Last updated: 16 September 2026
It depends on the country, and on how the move is written up. When you switch employer of record, the legal employer changes. In most places, a new contract with a new legal employer is a new employment relationship. So length of service and holiday balances are things you have to deal with on purpose. They do not carry across by default.
Some countries protect employees when a business or a service passes from one employer to another. Others do not treat a swap of provider as that kind of transfer. The two mechanisms people usually have in mind are the EU Acquired Rights Directive and, in the United Kingdom, TUPE. Whether either applies to your switch is a legal question that turns on the facts.
Holiday is the part employees notice first. Statutory leave has a floor in almost every country. In the UK that floor is 5.6 weeks of paid holiday a year, per GOV.UK. Whatever you agree with an outgoing or incoming provider has to sit above the local floor.
What actually changes when you switch provider?
The legal employer changes. That is the whole of it, and it is the thing that makes the rest complicated. Your people do the same work, for the same managers, at the same pay, in the same place. On paper, though, one company stops employing them and another company starts.
Everything that was tied to the old contract is now an open question. Length of service, holiday balance, notice, probation, benefits and pension all sat with the old legal employer. None of them move on their own. Each one is either paid out, closed off, or picked up again by the new employer under a new agreement.
The size of the job is not the headcount. It is the number of countries. Each market has its own rules on leave, notice and service, so a switch that is routine in one country can need local advice in the next. The market with a single employee usually takes as long to get right as the market with ten.
Does length of service carry over?
Sometimes, and you should not assume it either way. In many countries a fresh contract with a different legal employer starts the clock again, because service is counted against the employer who holds the contract. In others, rules on the transfer of a business or a service can preserve it. The answer is decided per country and per switch.
The two mechanisms people mean are the EU Acquired Rights Directive, Directive 2001/23/EC, and the UK's Transfer of Undertakings (Protection of Employment) Regulations, known as TUPE. Both deal with safeguarding employees' rights when an undertaking, or part of one, passes to a new employer. Whether a change of employer of record counts as that kind of transfer is a legal question, answered on the facts of the case, not by a general rule.
It matters in money as well as in feelings. Service usually drives statutory notice, redundancy or severance, and in some countries an end of service payment. If service starts again, an employee can lose years of accrued entitlement. If it carries over, the incoming employer takes on a liability that has to be priced. Take local advice in each country before you fix a date.
What happens to accrued holiday?
There are two routes in practice. The outgoing employer pays the balance out with the final salary, or the incoming employer agrees to recognise the balance and carries it onto the new contract. Both are used. Which one is open to you depends on local law and on what both providers will put their name to.
Local law sets the floor either way. Statutory leave cannot be signed away, and many countries have rules about when unused leave may be paid in cash rather than taken. Some allow a cash payment only when employment ends. If the old contract ends, that may be exactly what happens, whether or not you wanted the balance to move with the person.
Agree the numbers before the switch date, not after it. Ask the outgoing provider for a leave balance per person as at the last working day, and ask for it in days. Then decide, in writing, which route each country takes. Employees check this figure closely, so it needs to be right the first time.
What should be agreed in writing before the switch date?
Anything with a date on it. A switch goes wrong in the gaps: a day that belongs to neither contract, a benefit that lapses a week before the new one starts, a final payslip that nobody owns. Write each item down, name who owns it, and get both the outgoing and the incoming provider to confirm it.
Do this per country, not once for the whole group. The same list produces different answers in each market, and the country with one employee is the one most likely to be skipped. Give the single hire in a smaller market the same attention as the largest group.
| Item | What to agree | Why it matters |
|---|---|---|
| Last working day | The exact final date on the old contract | Sets the final payroll and the leaver paperwork |
| First day | The exact start date on the new contract | A gap or an overlap causes pay and cover problems |
| Accrued leave | Balance per person, and paid out or carried | The figure employees check first |
| Notice | Notice period on the new contract | May be shorter if service starts again |
| Probation | Whether a new probation period applies | Changes protection and can unsettle staff |
| Benefits and pension | End date on the old plan, start date on the new | Cover gaps are hard to fix after the event |
| Final payslip | Who issues it and the leaver documents | Employees need these for their own tax returns |
| Contact | One named person for employee questions | Stops people being passed between providers |
Keep all of it in one document. When a question comes up in month two, and it will, you want a single place that says what was agreed, in which country, and who signed it off.
What do employees need to be told?
Tell them early, in plain words, and in writing. A change of legal employer is a change to their contract, so most people will want it explained properly before they are asked to sign anything. Silence gets read as risk, and a worried employee starts looking at other jobs.
Cover the things they care about: the date, their pay, their holiday balance, their notice, their benefits, and who to ask. Say what stays the same as clearly as you say what changes. If something is still being worked out in one country, say so, and give a date by which you will have the answer.
Give them one named contact for the whole switch. During a move, people ask the same question more than once, and being passed between an outgoing and an incoming provider is what turns a routine change into a real worry. The right answer for your team depends on the countries you are in and on how each contract is written. Talk to an Expert at Teamed to work through yours.