Danger is my middle name
June 23, 2016
By Chad Eggerman, Miller Thomson
Five considerations when signing a contract to consult on a remote international project.
Maybe you have just qualified as a P.Eng. and want to gain some “real world” experience in the uranium mines in Namibia, or your kids are finally off the payroll and you are considering consulting on a gemstone project in Myanmar. There are five key consideration you need to address before signing that agreement and setting off on your adventure abroad.
The first consideration in your consulting contract is usually compensation. Is that reference to your salary in the contract in Namibian or Canadian dollars? The promise of $5,000 Namibian dollars per month may sound like a lot, but is only about $438 Canadian dollars. Consider which currency bears the least risk. Since local currencies in less politically stable countries often vary widely in their conversions, you will likely want to be paid in US dollars, GB pounds or Euros.
Related to compensation is taxation. Generally, Canadians who maintain residence in Canada but work abroad for a period of time must still declare all their income earned both in Canada and abroad. You may want to consider setting up a local holding corporation, or being paid to a corporation in a different lower tax rate jurisdiction.
The third consideration is insurance. Is your client, or your employer if you are going overseas as an employee of a consulting firm, providing and paying for all your professional and life insurance?
Is it necessary in the jurisdiction to carry insurance against risks such as kidnapping? Such insurances can be expensive but are prudent to carry in dangerous countries. You will want to negotiate with your client or employer to pay those costs Does your consulting contract provide for emergency and health insurance with access to private clinics? Will such insurance cover evacuation out of the country? Does the insurance policy carry the required endorsements applicable in the jurisdiction where you will be working?
The fourth consideration is expenses. Who will pay for all your transportation and moving expenses? If your children are travelling abroad, will your company or the owner pay for private schools? You should look to have these expenses invoiced directly to the owner, as then you may avoid problems with being reimbursed in the future. Review your benefit package carefully and ensure that all your relocation expenses are covered.
The fifth consideration is human resources. Does the owner employ qualified project managers and administrators who will make your job possible? Often consulting engineers are retained to solve specific problems. However, due to the remote location, the project owner may not employ a similar set of employees that Canadian mines would employ. Related to human resources is the lack of services. High speed internet access or remote access back to head office business systems may not be available, or only for short and intermittent periods. You will want to ensure that the owner agrees contractually to provide whatever you require to complete your duties. Otherwise your consulting contract should provide for the possibility of you terminating the contract, with losses payable by the owner.
With regard to the termination of the consulting contract, does it allow the consulting engineer to terminate for convenience, e.g. with 30 days’ notice? Or must the term of the contract be fulfilled in its entirety? Is termination of the consulting contract connected with compensation? Often expat consulting contracts will make a significant portion of the total compensation payable only on completion of the term of the agreement. Related to termination is force majeure. Does the consulting contract have a force majeure provision which allows you to terminate the contract in the event of an event such as labour unrest? ash from a volcano? mine closure by employees?
Working abroad in a remote location can be a valuable career stepping stone or opportunity to give back to the engineering profession. Ensuring a clear, balanced and binding contract is negotiated and executed is an important step to complete before flying off to the great beyond.cce
Chad Eggerman is a partner with Miller Thomson LLP in Saskatoon. Email firstname.lastname@example.org