international mobility - factsheets - cipd

23/4/2014 International mobility - Factsheets - CIPD

http://www.cipd.co.uk/hr-resources/factsheets/international-mobility.aspx 1/11

International mobility

Revised November 2013

In this factsheet

What is international mobility?

Preparation and planning

Remuneration, benefits and allowances

Checklist of steps which facilitate a successful assignment

CIPD viewpoint

Useful contacts

Further reading

What is international mobility?

International mobility can be used to achieve business objectives, enhance corporate culture and develop the

people within an organisation. It is a complex aspect of HR which encompasses the following phases:

Pre-assignment the selection of a candidate and the planning involved in advance of an international

move

Relocation the logistics of the international move

Related resources

Podcasts

Interview with Peter Cheese and look ahead to

2013 - podcast 74

Maximising the value of reward: thinking global,

acting local - podcast 55

Factsheets

International reward

Employing overseas workers

Guides

Work experience placements that work

Global talent gazetteer

Survey reports

Reward management 2013

Improving social mobility; inside the HR

profession and beyond

Books

Bookstore - International Human Resource

Management

Bookstore - Critical Issues in Human Resource

Management

Homepage > Resources > Factsheets > International mobility



On-assignment the activities and events that occur throughout the assignment

End of assignment career management, logistics and the end of assignment options.

In most cases, the philosophy of international mobility is that broadly, the employee should be no better or

worse off as a result of their assignment in home country terms. This however is dependent on the approach

that an organisation decides upon (see below).

The term 'international assignment' is used very broadly. It can be used to describe any of the following

situations.

Frequent business trips of less than 31 days duration per single trip, usually covered by the

organisations business travel and 'per diem' expenses policy.

Short term assignments over 31 days but less than 12 months. The employee may become

technically employed by the host country subsidiary, with certain additional benefits according to the

circumstances of the individual. Career management remains the province of the home country, while

performance management may be shared.

Long term assignments usually two years or more. In this situation, it is more likely that assignees

will be put on local terms and conditions.

The requirement for an expatriate, as opposed to employing a national to fill a post or handle a project, needs

to be clearly identified right from the beginning, not least for the purposes of obtaining work permits.

Acceptable reasons for using an expatriate will vary from country to country but may include:

to fill a post where no local staff are qualified

to train local nationals to take over roles previously occupied by expatriates

to transfer technical expertise

to give employees international experience in preparation for more senior roles

to provide development opportunities for employees as part of talent management and succession

planning initiatives

to facilitate knowledge sharing between employees in different parts of the organisation

to create an international corporate culture and encourage employees to develop an international

mindset.

Preparation and planning

Training courses

Measuring the Effectiveness of HR - Short

courses - Training - CIPD

Authenticity and Challenging Perceptions -

Short Courses - Training - CIPD

Conference details

Utilise Social media to connect to a world of

new talent

Reward Conference

View all resources

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What approaches are there to international assignments?

Home-based the employee remains on their home base contract of employment and their home

gross base salary. The employee is tax equalised to their home country which means that hypothetical

tax is deducted from their gross salary on a monthly basis and they are paid a net figure. The company

usually pays the actual tax liabilities.

Host-based the employee moves to a host contract of employment or equivalent terms and receives

a local salary which is subject to host taxes.

HQ approach international assignees are equalised to the HQ country irrespective of their home and

host locations.

Regional hubs international assignees are equalised to a regional hub. It could be either the tax rate

of one location within that region, or a blended average of a number of countries.

Which documents are applicable to international assignments?

Assignment policies the policy governs the terms and conditions and sets out the employees

entitlement for the duration of the assignment. It should also cover selection, development and career

planning for assignments and what happens at the end of an assignment.

Cost estimate an estimation of the costs involved in an international assignment which can be used

for approval for the assignment and for budgeting purposes.

Assignment letter/contract this is usually issued as an addendum to the home or host contract of

employment (depending on the companys approach) and details the relocation assistance and benefits

and allowances that are applicable to the employee while on assignment. It covers the employees and

the employers responsibilities for the period of the assignment. As a minimum the assignment letter

should provide information on:

the assignment duration

which countrys law is applicable for the duration of the assignment

the home country

the host country

the remuneration package at the start of the assignment



any specific terms and conditions relating to the return to the home country.

Income statement also known as a 'balance sheet' or 'build up'. This details the remuneration that

the employee can expect to receive while on assignment. This is typically used on tax equalised

assignments. As many of the elements of the income statement are subject to change it should be

reviewed periodically throughout the assignment.

What types of risk need to be considered before implementing an internationalassignment programme?

Legal - the letter of assignment should state which countrys jurisdiction applies for the duration of the

assignment to provide clarity in cases of legal dispute. It is important to note that the home and host

locations may have different employment law restrictions.

Regulatory the regulatory requirements in the home and host location may differ so professional

advice should be sought.

