This article aims to differentiate between the concepts of employee secondment and business travel.
- An employee may be delegated to work in a different location by way of business travel or secondment.
- These events entail different consequences under labour law, tax law and insurance law
- In the absence of an unambiguous definition of business travel, it is still controversial when a business trip turns into secondment.
The concept of business travel
The legislator refers to business travel in article 775 § 1 of the Labour Code, whereunder:
An employee who is instructed by the employer to perform an official task outside of the area where the employer has its registered office, or outside their regular workplace, is entitled to the reimbursement of any expenses incurred in relation to the business trip.
The above provision specifies the conditions which must be met for a trip to qualify as business travel:
- employer’s instruction,
- performance of an official task,
- work outside of the regular workplace or outside the employer’s registered office.
Please note as well that business travel is incidental, occasional and temporary. It does not cover a long-term or permanent departure.
The legislator has not introduced any provisions which would explicitly define the maximum duration of a business trip. Nevertheless, it may be inferred indirectly from other Labour Code provisions that business travel may last up to three months in total in the space of a year. Exceeding this duration entails having to comply with additional formalities related to the employment relationship between the parties.
The employee’s remuneration for the duration of the business trip is, in principle, subject to taxation and social security payments in the country from which the employee was delegated.
The concept of secondment
Secondment is defined as the placement of an employee to work over an extended period in a different place than originally specified in the employment contract. As a result, the employer is obliged to formally amend the terms and conditions of the employment contract, e.g. in the form of an addendum to the contract. This constitutes a key difference between business travel and secondment, because while business travel does not require employee consent, the terms and conditions of secondment must be agreed to by the employee.
Additionally, secondment involves the employee having to relocate or at least find a temporary residence.
Employee relocation may be domestic or international. In the case of a cross-border posting, the duration of relocation determines the place of taxation.
When it comes to social security and health insurance, contributions are paid to the system in the hosting state, unless the employee presents a valid A1 certificate (more on this subject in subsequent instalments of the series).
Unfortunately, in practice it is sometimes not easy to determine whether the employee’s work away from the employer’s registered office should be regarded as business travel or secondment. Without question, this is partly due to the fact that the maximum duration of business travel has not been explicitly defined.
The above-mentioned time limit of three months for business travel arises from the provision regarding the requirement of a formal amendment to the contract. Namely, pursuant to article 42 § 4 of the Labour Code:
A notice of termination of the existing terms and conditions of work or pay is not required when the employee is assigned, where justified by the needs of the employer, work other than that specified in the employment contract, for a period of up to 3 months in a calendar year, provided that it does not result in the reduction of the remuneration and corresponds to the employee's qualifications.
When differentiating between business travel and secondment, special attention needs to be given to the duration of the event under analysis. The period of 3 months is adopted as the threshold. Nevertheless, each case must be analysed individually. The differentiation of the two concepts is of paramount importance due to their different consequences in terms of formal arrangements, tax and social security.
AUTHORS: Michał Rodak, Advisor and Łukasz Boszko, Senior Consultant
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