Chapter 4: Differentiation between assignment guideline and assignment agreement

Global Mobility: The Interaction of assignment guideline and assignment contract

Author: Norma Reynov, CONVINUS global mobility solutions

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In the first three parts of this series, we examined the core elements of assignment guidelines (also known as expatriate policy or expat policy) and assignment contracts. While the assignment guideline sets the strategic framework, the assignment contract provides the legal foundation for an individual employee’s international assignment.

These two tools are closely intertwined. Only when they are carefully aligned can transparency, fairness, and legal security for international assignments be ensured. This fourth part focuses on the distinction between these essential instruments and highlights how they complement each other.

1. Assignment Guideline Strategic Framework for Transparency and Consistency

The assignment guideline serves as an overarching management tool that establishes the general rules and principles for international assignments within a corporate group. It addresses both operational departments and expatriates, providing clear guidance on recurring issues associated with international assignments.

Features and Objectives:

• Standardization: The assignment guideline defines general standards for assignments, such as compensation, benefits, tax, and social security principles.
• Flexibility: It offers a foundation that can be adapted to specific circumstances without creating new rules for each case.
• Strategic Alignment: The assignment guideline reflects the company’s philosophy and supports long-term planning and cost control.

The expatriate policy is primarily used in the planning stages of assignments to establish and communicate the framework. On its own, it is not a contractual agreement but serves as an internal guideline document.

2. Assignment Contract: Individual Agreement with Legal Binding Force

In contrast to the guideline, the assignment contract is a legally binding document outlining the specific terms of an individual international assignment. It is directed exclusively at the assignee and may include tailored agreements.

Features and Objectives:

• Legal Foundation: The assignment contract clarifies the conditions of the specific assignment and protects both the company and the employee from legal and financial risks.
• Customization: Its terms are based on the assignment guideline but address unique aspects such as location, compensation, and personalized benefits.
• Binding Nature: Unlike the policy, the contract has strong legal enforceability and is decisive in disputes due to its individualized terms.

3. Interfaces and Distinction

While the assignment guideline outlines general rules for international assignments, the assignment contract applies these rules to specific cases. The table below illustrates these differences:

4. Practical Recommendations for Companies

To maximize effectiveness, companies should ensure that their policies and contracts are properly aligned:

• Coherence: The assignment guideline should serve as the foundation, ensuring that all assignment contracts adhere to consistent principles.
• Flexibility: Despite standardization, assignment contracts must allow for individual customization to address the unique aspects of each assignment.
• Communication: Employees and departments must clearly understand the distinction between these tools to avoid confusion.

Conclusion

Assignment guidelines and assignment contract must be closely coordinated to ensure the legal and operational success of international assignments. While the guideline sets strategic standards and processes, the contract legally formalizes these for specific cases. Only a well-aligned interplay of both instruments can provide clarity, reduce risks, and enhance employee satisfaction. Regular reviews and transparent communication are vital to avoiding misunderstandings and sustainably optimizing processes.

SERIES: The Interaction of assignment guideline and assignment contract

Chapter 1: Why assignment guidelines are worthwhile even for a small number of foreign assignments: Transparency, fairness, and efficiency through clear rules.

Chapter 2: Assignment guidelines: Key aspects and challenges for companies

Chapter 3: Options for structuring the assignment agreement

Chapter 4: Differentiation between assignment guideline and assignment agreement