In today’s international marketplace, more and more companies are sending employees on overseas assignments or implementing a global mobility policy that allows employees to work abroad.
In fact, millions of expats live and work around the world, and those numbers are only expected to grow.
As expatriate employment increases, employers must provide comprehensive benefits that not only help retain talent and ease the stress of relocation, but also comply with local labor laws.
Find out what benefits to consider offering expats when sending them abroad and how to ensure compliance with international labor laws.
Why expat benefits and compensation matter
When a company expands internationally, it relocates employees to another country to set up a new branch, investigate the local market or set up a business in the country.
Providing the right expatriate benefits and compensation is key to ensuring a smooth transition for both the employee and the company.
When expats receive attention benefits package, they feel valued and supported, which leads to better engagement and productivity at work. Additionally, as global hiring becomes more competitive, full compensation is key to attracting top talent.
Employees may need incentives
While some employees may jump at the chance of a move, others may have reservations, especially if they have dependents and other commitments outside of work. An expat may face new challenges while working abroad, including the following:
- Understand a new culture
- To learn a new language
- Navigating Overseas Spending
- Acclimatization to a new way of life
It is important to provide sufficient support to your employees throughout their overseas assignments. Benefits that help cover expenses such as relocation costs, private health care, and international tuition for dependents can make the relocation offer more attractive to employees.
Moving is stressful
Settling in a new country is difficult and overwhelming, even for employees who are enthusiastic about living and working abroad. An expatriate can feel stress in the following situations:
- Find safe and secure housing
- Helping your partner find a new job
- Find a school for their children
- Perform well on the job
A benefits package that includes benefits such as relocation assistance, flexible work hours, additional paid time off, and wellness programs can help ease some of the stress of relocation.
Expat life has hidden costs
In addition to relocation and living expenses in another country, an expat may face additional expenses. These additional costs could include international schooling for their children, language lessons, public transport within the country, and travel home to see family.
Stipends for public transportation and monthly travel funds to visit friends and family while on vacation are thoughtful perks that help mitigate the hidden costs of relocation.
Financial aid for language courses and childcare reimbursements are also additional benefits to consider for relocated employees.
The global hiring landscape is competitive
The global hiring landscape is becoming increasingly competitive as companies look overseas to attract and retain the best employees. Today’s talent has new professional demands and isn’t afraid to look elsewhere when employers don’t meet her needs.
As a result, employers face unprecedented challenges in keeping their workforce intact.
To retain top expatriate talent, companies must offer competitive and valuable benefits and compensation, or risk losing them to another company eager to meet labor demands.
7 benefits for expatriate employees to consider
To incentivize talent, relieve the stress of relocation, and compete in today’s hiring market, companies need to consider these benefits when crafting a benefits package for expatriate employees.
Although an expat’s salary depends on 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 can also add a location bonus to their salary that recognizes an expat’s lifestyle difference from their home country, including cost of living, exchange rate, and relative difficulty of the position. .
Relocation assistance is an integral part of an expatriate benefits package for long-term assignments. An expatriate relocation package could include coverage of moving and shipping costs, storage costs, and flights for the expatriate and their family moving with them.
The employer should also consider other relocation expenses, such as in-country driving and transportation options, travel for home visits while on assignment, and pre-assignment travel for the expatriate to familiar with the new location.
cost of living allowance
Rather than a raise, you might consider providing a cost of living allowance as a monthly allowance for the expat to use for needed goods and services.
This type of allowance is advantageous when the cost of living in the host country of the expatriate is higher than in his country of origin. It reflects any additional daily expenses in the host country so that the expatriate can maintain their ideal standard of living.
An expatriate package can also provide an education allowance or cover school fees for an expatriate’s children. International schools cater specifically to expatriate communities.
Compared to local school options in the host country, international schools often follow a different curriculum and offer a higher standard of education, offer fewer language barriers, and ensure that the children of the expatriate can pursue a similar curriculum in their country of origin.
A benefits package that provides housing or housing while finding a place to settle is a key incentive for expats moving abroad with their families on a long-term assignment.
Expats want access to safe and secure housing that is conveniently located near other expats, offers a relatively short commute to work, and is close to international schools.
An expat benefits package should also include support services that help the expat better integrate into their host destination. Examples include pre-deployment cross-cultural education and language classes if the expatriate does not speak the local language.
Complementary health insurance
A quality complementary health insurance is a priority benefit for expatriate employees. While many countries have adequate national health coverage, others, such as the United States, not providing universal health care.
Additionally, many national health care plans do not cover the costs of services such as dental and vision care or extended maternity leave.
It is the duty of the employer to ensure the health and safety of its employees. A benefits package that provides comprehensive supplemental health coverage is a must for expats living in the United States and abroad.
Compliance risks when administering overseas benefits
Expatriate benefits must not only be competitive, but must also comply with local employment laws. Employment laws vary greatly from country to country, so employers should ensure that the benefits they offer are globally compliant. Some compliance risks include the following:
Variable legal requirements
Each country has its own legislation that governs and protects the rights of employees. Employers must understand and comply with the statutory requirements to avoid financial and legal penalties. Some statutory benefits that differ around the world include:
- Annual leave and sick leave
- Medical insurance
- Overtime payment
Incorrect salary contributions
Employee contributions also vary from country to country and employers need to calculate contributions correctly to ensure payroll compliance and avoid risks. Some different benefit-related employee contributions include:
Incorrect employee benefit tax return
Some jurisdictions require employers to declare social advantages on official tax forms to local authorities. They may also have to withhold or pay taxes on certain employee benefits.
Employers must keep track of taxable benefits provided to expatriates and report them correctly to the relevant tax agencies. If you do not complete these reports correctly, the local tax agency may levy penalties and even assess interest on overdue taxes.
Simplify expat benefits administration
Administering bespoke expat benefits across multiple countries is time consuming and expensive for HR teams. It also requires a thorough knowledge of labor law. Avoid headaches and compliance risks by working with a global partner like Velocity Global instead.
OUR Global Benefits Solutions offers competitively priced benefits that meet a wide range of expatriate needs and comply with market-specific regulations. We remove HR complexities so you can easily relocate and support talent in 185+ countries.
Celebrate your expatriate employees with premium benefits that matter. Contact Velocity Global to learn more.