Developing or Revisiting a Comprehensive Global Assignments Program: Employer Considerations

When setting up international operations, successful companies make special efforts to understand their foreign markets, exchange ideas and best practices, and maintain a consistent corporate culture. To achieve these goals, it is often necessary to deploy home-office employees to international operations and to bring employees based in foreign offices to the company headquarters.

Employers that fare best in this environment have planned for success—and have in place a global assignments program for selecting, managing and repatriating employees who accept international assignments. They also understand that immigration, tax, benefits and employment law interrelate—and that decisions made in one area will impact others.

Policies and procedures for global assignments should be developed when an employer first considers going global. Early planning in this area will help the company maintain consistency while managing costs, risks and expectations. Revisiting those policies and procedures as laws and business change will help the organization maintain a viable program.

The first in a series on global mobility, the following article provides an overview of issues employers should consider when developing or refining a global assignments program.

Consider Companywide Impact

Developing a comprehensive and coordinated global assignment program requires consideration of multiple interrelated factors in areas such as immigration, tax, employment and employee benefits.

Those charged with developing or refining an assignment program should, therefore, involve company decision-makers and stakeholders whose responsibilities will be affected by the policies and procedures the company ultimately adopts.

Stakeholders may include representatives from human resources, finance, tax, payroll/accounting, and legal. Other affected parties may include people in comparable positions in the company's international operations, as well as outside vendors and consultants who would have a role in implementing the assignment program as agreed or locally applied.

Determine Assignments the Company Will Support—and the Business Goals

Decision-makers and stakeholders will have a significant number of issues to consider in the development of the program, including the types of assignments the company will support and the business goal/s for each.

Examples of possible assignments include:

• Commuting
• Business trips
• Short-term, project-based assignments
• Extended training or internships
• Permanent transfers
• Career expatriates/internationalists

Employers will want to consider goal/s for each type of assignment. For example, is the assignment needed to engage in local meetings to ensure coordination of international business, fulfill a short-term business need, provide a high-achieving employee with some international experience, or to manage a foreign operation for the foreseeable future?

Assignment Goals

Goals will drive decisions about how much support the company will provide and for what purposes. Short-term business trips will likely involve minimal requirements, covering items such as applying for a business visa, travel, and costs incurred while on the trip. Daily commuters may need no more assistance than possible support for a work visa and cross-border taxes. On the other hand, a long-term assignment will involve considerable attention and support in visa costs, travel, moving expenses, family support, tax assistance and other types of employee benefits and incentives.

Assignment goals will impact tax, social security, repatriation and benefits issues, as well as decisions on appropriate choice of work visa. Decisions must also be made as to whether the employee will remain on the home country payroll and benefits, become localized in the host country, go on an international payroll and benefits program, or become subject to some other arrangement.

Ultimately, the company will need to determine what it will offer in each situation based on assignment goals, legal requirements, business needs, convenience, consistency and competition.

Unsupported Assignments

In addition to considering which assignments the business will support, employers are well-advised to consider those they may not wish support—or to support only on a minimal or narrowly defined basis. These may include employee-initiated transfers or employees who are trailing spouses who are being assigned abroad.

Document Assignment Decisions and Related Goals

Companies will have many issues to consider with regard to each type of assignment. Ultimately, the decisions the company reaches in each case should be memorialized in writing and, for assignments that go beyond short business trips, set forth in an assignment letter that is provided to the employee well in advance of departure.

The following are matters commonly outlined such written agreements, based on the nature of the assignment and its purpose(s).

Employee Visas, Work Permits and Residence Permits

Employers will always want to ensure the personnel they send abroad arrive in-country legally and with the ability to engage in the intended activities for which they are needed for the duration of their assignment. This is required for compliance with the laws of the host country by the company and the employee—and to maintain a good business reputation.

Dependent Visas, Residence Permits and Work Permits

If the assignment is one on which dependent family members will accompany the employee, these individuals will generally need dependent visas and, in some countries, residence permits. Some dependents will also want work authorizations.

While certain countries grant dependents of primary workers employment authorization as a benefit that is incident to their status, other countries require that dependents obtain their own, independent work authorization. Employers need to take this into account when offering an overseas assignment to an employee, keeping in mind that a dependent's inability to work may be a deal-breaker for the employee.

Some employers choose to support the dependent spouse's application for work authorization. Others will provide transferees with certain allowances that are to be used for expenses, which may include costs associated with a dependent's application for employment authorization. Others may determine that this is an expense to be borne by the employee.

Tax Issues

A global assignment will have tax implications for the company and the employee. Employers must be cognizant of permanent establishment issues (i.e., when the mere presence of an employee in the foreign country might provide sufficient nexus for the company to be subject to income tax there) and other potential tax exposures in the host country while likewise accounting for the impact of host-country taxes on the employee.

Compensation and Employee Benefits

The amount and source of compensation and employee benefits must be considered—taking the host country's cost of living into account. The company must also determine whether the employee will remain on home country payroll and benefits (including retirement benefits, social welfare insurance, health insurance, vacations and holidays), move to the host country payroll and benefits, have a split payroll (and how to ensure each portion of such split payroll is properly reported to the countries in question), or move onto a separate source of pay and benefits. These decisions will have significant implications for management regarding taxation and benefits issues for both the employer and employee and, as such, must be carefully considered.

Other terms and conditions of employment should also be outlined in the assignment letter. Topics to consider include working time, holiday and vacation schedules, application of corporate policies and/or local work rules. Keep in mind that it can be difficult to ascertain with certainty whether local employment laws will be applied to the employee's assignment and the level of risk should be taken into account when setting terms for the assigned employee.

Companies must determine how they will address assignment-related tax issues for the employee, whether through tax equalization or some other approach.

Specific Assignment–Related Benefits

Employers may consider a number of possible benefits based on the nature and goals of the assignment. These often include:

• Pre-decision travel to the host country
• Moving costs
• Housing (both home and host country)
• Cultural and language training
• Security
• Home leave
• Automobile/transportation
• Tax return preparation services
• Miscellaneous allowances and expenses such as club memberships and incidentals

Tracking Assignees During Course of the Assignment

Companies need to ensure employees are tracked for legal compliance purposes over the course of their assignments. For example, temporary visas, work permits and residence permits have expiration dates and may need to be renewed or extended.

Repatriation

Even before the assignment begins, companies should consider how they will handle repatriation of the employee and any dependent family members at the end of a global assignment.

Since an assignment may end for a variety of reasons, including employee resignation, termination of employment, family emergencies, or conclusion of the assignment term, employers may choose to address repatriation in different ways—dependent on the reason for the end of the assignment and on consistency of applicable policy for all international assignments.

Employers must take host country employment laws into account, recognizing that companies may have obligations to comply with notice requirements or other matters relevant to employment termination.

Select the Appropriate Candidate

Employers must also consider how they will select employees for international assignments. Certainly, the nature and goals of the assignment will be critical. It is also important to select individuals who can carry out the company's objectives in a different, sometimes radically different, environment. And, companies must consider how the employees will represent the company in the foreign country.

Companies might also consider individuals who are already citizens of the host country and, as such, should not need a visa or work permit while on assignment. If the proposed assignee is already in the "home" country on a temporary visa or as a permanent resident with physical presence requirements for maintaining such status, the company should take this into account when discussing the assignment with the candidate. There may be additional costs involved in such an assignment in order to resume temporary visa status, if desired, or to retain permanent resident status.