Benefits for staff on short-term placements overseas

A stint working abroad for a multi-national employer is usually regarded as a welcome opportunity by employees. Shorter-term placements overseas can be useful where specific expertise or resources need to be deployed quickly and for a defined period of time, for example, if a project needs to be set up or a critical role filled on a temporary basis. Employees can experience different working environments and build international networks without the upheaval and expense of a long-term assignment.

When deciding whether to send staff on short-term assignments, employers may have to factor in additional costs, particularly if it will incur additional expense such as providing staff with benefits to cover them overseas. But Matthew Hunt, a principal at Mercer, says the relative cost-effectiveness overall can be difficult to assess, given the rationale and objectives of assignments.

One issue employers must consider is what perks to provide to staff on short-term international assignments. One advantage is that many of the benefits an employee receives in their home country will remain in place because, for tax purposes, their status will not change unless they spend a whole year overseas. Under the terms of the social security agreements that exist within many countries, such benefits accrued in employees’ home country will also continue.

Where possible, home country retirement, death and disability cover should be maintained to minimise the impact on the employee.

Bob Sperl, a senior international consultant at Watson Wyatt, adds that most business travel insurance includes life insurance, with additional cover in case of accidents. Only if an employee were assigned somewhere dangerous might additional insurance be required. Kidnap insurance might also be prudent, as well as expenses to cover the cost of guidance from security organisations. However, these will be exceptional cases.

What employers need to provide in terms of private medical insurance (PMI) really depends on the country to which the employee has been assigned. Where possible, most organisations should try to keep employees in their home country plan. A European Health Insurance Card enables an employee to receive medical treatment in any EU country on the same basis that they are covered in the UK. Alternatively, a UK PMI plan may be extended to include overseas cover. In some cases, however, a fully-blown international PMI package may be necessary. This level of cover is essential if staff are sent to countries with is no state healthcare system, such as the United States.

While on assignment, employees may expect to be reimbursed for a range of expenses, including the cost of flights, accommodation and living expenses, often in the form of a daily allowance. For short-term stays, employers will usually pick up all accommodation costs, whether staff stay in a hotel or private residence on short-term leases. In contrast, long-term assignees are not expected to live permanently in a hotel. Instead, their employer would pay their relocation costs, but not all on-going living costs.

Some organisations simply let employees reclaim their costs on expenses, just as in their home country, but this system has the potential for abuse. Sperl says opportunities for “padding” should be kept to a minimum and receipts required. “Relying solely on the company’s business trip expense policy can often be an expensive and unnecessarily generous way for the company to reimburse staff for extended stays overseas,” says Hunt.

When sending staff overseas, therefore, employers should ensure they have a well-defined written policy, setting out its approach to all aspects of compensation and benefits EB If you read nothing else read this…

n Short-term placements are useful where there is a need for specific expertise.

n Employees’ will retain their usual cover for retirement, death and disability benefits.

n Employers will often cover a range of expenses such as flights, accommodation and daily living expenses.

n Private medical insurance is essential for certain countries, but staff can be covered in EU countries on the same basis as in the UK.