When an employee takes on an assignment in another country or transfers there for good, how should they be paid?

This sounds like a simple question but there are many options from which to choose, and each comes with its own logic, advantages and trade-offs.

From protecting home-country purchasing power to full alignment to the local market, organisations can choose from several distinct approaches to meet business goals, talent expectations, and budget realities. Many companies keep multiple pay approach options up their sleeve.

Before looking at each approach, it helps to set out a couple of key terms. The ‘home country’ is where the employee usually lives and works, while the ‘host country’ is the destination to which they are sent, either temporarily or permanently. With that in mind, here’s a comparison of the main pay methods.

Home-based approach

• Anchors pay to the employee’s home country salary, protects them from tax differences and adjusts for the cost of living in the host country. Allowances to incentivise or compensate moves are usually added too.
• It protects purchasing power and makes repatriation easy, because pay stays linked to the home structure. Though if the employee is coming from a low paying country, adjusting a low starting point for cost of living might not cut it in a particularly expensive and high-pay country.
• It tends to result in pay disparities between assignees from different countries in the same host location, and it’s complex to administer.
• It can also be expensive thanks to the additional allowances and companies taking the hit for the employees if tax is higher.
• Ideal for: strategic long-term assignments, keeping link to home country.
• Read more here.

Host-based approach

• Pays in line with salaries in the host location, whether that’s local peers or local expatriates.
• It’s simple to manage and promotes equity with local colleagues. It can be cheaper, but not always.
• It can make repatriation difficult and can create perceived “good” or “bad” postings depending on location. It also requires access to local pay data.
• Ideal for: permanent transfers, locally hired expats, lowering costs.
• Read more here.

Local-plus approach (a variant of the host-based approach)

• A host-based salary is supplemented with some benefits, such as housing, schooling for dependent children, etc.
• It bridges the gap between full local integration and expatriate needs.
• Less suited to equity with host-country colleagues than a true host-based approach.
• Ideal for: easing permanent transfers into local pay, moves motivated by personal benefit (e.g. career development assignments and self-initiated moves), lowering costs.
• Read more here.

Hybrid approach

• Combines elements of both home-based and host-based methods. Usually the starting point is the employee’s home-country salary, but it’s adjusted to reflect the typical amount needed for expenditure by local national peers (i.e. those employed as a local at the same job level) in the destination country.
• Some organisations take a “safety net” approach – they assess case-by-case and apply the hybrid approach when it protects an assignee’s purchasing power better than the home-based approach.
• Tends to be used when moving from low-to-high pay countries, relatively speaking, to protecting living standards (where a typical cost of living adjustment is inadequate).
• It promotes fairness and mobility but is complex and best suited for specific assignment routes.
• Ideal for: moves from low-pay to high-pay countries.
• Read more here.

Select country approach

• Like the home-based approach, but every employee’s home salary is benchmarked to local pay in a chosen country (and the country is the same, regardless of the employee’s origin). This salary in the selected country is then protected from tax and living costs differences.
• Typically, companies choose a country that has relatively high pay levels to ensure packages are attractive (or at least don’t make employees worse off).
• It simplifies comparisons across a global workforce and works well for highly mobile employees.
• It’s another option for protecting the living standards of employees coming from relatively low pay countries.
• However, it weakens the link to the home country and may not align well with repatriation needs.
• Ideal for: career expats (global nomads), equitable treatment between assignees, moves from low-pay to high-pay countries.
• Read more here.

International salary spine

• Applies a global pay scale (built from average salaries across multiple countries) that aligns with job grades.
• This can create strong equity and support for career expats, but it’s costly and administratively heavy.
• It may also disadvantage employees from very high-salary countries.
• Ideal for: senior career expats (global nomads), highly mobile talent, strategic leadership pipelines.
• Read more here.

These pay approaches are usually used for assignments longer than 12 months, back-to-back assignments or permanent transfers. For things like short-term assignments (usually lasting less than a year), business trips and international commuting arrangements, the most common approach is to keep paying the employee on home payroll like usual and provide something extra towards living expenses incurred in the host location. The common options are a cash allowance to cover expenses, an adjustment for cost of living differences, a per diem (based on hotel accommodation expenses) or reimbursement. Some extra allowances might be given too.

Choosing the right approach

No one method is universally “best.” The right choice depends on the type of assignment, the profile of the assignee population, and the organisation’s strategic priorities.

For some, the answer will be one consistent global model; for others, it’s a mix tailored to different scenarios.

Ultimately, pay approaches are more than numbers – they are a reflection of how much the business values mobility, fairness, and long-term talent engagement.