1. Various types of contractual arrangements

1. Various types of contractual arrangements

a) Secondment arrangement

Under a secondment arrangement, an employee is temporarily assigned to work at another business location and will usually enter into a contract with such entity. However, the employee's original employment contract will still be retained. After the employee has fulfilled the relevant duties and responsibilities under the secondment arrangement, he will return to his position held with the original employer.

Although the employees are required to work at a different business location under the secondment arrangement, typically they will still receive all the benefits and entitlements conferred under the original contract as they are still being hired by the original employers.

b) Dual contract arrangement

The dual contract arrangement is one which the employees will have 2 employment contracts with different employers (usually within the same group). Employees will split time working for the 2 employers and their salary and benefits will be split and apportioned between the 2 employers as well.

This type of contractual arrangement is common for cross-border employments especially in light of the tax implications as employees will be subject to taxes in 2 different jurisdictions when working in both countries. In Hong Kong, it has been decided by the Hong Kong Board of Review that the 2 employments will be separate and such arrangement was “commercial and motivated by realistic business considerations”. 

c) Direct hire arrangement

A direct hire arrangement means the employee's original employment contract is terminated and he will enter into a new employment contract with another host entity.

If an employee is to work for another host entity overseas, his original employment contract in Hong Kong will have to be terminated first. On the other hand, if a transfer is made between associated companies, the employee's length of service will not break and will continue to accumulate.