In today’s international marketplace, more companies are sending employees on assignment 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 not only help retain talent and ease the stress of relocation but comply with local labor laws.
Learn the employee benefits to consider providing to expats when sending them abroad and how to ensure compliance with international employment legislation.
Why 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 are become expat employees in the new country, often taking their lives and families abroad with them.
Offering the right expatriate 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 at work. Plus, 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 incentivization
While some employees may jump at the opportunity to enjoy global mobility and relocate abroad, others might have reservations—especially if they have dependents and other commitments outside of work. An expat may have to face new challenges working abroad, including the following:
- Understanding a new culture
- Learning a new language
- Navigating 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 the relocation offer more attractive to employees.
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 around the following situations:
- Finding safe and secure housing
- Helping their spouse find new work
- Locating a school for their children
- Performing well on the job assignment
A benefits package that includes perks like relocation assistance, flexible work hours, additional paid time off, and wellness programs may help relieve some of the stress of relocation.
Expat living has hidden costs
In addition to relocation and living costs in a different country, an expat may face additional expenses. These extra costs could include international schooling for their children, language classes, public transportation within the country, and traveling home to see family.
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.
Financial assistance for language courses and childcare reimbursements are also supplemental benefits to consider providing relocated employees.
The global hiring landscape is competitive
The global hiring landscape is becoming more competitive as companies look abroad to attract and retain top employees. 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 workforce demands.
Get our guide to learn how to retain top talent with competitive, compliant global benefits that go beyond the minimum requirements:
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.
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.
Compared to the host country’s local school options, 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 while finding somewhere to settle 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
An expat benefits package should also include support services that help the expat better integrate into their host destination. Examples include cross-cultural education before deployment and language courses if the expat does not speak the language of the country.
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.
Plus, 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 must not only be competitive but should also adhere to local employment 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 per 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.
Simplify compliant benefits administration for expats
Administering tailored benefits for expats in multiple countries is time-consuming and expensive for HR teams. It also requires advanced proficiency in labor law. Avoid the headaches and compliance risks by working with a global benefits partner like Velocity Global instead.
Our Global Benefits solution offers competitively priced benefits packages that accommodate a wide range of expat needs and comply with market-specific regulations. We remove the HR complexities so you can relocate and support talent in more than 185 countries with ease.
Celebrate your expatriate employees with top-shelf benefits that matter. Contact Velocity Global to learn more.
