Let's say your employer sends you halfway around the world. You get why it has to happen, but crossing international borders-let alone staying there and working-is a lot to ask. It's not unreasonable to expect some extra compensation for the upheaval.
In today's international marketplace, more companies are sending employees on assignments overseas or implementing a global mobility policy that allows employees to work abroad.
In fact, millions of expatriates live and work around the globe, and those numbers are only expected to rise. As expatriate employment increases, employers must provide comprehensive expat benefits that help retain talent and ease the stress of relocation while complying with local labor laws.
Why do expat benefits and compensation matter?
When a business expands internationally, it often relocates employees to another country to set up a new branch, investigate the local market, or establish a business in the country.
While not all employees are assigned to work internationally long-term, those who do become expat employees in the new country, often taking their lives and families abroad with them.
Offering the right benefits and compensation is essential to ensure a smooth transition for both the employee and the company.
When expats receive a thoughtful employee benefits package, they feel valued and supported, which leads to better engagement and productivity. As global hiring becomes more competitive, comprehensive compensation is essential for attracting top talent.
Below are four reasons global companies should administer competitive compensation and supplemental benefits to their expatriate talent.
Employees may need to be incentivized
While some employees may jump at the opportunity to enjoy global mobility and relocate abroad, others might have reservations-especially if they have dependents or other commitments outside of work. An expat may face new challenges working abroad, including:
- Understanding a new culture
- Learning a new language
- Dealing with foreign expenses
- Acclimating to a new way of life
Providing ample support to your employees throughout their international assignments is important. Benefits that help cover international employee transfer burdens such as relocation costs, private healthcare, and international schooling for dependents can make relocation more attractive.
Relocation is stressful
Relocating to a new country is challenging and overwhelming, even for employees excited to live and work abroad. An expat may feel stress regarding:
- Finding safe and secure housing
- Helping their spouse find new work
- Locating a school for their children
- Performing well on the job
A benefits package that includes perks like relocation assistance, flexible work hours, additional paid time off, and wellness programs may help relieve some of their stress.
Expat living has hidden costs
In addition to relocation, expats often face additional expenses. These could include international schooling for their children, language classes, public transportation within the country, and travel to see their family back home.
Stipends for public transport and monthly travel funds for visiting friends and family during time off are thoughtful perks that help alleviate the hidden costs of relocation.
In addition, consider providing financial assistance for language courses and childcare reimbursements to relocated employees.
The global hiring landscape is competitive
Talent today has new work demands and is not afraid to look elsewhere when employers don't meet their needs. As a result, employers face unprecedented challenges with keeping their workforce intact.
To keep top expat talent, companies must provide competitive, valuable benefits and compensation or risk losing them to another company willing to meet their demands.
7 expat employee benefits to consider
To incentivize talent, relieve relocation stress, and compete in today's hiring market, companies should consider these perks when crafting a benefits package for expatriate employees.
1. Increased salary
While an expat's salary depends on the industry, role, and level of responsibility, it should at least match, if not exceed, the salary an employee would receive for doing the same job in their home country.
You may also want to add a location premium to their salary that acknowledges the difference in an expat's lifestyle compared to their home country, including the cost of living, currency exchange rate, and relative hardship of the post.
2. Relocation assistance
Relocation assistance is integral to an expat benefits package for long-term assignments. An expat relocation package could include covering moving and shipping expenses, storage costs, and flights for the expat and their families relocating with them.
The employer should also consider other relocation expenses, such as driving and transport options in-country, travel for home visits during the assignment, and a pre-assignment trip for the expat to familiarize themselves with the new location.
3. Cost of living allowance
Rather than a salary increase, you might consider providing a cost-of-living allowance as a monthly stipend for the expat to use on necessary goods and services.
This type of allowance is beneficial when the cost of living in the expat's host country is higher than in their home country. It reflects any additional daily expenditure in the host country so the expat can maintain their ideal living standard and not be penalized for relocating.
4. Schooling costs
An expatriate package might also provide an education allowance or cover the cost of schooling for an expat's children. International schools specifically cater to expat communities.
International schools often follow a different curriculum and offer a higher standard of education, provide fewer language barriers, and ensure the expat's children can continue with a similar curriculum to their home country.
5. Subsidized housing
A benefits package that provides housing or accommodations is a critical incentive for expats relocating abroad with their family on a long-term assignment.
Expats desire access to safe and secure housing that is ideally located near other expats, offers a relatively short commute to work, and is close to international schools.
6. Cultural training
The benefits package should also include support services that help the expat better integrate into their host country. Examples include cross-cultural education before deployment and language courses if the expat does not speak the local language.
7. Supplemental health insurance
Quality supplemental health insurance is a high-priority benefit for expat employees. While many countries have adequate national healthcare coverage, others, like the United States, don't provide universal healthcare.
Even so, many national healthcare schemes don't cover costs for services like dental and vision care or extended maternity leave.
For example, public healthcare in Mexico is relatively inexpensive and accessible for expat employees, but the quality of care often depends on where your talent resides, and it doesn't cover dental care, eye care, elective surgeries, infertility treatments, treatments for self-inflicted injuries, or several preexisting conditions.
It's the employer's duty to ensure the health and safety of their employees. A benefits package that offers comprehensive supplemental health coverage is a must-have for expats living in the U.S. and overseas.
Compliance risks when administering benefits abroad
Expat benefits should not only be competitive but must also adhere to local laws. Employment law differs greatly from country to country, so employers must ensure the benefits they offer are globally compliant. Some compliance risks include the following:
Varying statutory requirements
Every country has its own legislation that governs and protects employee entitlements. Employers must understand and comply with local statutory requirements to avoid financial and legal penalties. Some statutory benefits that differ around the world include:
- Annual leave and sick leave
- Medical insurance
- Pension
- Severance
- Overtime pay
Incorrect payroll contributions
Payroll contributions also vary by country, and employers must correctly calculate contributions to ensure payroll compliance and avoid risks. Some differing payroll contributions that relate to benefits include:
- Social security
- Health insurance
- Workers' compensation
- 13th-month pay
Improper benefits tax reporting
Some jurisdictions require employers to report fringe benefits on official tax forms to the local authorities. They may also need to withhold or pay taxes on certain fringe benefits.
Employers should keep track of taxable fringe benefits provided to expats and correctly report them to the proper tax agencies. Should you fail to correctly file these reports, the local tax agency may levy penalties and even assess interest on past-due taxes.
Give your expat employees the best with Pebl
If you're asking someone to move from Ohio to Osaka, that's quite a change. To keep your talent happy, they need the right benefits package. It needs to be generous not just for Ohio, but for Osaka too-at least if you don't want your talent to jump ship a few months after they land.
Administering tailored benefits is time-consuming and expensive. It also requires advanced proficiency in labor law.
You shouldn't have to be an expert in everything-that's what Pebl is for.
Our Global Benefits service offers competitively priced benefits packages that accommodate a wide range of expat needs and comply with market-specific regulations. We handle the HR complexities so you can relocate and support talent in 185+ countries with ease.
Celebrate your expatriate employees with top-shelf benefits that matter. Contact us to learn more.
This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided "as is," and no representations are made that the content is error-free.
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Topic:
Employee Benefits
