Sending employees to work abroad for months or years at a time, perhaps with their families, requires relocation or Global Mobility services. The process has to be managed, tax, Social Security and immigration rules need to be complied with. To discuss this, Sarah Lockett from The Business Debate is joined in the studio with Alan Bentley, Managing Director of IPM Global Mobility.
Six critical questions you must answer before you send employees overseas.
The global world of business is changing rapidly and more and more businesses are beginning to expand their operations overseas. Those of you who have already started this journey will be aware that sending employees overseas requires research and planning, due to the many pitfalls which could jeopardize your plans. There are a range of considerations to take into account when operating an international assignment programme.
Here are 6 important questions which you should ask when you’re preparing to expand your business overseas. Knowing your answers, and the action you need to take as a result, will have a huge impact on the success or failure of your project:
1. Is your business at risk? Are you compliant?
You should always check the requirements of Home and Host country Tax and Social Security, as well as Immigration, for any potential risk. The Employee and family may be barred entry if the Immigration papers are not correct. For more serious breaches, there might be fines for the employee and/or the employer, and even imprisonment. If there are a number of assignees and repeat offences in a country, then the company risks being exposed publicly. This could impact its ability to carry on business, and most certainly would damage its corporate reputation.
2. How are you going to pay them?
Every assignment is different, so knowing how to pay each individual assignee is crucial; especially if they break tax residence in the home country. Payment facilities may be impacted by whether or not you have a legal entity, or Permanent Establishment, in the Host Country. Do you have a policy framework, and a consistent process to ensure that all employees moving overseas to work are treated equally? Each type of assignment may have different Tax, Social Security and Immigration issues, Are you prepared for that?
3. How much will it cost?
It is widely accepted that, next to the grossed up tax costs, some of the largest elements in the cost of running a global mobility programme are property and schooling related costs, policy allowances and the cost of relocation itself. For an assignment to be successful, the assignee needs to feel that the arrangements are fair. They will also expect to enjoy a standard of living at least equal to, if not better than, that in the home country. Cost management is paramount to running a successful Global Mobility programme, but you need to be careful to avoid making cuts in the wrong areas. Another question for you is to ascertain how much your time is worth, and how much of it do you spend on running your assignment programme? The highest potential cost is assignment failure, with the employee and family making a premature return home.
4. Who is going and how do you select the person?
Companies want the highest possible “Return on Investment”, therefore, choosing the right people: those who are dedicated and motivated to succeed, are more likely to adjust to the foreign culture and environment and thereby succeed in the international assignment; is paramount. Issues such as ageing parents’ health, schooling, the family’s ability to adapt into a new culture, dual careers etc are matters that must be taken into account.
5. What is the reason for the move?
International assignments take place for several reasons i.e. troubleshooting, lack of local skills and experience, employee development, talent management, moving into new markets. Whatever the reason, you will need to know what specialist skills are required in the host location, and then be able to select the most appropriate employee.
6. How long are they going for?
Assignment types are many and varied – Long term (3-5 years); Medium term (1-3 years); Short term (3-12 months); Commuter; Business Tripper; Permanent Transfer or Permanent Transfer with additional benefits – to name but a few. It is essential to have a policy framework for each type to ensure consistency of treatment among your employees.