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This article originally appeared in the September 2018 edition of Mobility Magazine.
Exceptions are unexpected allowances and benefits provided to an international assignee that are outside of the scope of an international assignment policy. Often managers sign off on exceptions, looking only at the direct cost and not realizing there can be large associated tax costs.
Besides cost issues, policy exceptions can create compliance risks, policy implications, and a lot of administration to track the exceptions, all of which could lead to significant budget overspend.
Related: Lump-Sum and Managed-Cap Moves
One of the first steps in planning a successful international assignment is to establish a budget. It is rare that companies will not need to make exceptions to policy from time to time to accommodate the varied needs of individual assignees. Hence, most companies set aside a contingency budget to cover unexpected costs relating to an assignment. Most companies use a rate of 5 to 10 percent from the total budget to determine contingency.
Policy exceptions tend to fall into three categories:
To keep costs down, a company will need to implement a well-defined process for managing and authorizing policy exceptions to realize cost savings in program administration.
Read the rest of this article in the September 2018 edition of Mobility Magazine.