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Expat Agreements – The Risks of Taking the Easy Option

There’s a lot to think about when putting together an expat package for an employee who is being sent to work abroad. But when it comes to drafting the employment agreement, employers should think twice before using the company’s standard form agreement for domestic employees.

One reason for not using the company’s standard domestic form is that the employer may inadvertently convey certain domestic rights that it never intended. In a recent UK case (Green v SIG Trading Limited), an employee recruited by a UK company to work in Saudi Arabia claimed employment rights under English law after his employment was terminated. The Employment Tribunal (ET) hearing the case considered various factors in deciding whether his employment was more connected to Saudi Arabia or the UK. In looking at one of the factors, the ET accepted the company’s claim that it had used a standard UK employment contract for the employee “for convenience” and that this was therefore not a factor that supported the employee’s claim that he was entitled to UK employment rights.

On appeal, the Employment Appeal Tribunal (EAT) held that the ET was wrong to disregard the contract as a choice made simply for convenience. The EAT explained that an agreement governed by English law was a material fact that should be considered objectively in deciding whether the employment had sufficient connection to the UK.

The EAT referred the case back to the ET to reconsider whether it had jurisdiction over the claim, so we don’t yet know if this will affect the outcome of the case. However, it serves as a useful reminder that careful thought needs to be given to drafting expat agreements, including the choice of law specified in the contract. Decisions made at the beginning of an expat arrangement, including deciding which form of contract to use, can have profound consequences at the end of the relationship.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.