Benefits are a crucial part of expatriate salary packages and can add substantial value to an assignee’s salary. Not only that, benefits also protect the well-being of the assignee and their family.
In this blog we are looking at what assignment benefits are usually provided, how they are determined and how they are delivered to the assignee. We will focus on assignment benefits that are provided on an ongoing basis for the duration of an assignment. These are distinct from relocation and repatriation benefits, which are costs only incurred at the beginning and end of assignments.
What benefits do companies usually provide?
The most commonly provided benefits among companies are home leave flights, medical insurance and examinations, host-country housing, education for expatriate children and company cars. These benefits remain core to assignment packages and are viewed as essential for promoting international mobility and maintaining the health and well-being of assignees and their families.
Commonly provided benefits
© Employment Conditions Abroad 2018
How are the levels of benefits determined?
There are different factors to consider when determining benefits, such as:
- Seniority level of the assignee
- Family size
- Host country practice
- Length of assignment
- Purpose of the assignment
These factors can have a major influence on the level of benefits that an assignee receives.
A prime example of this is host-country housing. Usually companies assume that assignees will have some sort of housing commitment at home (e.g. mortgage, or a rental contract that cannot be immediately terminated), hence the provision of host housing is very common.
The quality and size of the accommodation are determined by the family size and seniority level: i.e. the more family members, the more bedrooms; and the higher the seniority, the more high-end the accommodation might have to be - especially as some senior managers may be expected to entertain guests at home.
Yet, the provision of a company car is mostly influenced by factors in the host location. 43% of companies provide company cars to their assignees in line with host country policy. Where provision is discretionary, personal security, quality of public transport, quality of driving and road safety in the host location are all factors that would be taken into consideration.
The assignment length also influences the benefits provided. For example, an employee going on a long-term assignment might be accompanied by their partner and children. This means the house or apartment needs to have the appropriate number of bedrooms and to be located in an area within the proximity of international schools - which usually means a more expensive area in town too. School fees for children will need to be taken care of as well, which can add up to a considerable amount.
Whereas for a short-term assignment, the assignee would usually be going by themselves, and, if they had a partner, they would be more likely to remain at the home location, as would any children. This means that a smaller apartment can be provided and there would be no school fees to pay in the host location.
Finally, the reason for the international assignment also plays a role when determining the benefit levels. If the move is self-initiated, benefits are likely to be kept to a minimum as the assignee will not have to be as incentivised to take up the assignment. On the other hand, if an assignment is initiated by the company or is particularly business critical, it might mean the benefits level needs to be increased to motivate the assignee to go on assignment.
Most companies therefore have different benefits policies in place for different assignment types.
How are the benefits provided?
Delivery methods vary due to reasons such as tax efficiency, the need to give assignees flexibility and the ease of administering each method.
Generally speaking, providing benefits ‘in-kind’, where the employer pays for the benefit directly, is the most common delivery approach, as it can be the most tax-efficient method and gives employers control over what is provided. However, reimbursing the assignee’s expenditure is more common for some benefit types, particularly for areas like education and childcare where it is often more appropriate to give the employee a greater say in the details of the benefit provided.
Summary of the typical benefits
Assignment benefits are used to incentivise mobility and protect the well-being of the assignee and their family. Therefore, it is not surprising to see that host housing, medical insurance and home leave travel are the most typical benefits given to international assignees.
FIND OUT MORE
Please contact us to speak to a member of our team directly.
Balancing the cost of providing a suitable level of benefits against the assignment budget is a complex task. ECA researches detailed and extensive benefits data to produce assignment cost projections, which you can purchase on demand or access through our Assignment Management System, ECAEnterprise, which includes a comprehensive salary and cost estimate calculator as part of its core functionality. Get in touch to request a free personal demo.
Our Consultancy and Advisory team can assist in benchmarking, critiquing and writing policies, so that companies can ensure they are aligned with market practice and business objectives. In addition, ECA’s MyExpatriate Market Pay survey helps you to benchmark pay and benefits for international assignees within your industry group. The next survey opens in June and participants will receive free, personalised results.
A subscription to ECA data includes Accommodation and Benefits reports detailing the costs of expatriate housing, international schools, company cars and more, so that you can budget fully for assignee benefits.