Local Plus International Policy Considerations
ABOUT LOCAL PLUS POLICIES
Local Plus relocation packages are a hybrid of a permanent transfer or local hire with elements of a longterm assignment.
There are several impacts to both the employee and the company to weigh when considering adding a local plus policy to your global mobility program. Local Plus policies can be a good fit in locations where it is difficult to attract talent due to living conditions (e.g. high cost of living, complicated tax laws, and difficult living conditions). It can also be a tool to add some additional support without incurring the full cost of a long-term assignment.
Advantages
• Cost savings compared to full long-term assignment
• Provides greater equity between local employees and assignees as compared to traditional long-term assignments
• Assists with talent attraction and employee retention by offering additional benefits beyond typical permanent transfer
• Reduces risk for the company with respect to taxes
Disadvantages
• May impede mobility if employees are reluctant to move to locations with lower pay and higher taxes and/or cost of living standards
• May be more difficult to maintain pension and other benefit programs typically related to home pay
• Cost increases compared to a permanent transfer
• All move expenses may not be fully covered which could be perceived as creating financial burden for employees
The structure of a local plus package can vary by company, but the overall concept is quite similar from one company to another. The basic components include a local base salary or host-denominated salary (i.e., the rate of pay is based on the local scale) and additional allowances (also known as Plus benefits) provided to supplement the salary.
The Plus components are typically covered on a declining scale for a temporary period of time. The employee is usually responsible for paying all actual income taxes. While many compensation elements are delivered in host country currency, companies commonly keep employees, where possible, on the home country pension or social security system, if the intent of the Local Plus package is to be used for a temporary move resulting in a return to the home country.
Common Plus components include assistance related to:
Family
Immigration
Physical Examinations / Medical Expenses
Pre-Assignment
Policy and Tax Consultation
• Work permit and residence visa for employee
• Residence visa for family
• Reimbursement of costs to obtain passports, etc.
Cost of required exams or immunizations covered if not covered by home country medical plan for employee and family
Provided for employee and spouse/domestic partner
Home-country based balance sheet approach.
Compensation and Benefits
Social
Home country benefits maintained unless not possible due to host country restrictions.
Employee remains in home country social insurance program. COC obtained as applicable.
Based on prevailing local compensation rates in the host location. Paid through local (host) country payroll.
Where possible, employee may remain in home country social insurance program. COC obtained as applicable.
Destination country payroll and benefits
Destination country social insurance program
Exploratory or House Hunting Trip
5 days (inclusive of travel) for employee and spouse/domestic partner, including:
• Round-trip airfare (based on travel policy)
• Transportation, as needed
• Lodging • Meals
• Destination services provided
Language Training Maximum of 50 hours of language training for employee and spouse/partner
Cultural Orientation Online, plus 1 day training based on approval
Home Country Housing
Reimbursement of reasonable and customary closing costs
Travel to the Host Country
Temporary Living
Travel for employee and family includes:
• Travel (based on travel policy)
• Transportation, as needed
• Furnished accommodations with kitchen for 30 days while employee is waiting for the arrival of HHG
• 30 days temporary transportation in home and host combined
Air Shipment
• 500 lbs. for employee
Household Goods Shipment
• 600 lbs. for employee and spouse/domestic partner
• 500 lbs. for employee and 100 lbs. for each additional family member
• Furnished accommodations with kitchen for 30-60 days while employee is waiting for the arrival of HHG
• 30 days temporary transportation in home and host combined
Surface Shipment
• Employee and spouse/domestic partner: 20’ container
• Employee and family: 40’ container Insurance
Replacement value up to cap
Pet Shipment Shipment costs only for 2 household pets
Spousal/Family Assistance Allowance
Location-specific allowance (reimbursement account) provided to spouse/domestic partner for job search fees, professional dues, and professional education
Destination Services 2 or 3 days of settling-in services
Emergency Leave
Home Leave
Round-trip travel for employee and dependents for serious illness or death of an immediate family member
• 1 round-trip annually
• Employee and family via the most direct route
Round-trip travel for employee and dependents for serious illness or death of an immediate family member
1 round-trip annually
Employee and family via the most direct route
Allowance Provided - Rental Housing
Not provided
Not provided
Host Country Housing
Allowance Provided - Rental Housing
Unfurnished or furnished apartment or house based on third-party housing data guidelines, including basic utilities
Similar items covered (rental housing, utilities, appliances, etc.), based on third party data. Differential provided in host country currency as a supplement or Plus component added to local base pay. OR
Housing allowance paid on a declining basis for 3 years as follows:
Year 1 – 100% of allowance
Year 2 – 75% of allowance
Year 3 – 50% of allowance
Homeowners: Reimbursement of home purchase closing costs capped at 2% of purchase price
Renters: 1 day rental tour and/or reimbursement of finder’s fees if typical and customary for the area (maximum of 1 month’s rent)
Goods and Services Allowance
COLA based on third-party cost of living data
Preschool
Reimbursement of preschool/nursery school costs if attendance is legally mandated in the host location.
Elementary and Secondary Schools
Dependent
Education Assistance
If adequate public schools exist, employee is expected to utilize public education for dependents.
If public schooling in the host location is not adequate or compatible with home country education requirements, company may cover entrance fees and tuition. The difference only is covered if dependents attended private school in the home location.
COLA is typically omitted for Local Plus packages, since the employee is paid per local compensation rates. If provided, recommend payment on a declining basis for 3 years as follows:
Year 1 – 100% of allowance
Year 2 – 75% of allowance
Year 3 – 50% of allowance
Preschool
Reimbursement of preschool/nursery school costs if attendance is legally mandated in the host location.
Elementary and Secondary Schools
If adequate public schools exist, employee is expected to utilize public education for dependents.
If public schooling in the host location is not adequate or compatible with home country education requirements, company may cover entrance fees and tuition. The difference only is covered if dependents attended private school in the home location. Coverage is on a declining basis over 3 years as follows:
Year 1 – 100% reimbursement
Year 2 – 50% reimbursement
Year 3 - 25% reimbursement
Not provided
Not provided
Tax Assistance
Tax equalization and tax preparation assistance provided
Employee is responsible for paying all actual taxes.
No tax equalization is provided
Plus elements (host housing, goods and services, and dependent education) may be grossed-up for taxes to ensure that the employee receives the net value of the Plus components
It is common to provide tax preparation assistance for the years in destination and any subsequent years affected by the move.
Repatriation
Tax assistance and tax preparation assistance provided for year of relocation only
Similar provisions as on expatriation:
• Return travel to the home location
• Return shipment of household goods
• Temporary living
• Temporary transportation
If intent is to return employee to home location, similar provisions as on expatriation:
• Return travel to the home location
• Return shipment of household goods
• Temporary living
• Temporary transportation Not provided
