The factual employer - Part 1: What is it about?

In corporations, employees are regularly seconded from one company to another within the group. In such situations, there may be a de facto employer relationship. In this blog series, Findea explains what it is about and what the implications are. This first post explains the concept of de facto employer relationship and the criteria used to determine it.

The concept of de facto employer relationship

‍Within corporations, employees are regularly seconded from one company to another. Often, the host company is domiciled abroad. If this secondment lasts longer than three months, a de facto employer relationship can occur. This is the case if the sending company, at which the employee is officially employed, no longer exercises the rights and obligations of the employment relationship, but rather the host company does.‍

Criteria for assessing the de facto employer relationship

‍According to the OECD Model Convention, the natural or legal person who has the right to the work results or the work performance, but also bears the resulting responsibilities and risks, is to be classified as the employer. Specifically, the following criteria can be used for assessment: