The nature of international assignments, where employees are sent to reside/work in another country by their employer for a ‘temporary’ period only, usually means that they will retain financial commitments in their home country – or at least wish to retain any savings there.
Thus the issue of exchange rates is one that has been familiar to assignees and their employers for many years. Rates of exchange between the home and host currency (and sometimes a third currency) may be used in setting remuneration at the start of an assignment. As the employee remits funds to and from the assignment country against a constantly changing rate, this will have an effect on his/her perceived ‘purchasing power’ during the assignment.
We have produced a whitepaper on the 4 essential factors to consider in managing the issues of exchange rates for your international assignments. The whitepaper covers:
- How to maintain perceived equity in the calculation of the remuneration by using the home-country currency method.
- How to identify the most transparent method for the management in the host country, to get a known cost, which can be matched against the budgeted cost at the start of the assignment.
- How to use the split-pay approach that allows the assignee the flexibility to decide the percentage of salary that will be paid in the host currency.
- Understanding how to use another major component of the international assignment package, the cost-of-living allowance.
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