Expatriates, what to do when terminated?
26 June, 2018duguech
Expatriated workers receive wage supplements that depending on the terms of the contract and the legislation applicable, need to be included or not in the severance pay.
In general, to do the calculation and know if the supplements are included or not, the following scenarios can be considered.
- If the worker is terminated during services provided to the destination country, or Expatriation Plus can be included in the calculation of severance pay, as long as Spanish legislation is applicable. In this case, it can also be included if one can legally prove that the termination was planned, but not executed, before the return of the expatriate worker to Spain. If this is not the case, the worker may see their severance benefits considerably reduced.
- In the case that the worker is terminated after their return to Spain, the salary for the last month received will be considered including the pro-rata of extraordinary payments. In this case, one can find exceptions including, commissions or overtime. The salary considered will be that of the last year of work. If during this period there were specific expatriation benefits, these will be considered for the calculation.
If there is no legislative unanimity regarding if the expatriated workers should or not receive the wage supplements after their return to Spain, the courts have answered different cases, recognizing the sacrifice that the employee had to undergo to work abroad. Therefore, it is becoming more common that the courts are considering periods abroad when ruling on severance pay.
Cost of renting accommodations, use of a private car, as well as familial costs and other elements to carry out their functions abroad, as if they were in Spain are factored in, as they are not always considered as part of the regular salary of the expatriated worker.
However, in a ruling of the Supreme Court of Justice of the Valencian Community, following other rulings, established in 2016 that all the supplements received by the employee during their expatriation, are considered part of the wage as they are necessary for their job performance. This translates to the need to calculate them in the severance pay.
In the framework of international mobility of employees, it is not always easy to establish what are the wage components to include in severance pay. From the legal point of view, it is recommended that the business establish retribution outlines per recent rulings regarding global mobility. In the same line, economic conditions surrounding personal mobility needs to be regulated with the development of strategies to better navigate the wage conditions and compensations in favour of the expatriate and the business.
This information does not constitute legal advice, solely serving informative purposes. In the case of needing professional legal services in the areas of Global Immigration and Mobility, contact our firm.
*It should be noted that the norms of any of the countries listed and the procedures suggested might change at any time without notice.