Social cover

Which rules apply to people living abroad?

the differents status

Secondment, local contract, expatriation... Which status to choose?

Choice depends on multiple parameters: family situation, length of stay, context of the host country, costs...

Beyond the question of status, one must pay attention to every single aspect of his social protection.

In social cover matters, the basic principle is that it is the host country’s social cover that applies to the expatriate and his family.

The common rule (territorial application principle) is that a company pays social contributions for it’s employee in the country where the work is done, even if, as a company, it is not settled in the country.  The only exception to that rule is secondment.

The territorial application principle means that, except for some particular provisions, employees (with the exception of seconded employees) who live and work in a foreign country are requested to participate and benefit from the social system of the country where they reside.

When the host country’s social system is either similar to the country of origin’s or even better, the principle doesn’t lead to much difficulties. In other cases, differences may be slightly important and one, together with his employer, will have to consider finding additional package in order to secure an acceptable social cover for himself and his family.

In practice, there are three set of rules applying to foreign employees working in a given country: secondment, expatriation and local contract.

The interest of each formula may vary from one country to the other, depending on the duration of the residence abroad and on the employee’s family situation. Secondment and expatriation both involve significant costs which have to be considered together with the advantages they generate in each particular case.

  • Secondment works as an exception to the territorial principle. It provides foreign employees and their family with continuous home country social cover; as if they had stayed in their country of origin.
  • Expatriation is an alternative set of rules providing foreign employees with an additional package aimed at leveraging their social coverage (among other concerns) in order to secure a continuity with the home country. French expatriates, for example, traditionally turn themselves to the CFE (la Caisse des Français à l’Etranger) to get this additional coverage, particularly for pension scheme
  • Local contract differs from the previous modes in discontinuing the home country social coverage. Except for particular agreements, it sets foreign employees on an strictly equal basis with their local colleagues.

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