Security the nature of the host environment may be very different from the home and consideration

must be given to the appropriate security and welfare requirements.

Tax all payments should be tracked and the number of days spent in each location should be

recorded to ensure that the correct information is recorded when the tax return is filed at year end. It

should be clear what tax obligations both the organisation and the employee are responsible for.

Immigration all necessary work permits and visas for the employee and their family should be in

place before the assignment begins.

Social security depending on the assignment type and whether there is a reciprocal agreement in

place, the employee may be able to remain in their home social system. Organisations should seek

professional advice to ensure that they remain compliant.

Total cost reporting all costs relating to the assignment should be tracked in both the home and

host locations.

What should be considered once it has been decided that an international moveis appropriate?

Once it has been decided that an international move is appropriate, it must be decided which type of policy



should govern it. The policies differ according to the assignment duration, objectives of the assignment and the

anticipated career and business development possibilities following the assignment. Policy types include but

are not limited to:

Long term assignment usually between one and five years in duration.

Short term assignment usually between 3 months and one year in duration.

Commuter assignment employees travel back and forth between the home and host location on a

regular basis, the assignment duration can vary.

Permanent transfer the employee is transferred to the host location indefinitely.

It is important to note that business trips are not usually classified as international assignments. However HR

needs to be wary of frequent business trips that have become stealth assignments.

What should the employee consider before accepting an internationalassignment?

It is important that employees make an informed and realistic decision on whether they would be suited to an

international move and thoroughly research the country that they are considering working in. They should also

consider:

the impact on family

dual careers

education considerations

separation from home

career aspirations.

What qualities should an employee possess in order to be selected to go on anassignment?

Selection for an international role involves a wider range of considerations than selection for a home-based

position. For example, adaptability, cultural sensitivity and separation from home are qualities that must be

considered by both the organisation and the employee. Other desirable attributes include flexibility, leadership

abilities and a positive approach.



See our factsheet on international resourcing and recruitment

What steps should the employee take in order to prepare for an internationalassignment?

It is important that the employee researches the country that they will be living and working in. A variety of

third party providers have created country profiles that are useful reference material on the political, social and

economic history and practical information of each particular country.

The employee should ensure that they have read the relevant international assignment policy and their

assignment letter thoroughly so that they aware of their entitlements, the process of relocating and what they

can expect to experience while on assignment.

Some organisations provide intercultural and language training and organise an orientation trip to further

prepare their employees for living and working in another country.

Which elements of relocation should be considered when deciding upon aninternational assignment package?

Cultural and language training the duration and number of lessons should be agreed and whether

a global, regional or local vendor will be used.

Relocation allowance in some circumstances a relocation allowance is applicable to cover the

miscellaneous/incidental costs involved with going on an assignment (for example soft furnishings, set

up costs and car hire). It is usually a percentage of the employees gross base salary subject to a cap.

It can be paid at both the start and end of an assignment.

Travel the class and method of travel should be decided and the process of booking travel should be

clear and consistent.

Shipping the volume entitlement may be based on the duration of the assignment and/or family size

and the method of transporting the items, for example, by land, sea or air.

Remuneration, benefits and allowances

What are the remuneration considerations for an international assignment?



Salary depending on the approach that the organisation decides on, either a home gross base salary

or a local net could be applied.

Pension it should be decided whether the employee should remain in their home pension scheme,

join an international plan or join the host pension scheme. It should be noted that some countries do

not allow foreign nationals to join their pension scheme.

the Cost of Living Adjustment (COLA) - is a contribution towards protecting the home country

purchasing power of goods and services for individuals who are on an international assignment.

Organisations should consider whether this is something they are going to provide and what type of

index to use. Data to calculate the COLA is normally purchased from a specialist expatriate provider.

Territorial premium or Location premium a territorial premium could be payable in circumstances

where it is deemed that the conditions in the host are relatively more challenging than the home

country. A location premium is based purely on the conditions of the host country with no reference the

home location. Organisations need to decide whether this is an allowance they want to include in the

remuneration package for internationally mobile employees.

Shares is the organisation going to offer tax equalisation assistance on any liability arising on the

grant, vesting, exercise or sale of shares or share options? Will tax advice be provided to employees in

respect of share plans?

Per diem for short term assignments a daily subsistence allowance may be payable to contribute

towards the additional costs of going on an assignment such as transport, food and laundry. It should

be decided at what level to set the per diem.

What benefits might be included in an international assignment package?

A summary of the benefits that an organisation may decide to include in assignment packages is given below,

with the questions that should be considered when setting the remuneration principles:

Accommodation how would the accommodation allowance be set? Dependent on seniority or family

size? Furnished/unfurnished? Will utilities be reimbursed?

Medical cover which medical insurance provider will be used? Is a full medical examination

required? How will maternity care be covered?

