Employment law: know the facts

Successfully managing an internationally mobile oil and gas sector workforce can be challenging, particularly as home nation and host country laws can be vastly different

Rebecca Ford
Rebecca Ford

Due to the nature of the work, HR and employment practitioners in the oil and gas sector often find themselves dealing with tricky contractual arrangements to reflect a globally mobile workforce.

While a multinational employer may wish to centralise its employment policies and administration as far as possible, legal compliance with local laws in the host country may mean that it is not possible to impose global policies on the workforce. Taking the UAE as an example of a host country, the following are just some of the issues that HR and legal departments have to consider.

What contractual documents do you need?

Many organisations prefer to maintain home country contracts for their mobile staff, in order to provide some comfort to the employees that their accrued service will continue to be recognised, benefits supplied to an employee will be maintained, and rights and obligations will be familiar to the employee. Ideally, internationally mobile staff will not be inundated with paperwork and a simple letter confirming the international status of the employee is preferred.

However, the immigration requirements of the host country can often drive the employment documentation process. Expatriates working in the UAE, for example, must have a residence visa and work permit that enables them to live and work in the country. As part of the application process, an employee will be required to enter into a standard form local contract (supplied by the Ministry of Labour or relevant free zone authority).

What specific law applies to the international assignment?

Where there is a requirement for a local contract, such as in the UAE, the local laws will apply to the employment – in the UAE, in most cases, this will be Federal Law No. 8 of 1980, as amended (the Labour Law).

This means that a company must consider how the host country laws will dovetail with the home country, in cases where a home country contract is maintained.

For example, in the UAE, the Labour Law sets out certain minimum standards, covering issues such as annual leave, sick leave, and end of service gratuity, which cannot be contracted out of. This means that a company will have to look at its usual policies and consider whether these need to be enhanced to ensure host country law compliance. Equally, a company will want to ensure that an employee does not receive two sets of entitlements and that any leave, for example, runs concurrently in both jurisdictions. In addition, local statutory rights may increase the value of benefits offered to an employee in the host country. In order to ensure parity with employees across the globe, it may be necessary to offset statutory benefits in the host country against contractual benefits in the home country.

Who is the employer?

The host country employer may be a branch or other group company of the home country entity; it could also be a joint venture partner or local sponsor, however.

An employee may therefore acquire an ability to bring a claim both against the host country entity and the home country entity in the event of a dispute. It is important, then, that the home and host entities are aligned in their management of employee relations and, in particular, who is the disciplining and dismissing party. While the host company would usually deal with the day-to-day management of the employee, the home company will want to maintain some control over this, or at least be consulted prior to any disciplinary or dismissal action. This can be dealt with by way of an agreement between the two employing entities.

Taxation

When moving employees from one jurisdiction to another, the multinational employer must consider both the tax implications for the employee (for example, in what circumstances is income tax payable in the home or host country, or both), as well as the tax implications for the employer – for example, is a permanent establishment created when one or more employees are sent to a particular location?

In the UAE, for example, there is no income or corporation tax; however, certain employees (for example, American nationals), may still be obliged to account for tax in their home jurisdiction.

Medical requirements

Immigration requirements can pose specific problems to multinational companies seeking to transition employees. For example, in some jurisdictions, it is illegal to require an employee to take an HIV test. However, in others, such as the UAE, the immigration process includes a medical test that checks for communicable diseases, such as HIV.

The employer will need to explain to the employee that the medical examination is imposed by the authorities and obtain the employee’s co-operation. The employer may also want to consider how it will deal with the employee if things go wrong – for example, what happens if the employee fails the medical test? Will the company continue to employ the individual in the home jurisdiction?

Policies – can one size fit all?

Although a multinational can maintain similar employment policies globally, it is unlikely that they will all be the same. For example, a policy providing accommodation and other benefits to an unmarried couple would not be appropriate in jurisdictions such as the UAE, where to live together would be illegal; a drug rehabilitation policy would equally be inappropriate in the UAE. In other cases, a policy may be able to be maintained but some parts of it amended. Policies should therefore be looked at from a host jurisdiction perspective, in order to ensure local law compliance.

Webinar - Register to attend: Oil & gas at a digital tipping point

In partnership with leading global engineering company ABB. The webinar is free but can only be accessed by registering below in advance.

Newsletter

Most Popular

Digital Edition

Oil & Gas Middle East - July/August 2020

Subscribe Now