Posting staff abroad

What is a posting abroad?

In the case of secondment, an employee is sent abroad for a limited period while remaining employed by their German employer. They work abroad on the instructions of, and on behalf of, the sending company, and return to their domestic workplace once the assignment is complete. It is precisely this ongoing connection to the German company, as well as the foreseeable return, that distinguishes a secondment from other scenarios.

Firstly, secondment must be distinguished from a short business trip, where the focus is not primarily on the employee carrying out work in the destination country. It must also be distinguished from local employment. If an employee is employed by a foreign subsidiary and their German employment relationship is terminated or suspended, this constitutes a change of location of the employment relationship, with different social security and tax consequences.

In practice, hybrid forms exist, such as a secondment contract combined with a supplementary local employment contract or a suspended German employment relationship alongside parallel employment abroad. As these arrangements affect the entire downstream structure, they should be clarified at the start of the planning process rather than at the end.

For German Mittelstand companies serving customers, construction sites, assembly projects or sales structures abroad, secondment is the standard way of sending their staff to work locally for a limited time while still being employed by the parent company.

What should be included in the secondment agreement?

The secondment agreement supplements the existing employment contract and governs the assignment abroad. Ideally, it should be a separate agreement that takes precedence over the main contract during the assignment and ends when the employee returns. The legal starting point is the choice of applicable law. According to Article 8 of the Rome I Regulation, the parties can select the applicable law, which is usually German law.

However, this choice is subject to one restriction: the employee must not be deprived of the protection afforded by the mandatory provisions that would apply if a choice of law were not made. If the work is only temporary and takes place abroad, the habitual place of work remains unchanged. This means that German employment law continues to apply, supplemented by the host country's mandatory protective provisions.

In any case, the agreement must include certain points.

Firstly, the contract should specify both the applicable law and the place of jurisdiction. It is customary to expressly choose German law, while the host country's mandatory provisions remain unaffected. The duration, start date and return must also be clearly described, including the period of the assignment, any possible extensions and the place of work upon return. It is the return clause, in particular, that distinguishes a temporary secondment from a permanent relocation of the employment relationship.

Remuneration and allowances are not limited to basic salary. The agreement must cover overseas and role-related allowances, purchasing power adjustments, accommodation costs, return flights, relocation costs and currency, as well as the company responsible for payment. Any increased tax or social security contribution burden must also be allocated on an economic basis. The agreement should also reflect the planned social security and tax structure, including the A1 certificate, tax equalisation models, and supplementary cover for sickness, accidents, and pension provision. Finally, working hours, annual leave and public holidays should be adapted to local conditions, provided they do not fall below the mandatory standards of the host country.

A well-drafted secondment contract clarifies potential areas of disagreement in advance, particularly regarding the return and allocation of additional costs. The so-called 'expat contract', which is in high demand, is simply such a secondment contract, usually used for long-term assignments abroad in managerial or specialist roles.

When do you need an A1 certificate, and how do you apply for one?

The A1 certificate confirms which social security legislation an employee is subject to while posted abroad. For assignments within the EU, EEA countries and Switzerland, it confirms that the employee remains insured under the German system and that no contributions are payable in the host country. This is based on Regulation (EC) No 883/2004. According to this regulation, the legislation of the country of employment generally applies. However, Article 12's posting rule allows German legislation to continue to apply, provided the expected assignment duration does not exceed 24 months and the employee is not replacing someone who has already been posted.

Even short assignments, including one-day business trips, visits to trade fairs and installation work, require an A1 certificate. It must be obtained before the trip begins. In Germany, it is applied for via the electronic application procedure under Section 106 of Book IV of the Social Code (SGB IV). Those with statutory insurance should apply to their health insurance fund, those with private insurance to the German Pension Insurance, and those covered by occupational pension schemes to the Association of Professional Pension Schemes.

Since 1 January 2026, the electronic procedure has also applied to countries that have a social security agreement with Germany. This means that the certificate can be requested digitally for many of these countries.

Companies that regularly send employees abroad therefore need a standardised process to ensure that an A1 certificate is applied for before each trip. This certificate must be carried in its original form or as a printout, and the company must keep a record of it, as this is precisely what will be requested during checks in the destination country.

What happens if you don’t have an A1 certificate?

There are several consequences if the A1 certificate is missing during an inspection. Firstly, many destination countries impose fines, which can amount to four or even five figures per employee, depending on the country and its level of strictness. These fines may be levied against both the company and the employee. Secondly, if proof of German social security cover is missing, the social security authorities in the host country may demand back payments. This results in a double contribution burden. Thirdly, in individual cases, the employee may be prevented from starting work, for example by being denied access to a construction site, until proof is provided.

Some countries, such as France, Austria, Belgium and Switzerland, carry out particularly strict checks, even for short-term assignments. The number of these checks has increased noticeably in recent years. As the certificate is free of charge and can be applied for electronically, the only cost is the organisational effort involved. The only risk is forgetting to take this step. Therefore, a reliable internal procedure that does not permit travel without an A1 certificate is the most effective safeguard.

How long can a posting abroad last?

As there are two time limits from different areas of law that must be considered separately, there is no single figure for the maximum duration.

According to Article 12 of Regulation 883/2004, German social security law can continue to apply as long as the expected duration of the assignment does not exceed 24 months. For assignments exceeding this duration, an exemption agreement can be arranged under Article 16 of the Regulation to ensure that the employee remains covered by the German system. This requires the consent of the relevant authorities in both countries and must be applied for before the original 24-month period expires. In practice, this approach is used to cover assignments of up to five years.