Travel class of travel to the host location? Home leave travel? Rest and recuperation?

Compassionate leave? Method of transport train, plane, car?



Leave would annual leave and public holidays be as per the home or host entitlement? Would

maternity/paternity leave be as per the home or host entitlement? Home leave entitlement how many

return trips per annum class of travel? What is the policy on compassionate leave? Will rest and

recuperation leave be offered?

Education Will the full amount be reimbursed or a percentage? What would the maximum age of the

children be? Boarding/international/local school? Third country schooling applicable? Still applicable for

unaccompanied assignments? Which costs will be met applications, tuition fees, registration fees,

field trips, transport, food, equipment?

Insurance Which insurance policies will be offered and will employees be insured in both the home

and host locations? Will personal accident cover, life insurance, motor insurance, buildings insurance,

household contents insurance, travel insurance be offered?

Transport global policy for car allowance? Or as per the home/host country entitlement? Are

employees entitled to the reimbursement of car hire expenses?

See our factsheet on international reward

Checklist of steps which facilitate a successful assignment

Following the steps given below will help ensure that international moves within an organisation are managed

as effectively as possible.

Talent

Selection decisions selection should not only relate to performance in the home country. A variety

of qualities and attributes should be considered.

Performance management assignment objectives must be clearly stated and performance

reviewed regularly.

Career management and retention (repatriation, reintegration and succession). Both the employee

and the organisation should think about what will happen at the end of the assignment well in advance.

Reward

Assignment remuneration - which elements are included in the package and is any additional

compensation for disruption or an increase in total compensation as a result of the assignment.



Remember that in a host based approach, cost of living and local tax rates may be very different.

Assignment benefits should assignment benefits to be equitable and consistent or should they differ

by family size, grade, role or business function?

Variable compensation how do bonuses and stock options fit in to the remuneration package? If

employees are being rewarded for long term performance, how do international assignments fit into this

approach and how would payments be delivered?

Process

Risk it is essential to be compliant to avoid fines, penalties and additional fees. Risks can be

mitigated by implementing streamlined and consistent processes.

Cost management costs should not be the only factor in determining whether an international

assignment is appropriate. However, international assignments incur a considerable financial

investment so costs need to be managed effectively. Professional advice should be sought on tax

savings and minimising costs.

Technology

A variety of software options are available to assist with managing and coordinating the international

assignment process.

CIPD viewpoint

International mobility is an increasingly common feature of working today. With many organisations operating

on an international basis there is the increased demand for employees to share their expertise and knowledge

with colleagues in different countries, pooling this knowledge for the benefit of the organisation.

Working on an international basis for a period of time brings definite benefits to the career and development of

an individual. However, there is also a significant amount of disruption for the employee and their family. If

these disruptions are acknowledged and carefully managed by the organisation, the benefits for both the

employer and the employee will be enhanced. It is essential, therefore, that all the issues are carefully

addressed before an employee actually starts on an international placement.

Useful contacts



ECA International

Farnham Castle, International Briefing and Conference Centre

Further reading

Books and reports

BREWSTER, C., SPARROW, P. and VERNON, G. (2011) International human resource management. 3rd

ed. London: Chartered Institute of Personnel and Development. (Especially Chapter 14: Managing expatriation)

CARP, J. (2009) Drafting employment documents for expatriates. Bristol: Jordans.

MATTHEWMAN, J. (2011) The rise of the global nomad: how to manage the new professional in order to gain

recovery and maximize future growth. London: Kogan Page.

RENNIE, A. and McGEE, R. (2012) International human resource management. CIPD Toolkit. London:

Chartered Institute of Personnel and Development.

REUVID, J. (2009) Work ing abroad: the complete guide to overseas employment. 30th ed. London: Kogan

Page.

ROBERTSON, J (2010) Employee mobility. HR studies. London: Incomes Data Services.

Visit the CIPD Store to see all our priced publications currently in print.

Journal articles

CLOUSE. M.A. and WATKINS, M.D. (2009) Three keys to getting an overseas assignment right. Harvard

Business Review. Vol 87, No 10, October. pp115-119.

DOHERTY, N. and DICKMANN, M. (2012) Measuring the return on investment in international assignments:

an action research approach. International Journal of Human Resource Management. Vol 23, No 16,

September. pp3434-3454.

HAHM, E. (2011) Think global act global: integrating international assignments into talent management

programs. Workspan. Vol 54, No 1, January. pp33-34,36-39.



KURSON A. and ROSSIER-RENAUD, A. (2011) The right metrics for expat integration. Workspan. Vol 54, No

11, November. pp60-65.

MULLANEY, E. (2012) Talent mobility: a global approach to talent management. Workspan. Vol 55, No2,

February. pp32-36. .

CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.

Members and People Management subscribers can see articles on the People Management website.

This factsheet was last updated by CIPD staff.

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