TYPICAL Assignment Components & Best Practices
Introduction Following is a brief summary of current global assignment best practices from TRC Global Mobility, Inc. The information presented represents the opinion of TRC Global Mobility, based on our clients current practices and reliable, independent benchmark data derived from a variety of industries. This information is meant to serve as a starting point in considering the appropriate global assignment package to offer your employees. There can be considerable variation across industries and a TRC Account Manager can consult with you to ensure your company is offering competitive, yet cost-effective benefits within your specific industry. It is our hope that these best practices will jump-start your policy review process and highlight benefit areas that might be worth reconsidering. TRC believes that policy drives the relocation process and that effective, competitive policies help to produce successful outcomes.
Contents Pre-Assignment Assistance.... 3-4 Home Country Housing.... 5 & Personal Auto Assistance Mobilization... 6 Destination & Settling In Services.... 7 Personal Goods Shipment... 8 Compensation & Benefits.... 9-11 Tax Services & Policy.... 12 Holidays & Leave.... 13 Repatriation Benefits.... 14
Pre-Assignment Assistance Candidate Assessment TRC recommends making this relatively small, up-front investment to help ensure a successful assignment and to protect the company s investment (potentially $1m+USD). Preview Trip One trip not to exceed five days + two travel days is typically offered to the assignee and his/her spouse/partner (and dependents, if approved). Travel guidelines follow the corporate travel policy. Reasonable hotel, meals and transportation reimbursed. Can be treated as a business expense if taken before signing. Relocation Agreement/Offer Letter. Spouse/Partner Career Transition Assistance Spouse/partner adaptation to the new country is crucial for a successful assignment. Due to restrictive labor and immigration laws in some countries, some companies are providing career transition assistance to the trailing spouse/ partner. Most companies allow reimbursement of up to $2,500 USD with receipts. (continued on next page) 3
Pre-Assignment Assistance (continued) Language Training When necessary, TRC recommends providing the assignee and adult family members formal language training prior to departure for the host country. This is sometimes continued in the host country. Up to 100 hours are typically covered. Cross-Cultural Training TRC recommends providing the assignee and accompanying family members a one-day cross-cultural training program to ease the acclimation to the new environment and reduce the risk of a failed assignment. Often capped at $2,500 USD for single; $3,500 USD for couple/family. Visa & Immigration All expenses associated with obtaining visas, work permits, passports, inoculations, and immunizations should be paid directly or reimbursed by the company. 4
Home Country Housing & Personal Auto Assistance Home Sale Assistance Home sale benefits are not typically offered to international assignees. The assignee is expected to return to the home location and retention of the home is strongly encouraged. Lease Cancellation Up to two months rent is typically reimbursed. Security Deposit Usually paid by the company. 100% retrieval is usually required; any damages are the assignee s responsibility. Loss on Auto Sale TRC recommends reimbursing up to $2000 USD for loss on sale for one personal auto. The loss will be based on the median or average difference between the retail and tradein values, less the actual sales price. Proof of ownership and sale should be required. Long Term Storage Long term storage in the home country is typically covered by the company for the duration of the assignment, if less than five years. Property Management TRC recommends providing property management services for the departure home throughout the term of the assignment. If the home is rented during the assignment, some companies claim the rent received to offset host country housing costs. 5
Mobilization Final Move It is typical to reimburse reasonable transportation (coach/economy class airfare), lodging and reasonable meals, per company travel policy. Lodging is usually capped at five days two on the departure end; three at destination, depending upon the distance between home and host locations. Temporary Housing TRC recommends reimbursing 45 days cumulative between home and host countries, due to transit times of personal goods shipments. TRC recommends replacing full meal reimbursement upon submission of receipts with a one-time pantry set up allowance (amount will depend on cost of groceries in the new location). The intent is to help offset (but not cover 100%) the expenses associated with stocking a pantry in a new home. 6
Destination & Settling In Services Destination Services TRC recommends providing a two- to fourday program upon arrival in the host country to facilitate home search, area orientation, registration with local government agencies, lease negotiation, banking arrangements, transportation and school enrollment. Education Assistance If adequate public schooling is not available, TRC recommends that the company reimburse for enrollment fees, tuition, uniforms, books and transportation for school- aged children. Tenancy Management TRC recommends that we manage the entire host country leasehold process. The lease would typically be signed by the assignee (in some locations, there are tax/legal reasons for the company to sign leases). TRC pays rent to the landlord/property management company on behalf of the international assignee. Once the initial accounts are set up, TRC pays the local utility providers (gas, electric, water, trash removal, etc.) on behalf of the assignee, and manages all maintenance issues and property emergencies throughout the assignment. 7