From an employment law perspective, a shorter threshold applies. Under the amended EU Posting of Workers Directive, the host country’s core working conditions apply from day one. However, for postings lasting more than twelve months, the host country’s entire body of mandatory labour law applies. This period may be extended to 18 months if the employer provides appropriate justification. From this point onwards, the assignment is more closely governed by the host country's labour law. This should be planned for at an early stage in the case of long-term postings.

The two timeframes are independent of one another. For instance, a posting may be covered by the German social security system while the host country’s full labour law is already in force. Therefore, anyone planning to utilise the maximum duration must keep track of both timeframes simultaneously.

What working conditions and reporting requirements apply in the destination country?

Even if a German employment contract remains in force, the host country enforces mandatory minimum standards. Within the EU, this is based on the Posted Workers Directive, as amended by Directive 2018/957. The posted worker is entitled to the 'core' local working conditions from day one. These include remuneration in accordance with the applicable local rules, including allowances, maximum working hours and minimum rest periods, minimum paid annual leave and health and safety regulations.

The principle is that of equal pay for equal work in the same place. Therefore, a German employer is not permitted to pay its employees less than is customary in the host country on a permanent basis.

In addition to local minimum standards, there are reporting obligations. Almost all EU and EEA countries require the posting to be registered with a national authority before work begins, and in many countries this must be done the day before work starts. Requirements vary considerably from country to country with regard to the registration portal, documents to be provided, obligation to appoint a local contact person and documentation requirements.

Therefore, it is necessary to check which notifications, translations and documents are required for each destination country separately. This check must be carried out at the start of each assignment, since failing to provide the correct notifications can result in fines, regardless of the A1 certificate.

Does the employee remain covered by the German social security system?

In the EU, EEA and Switzerland, posted employees remain subject to the German social security system via an A1 certificate, provided the conditions in Article 12 of Regulation 883/2004 are met. For countries with which Germany has a social security agreement, continued coverage is governed by that agreement. However, these agreements often only cover specific branches of social security and stipulate their own maximum durations.

For assignments in countries without such an agreement, i.e. so-called 'non-contracting countries', Section 4 of Book IV of the Social Code (SGB IV) applies. This provision, known as the 'extended effect', means that German compulsory insurance rules continue to apply if the posting takes place within an existing German employment relationship and is limited in time from the outset. In this case, the employee remains insured in Germany.

However, this does not prevent the host country from requiring contributions under its own legislation. In such cases, double contributions may arise, which can only be mitigated by the host country's national law or private insurance. Therefore, before assignments in non-treaty countries, it is worth carrying out a detailed check to determine which contributions are payable and how to arrange comprehensive sickness and accident cover.

How is salary taxed during a secondment?

The tax treatment is governed by specific rules that differ from those relating to social security, so you should consult a tax adviser about your particular circumstances. In principle, under most double taxation agreements, the right to tax wages lies with the country of employment. The 183-day rule provides an exception to this principle. If, during the relevant period, the employee does not stay in the country of employment for more than 183 days and their salary is not paid by an employer or a permanent establishment based there, the right to tax remains with the country of residence. All three conditions must be met.

In practice, the decisive factor is who is considered the economic employer. If a foreign group company pays the wages, the right to tax may transfer to the host country before the 183-day period has elapsed. Furthermore, depending on the agreement, the relevant period may be calculated using the calendar year, the tax year or a rolling twelve-month period. As these are tax-related issues, they should be clarified by a tax adviser and an adviser in the host country. We ensure that the secondment contract accurately reflects tax-related commitments, such as tax equalisation, and is consistent with the chosen structure.

What should be borne in mind regarding third countries and common mistakes?

When carrying out assignments outside the EU, it is also necessary to take into account residence and employment law. Employees generally require a visa and a work permit from the destination country. The requirements and processing times for these vary considerably. Tourist visas are not sufficient for employment purposes. These permits must be applied for well in advance, as they determine the start date of the assignment. At the same time, issues regarding social security in countries with which there is no bilateral agreement, and taxation under the relevant treaty – where one exists – must be clarified.

In practice, certain mistakes tend to be repeated with striking frequency.

In most cases, preparations fail because steps are omitted rather than due to complicated individual issues. For instance, the A1 certificate is often forgotten for short trips, even though it is required from day one of the assignment. It is also often forgotten that the A1 certificate does not replace the labour law requirement to register the posting in the host country. Without a robust return arrangement in place, disputes may arise after the assignment regarding job role and workplace. Additionally, time limits applicable in different areas of law are often misunderstood: the 24-month limit under social security law, for instance, operates independently of the 12- to 18-month limit under employment law. Further risks arise if remuneration, working hours and annual leave are organised exclusively in accordance with German law whilst disregarding the mandatory standards of the host country. In the case of third countries, it is ultimately the residence and work permits – applied for in good time – that determine whether the employee can start work on the planned date.

Proper preparation prevents these errors. It is sensible to follow a set sequence. First, the structure should be clarified, i.e. whether the arrangement involves a posting, local employment, or a hybrid form. Next, draw up the posting contract, including the choice of law and a return clause. Then, the A1 certificate and posting notification for the destination country should be finalised. For third countries, a visa and work permit should be obtained. Throughout the entire process, tax and social security issues should be coordinated with the relevant advisers.