What labour laws will applies to you, where will you contribute to social security, and how can your work abroad affect your future pension if you move to a new country as an expatriate or as a local worker?
The decision to move for a job opportunity has caused difficulties for thousands of people. Before embarking on the trip, whether you will be looking for a job or already have a contract in hand, you should study the various aspects of labour law to avoid surprises and to know your rights and obligations. The first thing to consider is if whether your move will occur within the European Union or not, because this will determine some immigration procedures.
What happens if I go and I already have an employment contract or a job offer?
You have to see if the contract is local (in the country of destination) or if it’s a contract with the conditions of the country of origin (which is considered expatriate). The latter would come from a company that hires you in your country (and is governed by this country’s conditions), but sends you abroad to perform your job. If it’s a local contract, it will be governed by the conditions of the destination country. If it’s a job offer, you need to request a residence and work permit.
What if I will be looking for opportunities, without having a job already?
If the move is within the EU, there is freedom of movement, establishment and employment: you don’t need to request a visa, although you will have to go through different procedures depending on the country of destination once you get a job. For example, the UK doesn’t require any registration or immigration formalities, but Germany does: you need to obtain a work certificate.
If it’s outside of the EU, one option is to ask for a tourist visa until you get a job offer. However, keep in mind that tourist stays are limited. Moreover, not all countries allow you to immediately change the tourist visa to a work visa. That is to say, there are countries where if you want to obtain the work visa after having had a tourist one, you will need to go back to the country of origin to complete the paperwork, like in the United States.
If you want to ask for a residence permit (without having a job yet), you will need to demonstrate that you have sufficient financial means to support yourself and not be a burden to the country where you will reside.
What is my situation if my contract is local but I’m working abroad?
In this case, you are maintaining the link with your national labour law, which means that the Spanish/French/Italian/EU country/etc… laws are the ones that apply, including those regarding social security (for a limited period of time, normally about five years). However, the contract must also meet the minimum requirements established by the legislation of the destination country.
What if my contract is in the destination country?
Then there is no link with Spain/France/Italy/EU country/etc… law and the laws of the destination country apply. It is convenient to inquire what the working conditions are: what rights will be generated and how, what labour protection is there, how does social security work there…
So, where do I contribute to social security?
The general rule is that a person contributes in the country where they work. If the contract is in the destination country, there is no doubt: you will pay for social security in the place where the contract was made and your rights are the ones that apply there. However, if a company hires in (let’s day) Spain and sends the worker abroad, you can continue to contribute in Spain if the destination country has signed a bilateral agreement with Spain. Such agreements general allow you to contribute financially to Spain for five years, so that you don’t have to do it in more than one country. After that point, the company often offers a contract in the destination country with the local conditions, and you will do everything there.
Almost all European countries have signed such agreements with UK, as well as many in America. This is not the case with countries in Asia or Africa, where only just a few places have a bilateral agreement with UK. If the company sends the worker to a country without a bilateral agreement, then your social security contributions only apply there and have no impact in EU.
This means that if, for example, you get a job in China with a local contract, a country without a bilateral agreement with Spain, the Spanish government will not recognize you as being employed.
How does this affect my future pension?
In the event that a person has worked in a country (or several) with bilateral agreement, all the contribution periods will be taken into account in the home country when determining whether he or she qualifies for a pension. That is, if he or she worked seven years in Germany, five in Italy, ten years in Spain, and five in France, the Spanish Social Security will consider all 27 years as eligible for pension recognition. In Spain, a right to a pension is generated if you have contributed for at least 15 years. However, you will just be paid for what you have contributed in Spain. That means that the contribution base (salary) from other countries won’t be taken into account to calculate the amount of the benefit.
As to whether you are entitled to a pension in any of the countries where you worked, it depends on each place’s rules. In some countries, the years where you contributed there will help you obtain some benefits.
If the country doesn’t have a bilateral labour agreement with UK or your home country, the periods contributed there will have no impact here (as in the example with China).
Where do I pay taxes?
It is understood that a person is tax resident in UK when s/he stays more than 183 days in UK territory during a calendar year. To calculate this period, sporadic absences are counted, unless the taxpayer proves to have fiscal residence in another country. The tax residence is calculated for an entire year. You are also a tax resident in Spain if the core of your economic activities or interests are here.
However, if you declare taxes in another country they will be based on your worldwide income (all that you own regardless of where you have it). Also, if you keep assets in Spain/France/Italy/EU/etc (like a house) you need to declare it here. If, for example, a company has sent a worker abroad but pays them part of the wages in Portugal, everything will be taxed in their country of destination, as the compensation is for work that takes place outside of Portugal.