Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Expatriate Compensation 
By: 
Sonali Srivastava
Definition 
An individual living in a country other than their 
country of citizenship, often temporarily and for 
work re...
In addition to salary, businesses sometimes give 
their expatriate employees benefits such as: 
• Relocation assistance an...
The major focus of most international 
compensation programme is to keep 
international employees at a sufficient 
financi...
1. Base salary 
For expatriates, the term base salary means the 
primary component of a package of allowances 
which are: ...
2. Foreign Service inducement/hardship premium 
Parent-country nationals often receive a 
salary premium as an inducement ...
3. Allowances 
Various allowances are paid to expatriates depending upon the 
assignment. They include: 
(a) The cost-of-l...
4. Education Allowances for Children 
Education allowances are given towards 
fees for the education of expatriates’ 
chil...
5. Relocation Allowances and Moving 
Relocation allowances usually cover 
moving, shipping; temporary living 
expenses, an...
6. Tax Equalization Payments 
Many international compensation plans 
attempt to protect the expatriate from 
negative tax ...
7. Spouse Assistance 
To help guard against or offset income lost 
by an expatriate’s spouse as a result of 
relocating ab...
Expatriate Compensation Packages 
Expatriate compensation packages can 
vary enormously from company to 
company and locat...
Factors 
1. Nature of the Employment 
2. Contract duration and termination notice 
3. Governing Law and Jurisdiction 
8 De...
1. Nature of the Employment 
One of the first major considerations of any 
expatriate compensation package should 
concern...
A. Local-to-local: When you are working 
abroad for a local employer, you may 
receive a local-local contract. You will be...
B. Local-to-expat: This contract is again for 
expats who are working for a local 
company abroad. This time however the 
...
C. Expat-to-local: This is for people 
working for an international company, but 
still on a local contract. Many small 
b...
D. Long-term expat packages: Most 
expats on a long-term contract with large 
corporations will find that their expat 
pac...
E. Short-term expat packages: Similar to 
the long-term packages, but usually 
without the holiday entitlement and school ...
2. Contract duration and termination notice 
There are a number of different types of 
expat contract, those with specifie...
3. Governing Law and Jurisdiction 
This will usually be the local law in the country you will 
be employed in, the law of ...
Many companies will include a clause in their 
contract that specifies that all local laws be 
waived in favor of the law ...
Thank You 
8 December 2014 23
Upcoming SlideShare
Loading in …5
×

Expatriate Compensation

34,912 views

Published on

Compensation Methods for Expatriate

Published in: Business
  • Real Ways To Make Money, Most online opportunities are nothing but total scams! ♣♣♣ http://ishbv.com/ezpayjobs/pdf
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Can You Spare 1 Minute Per Day? If you have a few spare minutes per day, we have some very exciting news for you! ♥♥♥ https://tinyurl.com/1minweight
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Discover a WEIRD trick I use to make over $3500 per month taking paid surveys online. read more... ●●● http://ishbv.com/surveys6/pdf
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • The 3 Secrets To Your Bulimia Recovery ▲▲▲ http://tinyurl.com/bulimia2recovery
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • You can now be your own boss and get yourself a very generous daily income. START FREE...■■■ https://tinyurl.com/make2793amonth
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Expatriate Compensation

