Working abroad on assignment or as a local hire : how does it impact your employee benefits ?
Working abroad on assignment or as a local hire :
how does it impact your employee benefits ?
October 08, 2019
When you live and work outside of France, your health care and retirement benefits will mostly depend on your type of work contract.
An estimated 3.5 million French citizens (1) live abroad. As many as 68% of French expats reside in just fifteen different countries (2), with Switzerland in first place, followed by the United States and the United Kingdom.
Expatriates include students, retirees, businesspeople and a large number of salaried employees and their family members. Depending on the kind of contract they have, these employees will have a particular status that significantly impacts their health and retirement benefits.
If the employee is on an open-ended assignment
Employees sent abroad on an open-ended assignment to work for a company’s foreign subsidiary will sign a local employment contract with that subsidiary. Their French work contract will be suspended until they return to France. These employees are generally offered additional perks such as coverage of relocation expenses, travel expenses, and school fees for their children. Expatriates must enroll in the host country’s social security system, but in most cases they will contribute less than in France and the corresponding health and retirement benefits will be less substantial. It is therefore in their best interest to take out supplemental individual or group insurance through their employer. Such insurance can complement coverage from the Caisse des Français de l’Etranger (CFE, a French social security fund for expats).
Employers often pay for the supplemental insurance and CFE contributions.
If the employee is on temporary assignment
Employees sent abroad on a temporary assignment (for an average duration of 3 years) simply sign an addendum to their French employment contract. They continue to be employed by the company in France. As such, they remain covered by French social security. They pay into the system as though they were still in France and acquire the same health insurance benefits and retirement entitlements as employees who live and work in France. However, in practice, claiming social security and any additional French insurance benefits may not be as smooth as in France. For example, expats may need to pay costs up front and then claim reimbursement. For some host countries, it is strongly recommended to take out a supplemental health insurance policy specifically designed for expats.
If the employee is hired locally
When hired locally in a foreign country, the employee’s French work contract is terminated. Locally hired employees sign a new contract without the guarantee of returning to their former job in France. They must pay into the host country’s social security system, and the new employer rarely pays for CFE contributions or supplemental private insurance.
(1) Source: Centre des Liaisons Européennes et Internationales de Sécurité Sociale (CLEISS) [European and International Social Security Liaison Center] statistical report published on February 20, 2019.
(2) In descending order: Switzerland, the United States, the United Kingdom, Belgium, Germany, Canada, Spain, Morocco, Israel, Algeria, Luxembourg, China, the Netherlands and Australie. Source: Cleiss 2019.