IN DETAIL: HUMAN RESOURCES
Tips for Successful Expatriate Agreements Hiring and relocating expatriates is an expensive and demanding undertaking. Make sure clear agreements are in place to avoid future conflicts or financial losses. – By Ishali Patel
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aving a suitably worded agreement helps to avoid lengthy legal battles and provides protection for both the employee and employer. Clear agreements minimise the risk of employeremployee conflict, and provide clarity about what the employee should be doing and where his or her responsibilities lie. As part of any global assignment agreement, there should be clauses that clearly stipulate the new rate of pay, the currency in which the employee will be paid, how the payment will be made, how tax liabilities will be handled, what benefits will be provided, and the terms of any bonus payments (whether they are linked to personal performance, company performance or both). Clarity on these issues avoids misunderstandings and protects the organisation from overspend and unexpected liabilities.
Consider financial risks The cost of overseas assignments must not be underestimated. With employers paying for the
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cost of relocation, accommodation, benefits and relevant insurance as well as taxes and pensions, – not to mention the cost in time and money for administration on top – insufficient expatriate agreements can be very expensive. When lacking such robust agreements, costs can quickly escalate if an employee becomes disgruntled or certain legal obligations are not met. It is important to outline and agree upon budgeted amounts, reporting procedures and responsibilities. This mitigates risk and helps to ensure that each country’s statutory reporting requirements are met. In addition, having an agreement that captures the details of who is responsible for all the relevant financial, tax and social security liabilities can put the employee’s mind at rest as well as providing a safety net to both employees and employers. With currencies changing in value on a day-by-day basis, some markets will not always be favourable. Consequently, it is critical that contingency plans