An assignment letter spells out what happens when you send an employee to work in another country. It covers duration, compensation adjustments, housing or relocation allowances, tax responsibilities, and repatriation terms. Without one, you’re inviting disputes over who pays for what when the assignment ends.
Most EOR arrangements don’t involve traditional assignment letters because the employee is hired locally from the start. Assignment letters matter when you have an existing employee in one country and need them working in another — a secondment or intra-company transfer. The EOR in the host country may still need to issue a local employment contract alongside your assignment letter.
The tax implications are where assignment letters get complicated. An employee on a 6-month assignment to France triggers French tax obligations after 183 days. The assignment letter should specify whether the company grosses up taxes, applies tax equalization, or leaves the employee to sort it out. Most companies above 500 employees use tax equalization. Smaller companies often don’t realize they need to address this until the employee gets a surprise tax bill.
A well-drafted assignment letter covers five things: assignment duration with clear start and end dates, compensation structure including any cost-of-living adjustments or hardship allowances, benefits continuation or replacement during the assignment, tax treatment specifying which party bears the incremental tax cost, and repatriation terms including what role the employee returns to. Skip any of these and you’ll hear about it from the employee — or their lawyer.
The ILO’s guidelines on migrant workers recommend that assignment terms be documented before the worker relocates, not after. That recommendation exists because companies routinely delay formalizing assignment terms, then face disputes when the employee’s expectations don’t match the company’s intentions.
Why It Matters for EOR
If you’re using an EOR to manage an international assignment rather than a fresh local hire, the assignment letter and the local employment contract must work together without contradicting each other. The assignment letter governs the relationship between you and your employee. The local employment contract governs the relationship between the EOR and the employee in the host country. Conflicts between the two — on notice periods, severance, or benefits — create legal exposure in both jurisdictions.
Before structuring a cross-border assignment, compare EOR vs. entity setup to determine whether an EOR-managed assignment or a direct entity transfer is the cleaner path. For assignments under 12 months, EOR is almost always simpler. For longer assignments, your own entity may give you more control over assignment terms and cost.
For practical use of this concept, see EOR vs PEO explained and remote jobs by country.
Further Reading
- EOR vs. entity: choosing the right structure for international assignments — Assignment letters are more common with entity-based transfers, but EOR arrangements sometimes require them alongside local contracts.
- Hiring in the United Kingdom: assignment terms and tax implications — The UK’s 183-day tax rule and PAYE system create specific obligations that assignment letters need to address.
- EOR comparisons
- Read Deel review
- EOR vs PEO explained
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