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How to compensate employees living and working in remote and extreme locations

ECA International

Mobile employees and their accompanying families will often have to make adjustments to life while on assignment in an unfamiliar environment. They may experience differences in climate, language and culture, while other factors, such as personal security issues or political tensions, can also impact their everyday life. In recognition of such adaptation, companies frequently provide a Location Allowance.

However, for companies whose purpose requires their employees to live and work at challenging sites, perhaps with only basic facilities, such as mines, plantations, military bases or oil and gas facilities, or located in remote or extreme environments like jungles, deserts, the Arctic, or even a disaster zone, a standard location allowance may not provide sufficient compensation.

ECA’s Remote Allowance Calculator enables our clients to offer fair, equitable and defensible remote allowances to compensate employees for the additional level of adaptation required - whether it be for a long-term, rotator, commuter or any other type of assignment.

Which factors are considered?

ECA’s Remote Allowances are designed to be provided as a supplement to our standard Location Allowances. In order to calculate the Remote Allowance, the first step is to calculate the Location Allowance between the home and ‘anchor’ location (i.e. a standard nearby location to the remote site). For example, if the assignment is to an oil platform in the Niger Delta, the user may choose Port Harcourt in Nigeria as the anchor point as it is the nearest published ECA location and the city the employee may travel to when not on rotation. The user is then required to select the factors below depending on the particular circumstances of the remote host site. These factors have been identified as being common elements cited by our clients which turn a location into a ‘remote’ site for the purpose of paying additional allowances.

Climate – the anchor point chosen will already provide an assessment of the climate for the area. However, if the actual location is deemed by the user to have an even more extreme climate than the anchor (for example, an oil rig regularly battered by storms or a mine in the middle of a desert) the user can choose to factor this in.

Access to location – Poor accessibility not only poses practical issues but can also increase the sense of loneliness and isolation felt by an assignee. Users are asked to assess ease of access and the availability of international flights.

Living quarters – Often, the kind of accommodation provided in remote locations is very basic and in no way resembles the townhouse or apartment a standard assignment might involve; it is more likely to be a tent, a portacabin or a dormitory. Privacy, as well as comfort, is a major consideration in many remote sites and these considerations are factors in the calculation.
Leisure time – Being in a remote location with little or no entertainment can create a sense of boredom, so employees without access to a reasonable range of facilities will need higher compensation.

Medical provision – Most sites require a minimum standard of healthcare and companies are likely to have an evacuation plan in place, but for expeditionary assignments (for example), where there really is very little or no medical support, an allowance beyond that already provided by the Location Allowance may be warranted.

Family status – as it is not unusual for assignments to remote locations to be unaccompanied, many companies consider this part of the job and the base salary will reflect this. However, ECA’s calculator allows the user to decide if separation from the family should be considered as part of the Remote Allowance calculation.

Once all these factors have been assessed, an additional allowance, expressed as a percentage will be displayed to be added to the standard Location Allowance. If insufficient criteria have been met, no supplement will be indicated. This may mean that the location in question could be reasonably assessed using ECA’s standard Location Allowance methodology. ECA can undertake a special location analysis to provide a suggested allowance or suggest an appropriate proxy in such cases.

How are the allowances expressed?

According to ECA’s latest Expatriate Salary Management Survey, Location Allowances including Remote Allowances are most frequently expressed as a separate allowance and are most commonly calculated as a percentage of the notional home gross salary, delivered as a net amount.

Remote allowances are ideal for

 Offshore installations and vessels
 Mining facilities
 Military installations
 Polar and tundra research stations
 Desert or tropical outposts
 Charity and relief programmes

Our Remote Allowance Calculator allows you to

 Establish whether a Remote Allowance is warranted
 Create fair and rational allowances for all your employees
 Apply a consistent policy
 Reflect the individual characteristics of assignment sites
 Plot and save individual sites online
 Create Location Ratings reports


How to buy Remote Allowance calculations

Calculations can be bought individually from your ECA contact or as an add-on to a subscription to our Location Ratings Calculator, allowing users to plot, save and share site information with colleagues.

Companies wishing to attribute their own allowances to the system or customise the ‘bands’ to which the scores and allowances are attributed, can have the calculator configured. Please get in touch with your ECA contact to find out more, or contact us here

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