  1. 1. Expatriate Compensation By: Sonali Srivastava
  2. 2. Definition An individual living in a country other than their country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another. If your employer sends you from your job in its New York office to work for an extended period in its London office, once you are in London, you would be considered an expatriate or "expat." 8 December 2014 2
  3. 3. In addition to salary, businesses sometimes give their expatriate employees benefits such as: • Relocation assistance and • A housing allowance For Americans working abroad as expatriates, complying with United States income tax regulations is an added challenge and financial burden because the U.S. taxes its citizens on income earned abroad. 8 December 2014 3
  4. 4. The major focus of most international compensation programme is to keep international employees at a sufficient financial level during their international assignments so that they do not lose ground economically. Components of an international compensation package, in addition to the normal salary and benefits offered in the home country 8 December 2014 4
  5. 5. 1. Base salary For expatriates, the term base salary means the primary component of a package of allowances which are: (a) Foreign service premium, (b) Cost-of-living allowance, (c) Housing and utility allowance, (d) Basis for in-service benefits and pension contributions. Base salary may be paid in home or local currency or in some hard currency like pound or 8 December 2014 5 dollar.
  6. 6. 2. Foreign Service inducement/hardship premium Parent-country nationals often receive a salary premium as an inducement to accept a foreign assignment or as compensation for any hardship caused by the transfer. Such payments vary depending upon the assignment, actual hardship, tax paid to foreign governments and length of the assignment. 8 December 2014 6
  7. 7. 3. Allowances Various allowances are paid to expatriates depending upon the assignment. They include: (a) The cost-of-living allowance (COLA): It involves a payment to compensate the differences in expenditures between the home country and the foreign country. (b) Housing allowance: Implies that employees should be entitled to maintain their home-country living standards (or, in some cases, receive accommodations) (c) Home leaves and travel allowances: Is given to cover the expense of trips (usually once in a year) back home. These trips allow the expatriates the opportunity to renew family and business ties, thereby helping them to avoid adjustment problems when they are repatriated. 8 December 2014 7
  8. 8. 4. Education Allowances for Children Education allowances are given towards fees for the education of expatriates’ children. Education allowances include items such as tuition, language class tuition, books, transportation and uniforms. 8 December 2014 8
  9. 9. 5. Relocation Allowances and Moving Relocation allowances usually cover moving, shipping; temporary living expenses, and down payments or lease-related charges. 8 December 2014 9
  10. 10. 6. Tax Equalization Payments Many international compensation plans attempt to protect the expatriate from negative tax consequences by using a tax equalization plan. Under this plan, the company adjusts an employee’s base income so that the expatriates will not pay any more or less tax than if they had stayed in the home country. 8 December 2014 10
  11. 11. 7. Spouse Assistance To help guard against or offset income lost by an expatriate’s spouse as a result of relocating abroad. Multinationals generally pay allowances in order to encourage employees to take up international assignments. 8 December 2014 11
  12. 12. Expatriate Compensation Packages Expatriate compensation packages can vary enormously from company to company and location to location. When negotiating an expat contract that is right for your needs and those of your family, it is important that you carefully consider several factors 8 December 2014 12
  13. 13. Factors 1. Nature of the Employment 2. Contract duration and termination notice 3. Governing Law and Jurisdiction 8 December 2014 13
  14. 14. 1. Nature of the Employment One of the first major considerations of any expatriate compensation package should concern the nature of the relationship between the employee and the employer and should address what the employment relationship will constitute. There are several different types of expatriate contract and these will determine what the employment obligations will be 8 December 2014 14
  15. 15. A. Local-to-local: When you are working abroad for a local employer, you may receive a local-local contract. You will be on the same kind of contract as the local people, which may be better or worse than you are used to. Your salary will be in line with that of the local employees, as will the weekly hours, holiday entitlement and notice period. You will be expected to pay local tax and will be obliged to adhere to all the local policies and plans of the UK company. There will be no perks for being 8 Deacemnb eer 20x14pat. 15
  16. 16. B. Local-to-expat: This contract is again for expats who are working for a local company abroad. This time however the contract recognizes that you have moved abroad and are likely to have been hired because of your skills and expertise. You will no doubt be on a higher salary than the local workers and you will be entitled to more holidays and possibly less working hours. It is unlikely that you will receive any kind of expat package aside from relocation costs. 8 December 2014 16
  17. 17. C. Expat-to-local: This is for people working for an international company, but still on a local contract. Many small businesses work like this as they cannot afford the expensive expat packages that are usually associated with big multi-national companies. There will not be much difference to a local contract with a local company. 8 December 2014 17
  18. 18. D. Long-term expat packages: Most expats on a long-term contract with large corporations will find that their expat package is very generous. Most packages include a housing allowance, children’s school fees, travel allowance, good holiday entitlement and a high salary. It is these packages that attract so many expats to move overseas. 8 December 2014 18
  19. 19. E. Short-term expat packages: Similar to the long-term packages, but usually without the holiday entitlement and school fees. These contracts are for people working abroad on a short contract of six months or less. 8 December 2014 19
  20. 20. 2. Contract duration and termination notice There are a number of different types of expat contract, those with specified end dates or durations, and those that are ongoing. In the US there is also a contract type that is referred to as “employment at will”. Failure to fully consider the implications of your contract type could have serious repercussions. 8 December 2014 20
  21. 21. 3. Governing Law and Jurisdiction This will usually be the local law in the country you will be employed in, the law of the home country from which you relocated or the law of the country in which your employer is incorporated. There is simply no such thing as a standard expatriate contract that can be implemented in any country. The clauses and inclusions need to be modified according to the law of the foreign jurisdiction and tailored in such a way that ensures that any conflict between the law of the host country and the law of the country of the corporation or hiring entity do not conflict. 8 December 2014 21
  22. 22. Many companies will include a clause in their contract that specifies that all local laws be waived in favor of the law of the employing country. However, despite this, it is worth noting that in many countries, especially those within the EU, this is unenforceable. In addition to this, although the law varies from country to country, it is generally accepted that, in the absence of a clear choice of law in the contract, the employment agreement will be carried out in the country within which the employee will carry out their work. 8 December 2014 22
  23. 23. Thank You 8 December 2014 23

×