Project Description

Job Losses Abroad

That’s why companies should hedge their expatriates

Datenschutz bei Auslandsendung

Companies that send employees abroad should definitely take out private unemployment insurance.It is also not particularly recommended to set the so-called application obligation according to Article 28 of the Third Social Code (SGB III), in which the employee voluntarily remains in the German unemployment insurance.

Why this recommendation? “Simply because in the worst case scenario, that is unemployment during or after the stay abroad, the assignee is generally much worse off,” says Claus-Helge Groß, corporate client consultant for social security at the BDAE Group specializing in global mobility services.

“Specifically, this means that the unemployment benefit is lower than the actual claim. And that in turn can lead to liability claims against the sending company. ”

Return clause in the employment contract is insufficient:

However, many foreign assignments do not allow companies to keep their employees in the German social security system due to the legal framework.

The problem: In particular, in the important insurance column of the unemployment insurance German expats want to continue to remain in their familiar and secure system. Since many companies are under tremendous pressure due to the costly process of posting, they often follow the advice of many labor law advisors to include a return clause in the expatriate posting contract. This return clause guarantees the continuation of employment after the termination of the employment relationship abroad, for example, in the company in Germany. Thus, the employee is promised that he can not become unemployed upon return.

In addition, this process suggests that companies save themselves the unemployment contributions in German social security.

“But even this procedure can turn out to be a liability trap. Because the legal gimmick only promises the employee, after his foreign employment again to take up employment in the previous operation, “insurance expert explains Groß.

It is thus guaranteed that the employee receives a salary. From this his taxes and social security contributions are paid off. However, what this clause can not guarantee is the entitlement to unemployment benefits in the event of job loss after his return. The reason for this: After 12 months abroad and leaving the German social insurance, an employee basically loses his entitlement to unemployment benefit I (ALG I). The Federal Employment Agency (BfA) is examining the so-called qualifying period.

This is a condition for the approval of the benefit entitlement and means that a person only has a right to benefit if he / she has paid at least 12 months into the unemployment insurance in the last 24 months.

In the worst case threatens Hartz 4

Risiko Jobverlust bei Auslandsentsendungen

However, anyone who quits his job during his stay abroad or is dismissed for various reasons is thus in a worse position than if he remained in Germany.

How delicate this situation can be in terms of liability for the employer is shown by the following example: A childless employee (tax class III) with a wife, whose earnings exceed the income threshold of 6,200 euros (2016), will pay a monthly amount of 2,267.40 euros plus the costs of Kranken-, Pflege- und Rentenversicherung zu. The amount of the cost of a benefit entitlement of up to 12 months is quickly apparent.

They amount to a total of 27,208.80 euros. The situation is similar when the employee returns to the old employment after completing the assignment abroad. Although he receives a salary, but has forfeited the entitlement to unemployment benefits and must first rebuild his claim for benefits in Germany in the first 12 months.

“If he is terminated during this time or loses his job, for example, due to a company consolidation or a global economic crisis, he is not entitled to ALG I and he automatically slipped off in Hartz IV,” Groß summarizes.

A contribution with kind permission of the BDAE group

© Jacob Lund –