Personal Goods Shipment Shipment of Household Goods TRC recommends providing reasonable packing, unpacking and shipment of household goods. Customs and import/export duty taxes should be covered. Reimbursement for excess baggage (+2) is preferable to air shipments. Weight Allowance & Method of Shipment Air freight: single = 500 lbs.; accompanying spouse = 250 lbs.; each additional dependent = 150 lbs. Sea container: single = 20 foot container; +1 and/or family = 40 foot container. Storage in Transit Usually matched to the number of days allowed in Temporary Housing. This provision is not often required since the transit time of a surface shipment often exceeds the number of days in Temporary Housing. Pet Transportation Pet transportation and quarantine are typically not covered under company policy. TRC recommends guiding the assignees to use relocation or miscellaneous relocation allowance to cover the costs, if a pet needs to move with the assignee. 8
Compensation & Benefits Base Salary & Bonus Based on home country pay practices, policies, and norms; this may be adjusted via the goods and services differential. Foreign Service Premium Payment of 10-15% of base salary as an incentive to accept the assignment (usually tax-protected). This premium is becoming less common, but is sometimes still used in industries with tight talent pools or for particularly arduous assignments. Hardship Allowance Specific to a location; intended to compensate assignees for working in difficult or dangerous locations (US Department of State website is often used). Factors considered include climate, traffic, violence, disease, infrastructure, education quality, housing, etc. Calculated as a percentage of base pay, usually between 5-30%. TRC recommends tax equalizing this allowance; it can be paid either by company payroll or TRC. (continued on next page) 9
Compensation & Benefits (continued) Transportation Allowance If a company auto or car and driver are not provided in the Host Location, TRC recommends providing a Host Transportation Allowance. The amount provided may be determined by an independent data provider; it can cover all or only a portion of the assignee s host, personal auto or public transportation expenses. Relocation Allowance TRC recommends providing this allowance to cover items not specifically addressed in the policy. This allowance is typically one month s salary and is capped at $10,000 USD. TRC recommends tax equalizing this allowance; it can be paid either by company, payroll or TRC. (continued on next page) 104
Compensation & Benefits (continued) Goods & Services Differential or Cost of Living Allowance TRC recommends providing this when the spendable portion of the assignee s income (based on income and family status/size) is significantly less in the host country compared with the home country. Usually paid monthly, or whenever base salary is paid. Parameters are reviewed annually or if the exchange rate fluctuates more than 5%. TRC recommends tax equalizing this allowance; it can be paid either by company payroll or TRC. Health Benefits Supplemental (international) health coverage should be provided when possible. Medical Exams TRC recommends covering the costs of any exams and tests to the extent they are required for entry in the host country or by the home country laws. 114
Tax Services & Policy Expat Tax Policy TRC recommends using tax equalization to manage expatriate taxes into and out of all countries to eliminate any perceived benefit or disadvantage from the decision to accept a potential assignment. Tax Consultation & Preparation Most companies provide home and host country tax briefings to the expat to explain the overall tax equalization process, as well as expectations with regard to filing taxes in both the home and host country locations. Tax preparation assistance is usually provided for the home and host countries for all tax years affected by the assignment, including after the assignment ends. 4 12
Holidays & Leave Vacations & Holidays Vacation should be accrued according to the home country vacation policy. Paid holidays should be observed in accordance with the host country customary/ declared holidays. Home Leave TRC recommends providing one round trip home for assignee, spouse, and dependent children per full year of assignment completed; some companies provide two trips to unaccompanied assignees. Term of the home leave is typically aligned with company s vacation policy and paid time off is used. 134
Repatriation Benefits Emergency Leave TRC recommends providing round-trip travel expenses to the home country in the event of a medical or personal emergency, as approved by the company line management. Reintegration Workshops Designed to help process the experience the family had while living abroad. Provided to employees who have been out of the country for three or more consecutive years. Career Development TRC recommends having a career development plan in place to allow the employee to apply the skills learned while on assignment. Failure to have a career development plan often leads to expatriate attrition. Core Benefits Provided TRC recommends providing the following benefits during repatriation: Departure Services, Personal Goods Shipment, Temporary Housing, Repatriation Allowance (this should be similar to the Relocation Allowance described in the Compensation & Benefits section). 14
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