Key Considerations When Structuring Short-Term Packages

Short-term international assignments have many tricky nuances related to immigration, employment law, payroll, tax, and other related perspectives.

Managing short term assignments has become a major challenge for many companies, as different departments and business units frequently initiate them. Assumptions that sometimes are made with respect to the nature and duration of a short-term assignment, as well as the taxation, immigration, and other issues surrounding the assignment, can get an employer and the employee into difficulties.

Trends

Many employees consider international assignments important to improving their career prospects. ECA research shows that use of short-term assignments, which typically last from three to 12 months, has risen considerably over the past decade, with short-term assignees making up more than 20% of companies’ internationally mobile workforces. Factors contributing to the rise in popularity of short-term assignments include changing workforce demographics, the need to plug skills gaps and accelerate the development of employees with leadership potential, increased focus on costs, and their use as a means to overcome mobility barriers.

For both employer and employee, short-term assignments fulfill many of the criteria demanded by our 21st-century lifestyles: flexibility, variety, immediacy, and minimal family disruption.

How Do Companies Structure Packages?

There is a wide range of practices among companies in the level of living allowances, the types of incentives, and even the number of times they will pay for trips home for employees to visit their families.

Daily Living Expenses

Nearly 20% of companies report that they reimburse actual day-to-day living expenses for their assignees. What is the most effective approach? That depends on the number and type of short-term assignees that a company is trying to manage. Several research participants apply more than one approach to cover costs, taking into account variables such as the type of accommodation, length of assignment, etc.

Incentives

According to ECA’s research, fewer than 50% of companies say they provide mobility incentives for short-term assignments (which typically run from 10% to 15% of the monthly base salary), whereas this mobility allowance is commonly paid for long-term assignments (62% of companies using the home-based approach). The other 50% of companies will usually argue that, as short-term assignees normally leave their families at home, they are far less exposed to “hardship factors” than assignees who have their families living with them at the host location. Conversely, the payment of a location allowance is more prevalent with companies in the construction, civil engineering, mineral and mining, nonprofit, oil and gas, and telecommunications sectors, with the number of companies providing this allowance increasing to over two-thirds.

Trips Home

Employees undertaking short-term assignments are rarely accompanied by their partner and/or family, who often opt to stay at home because of the shorter nature of the assignment. This leads to a wide variation in practice relating to trips home. It is surprising, given that this is a critical policy issue, that many companies do not appear to have clear guidelines in place. Typically, companies permit one company-funded trip home every 12 weeks for employees whose families have remained at home. However, some companies allow the partner to visit the assignee in the host country in lieu of the assignee returning home. 

Increasing the Pool

With proper planning and administration, short-term assignments can be an effective and efficient means of increasing the pool of potential employees for the international assignment program. M

David Remedios is head of consultancy with ECA International LLC. He can be reached at +44 (0)20 7351 5000 or david.remedios@eca-international.com.

The above information is excerpted from an article that appears in the September 2019 issue of Mobility magazine.

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