scheduled end, how long? Does that also end the overall employment relationship?
- Especially if the relocation is to a separate group company, how far will the employee be bound by the rules of the local workplace and how far by those of his original workplace? Where there is the potential for inadvertent offence as a result of religious or cultural sensitivities, it may be wise to consider cultural awareness training pre-departure to minimise the risk of claims. Administratively, who will be responsible for performance management and appraisals, to whom should grievances be brought, how is sickness absence monitored? What rights and responsibilities will the employee have? If he/she is a sole representative or agent overseas, what are the limits on his/her authorities?
- On the assumption that the employer pays the relocation costs out, are there any limits on its obligation to repatriate the employee when the arrangement ends? Would it still be willing to meet those costs if he resigns voluntarily or is dismissed for gross misconduct? If the employee resigns as soon as relocated, would you seek any reimbursement of the initial costs, perhaps on a sliding scale?
- Making the arrangement conditional upon the employee having and maintaining the necessary immigration consents for the country in question. Do you need legal advice from that jurisdiction about this or concerning permissible forms of contract? What will be the law governing the contract of the relocated employee – the home country’s or the host’s?
- What level of commitment is to be given that at the end of the relocation there will be the old job or some other slot available back at base? If there is no guarantee, what arrangements would apply should there be no role for the employee at that time? Is there any trial period within which either party can re-wind the clock and reverse the relocation, or once moved, is that it?
Most of these terms apply particularly to overseas relocations, but it can readily be seen that some would be applicable on a smaller scale within the scope of a mobility clause limited to an area or city – who pays any extra travel costs, is the working day shortened to take account of extra travel time, what is the impact on childcare arrangements, what contribution would be made to any property sale and purchase or removal costs, etc?