International HR Adviser Winter 2016/2017

WINTER 2016/2017

ISSUE 68

Free Subscription Offer Inside

International HR Adviser The Leading Magazine For International HR Professionals Worldwide

Features Include: Reward Package Design - How Are Multinational Corporations Weathering The Storm?

UK Employment Law Post-Brexit • Global HR Insight: Careers Without Borders At adidas Group Management Of Assignee Compensation: Building A Centralised Global Compensation Solution Flexible Global Mobility Policies: Navigating A New Global Mobility World Tax And Social Security Issues When Entering A New Location • Global Taxation Update Business Traveller Tracking – Why Should It Keep You Awake At Night?

PLUS Crown World Mobility’s White Paper On Flexible Global Mobility Policies: The Pros And Cons Of Core-Flex Policies Advisory Panel for this issue:

The 2017 Global HR Conference for Global HR professionals only

This free afternoon conference is taking place on Monday 6th February 2017 from 12pm - 5pm at Smith & Wollensky, 1-11 John Adam Street, London, WC2N 6HT If you would like to join us for this educational afternoon that is aimed at supporting Global HR professionals, then please email helen@internationalhradviser.com to register your place.

The seminar programme is as follows:

Brexit: What Will It Mean For Employers?

The UK people have voted to leave the EU and the UK government has declared that “Brexit means Brexit”, but what does this mean for employers and their mobility and reward policies? Discover how your organisation can ensure it is well prepared in an unfolding landscape.

Hosted by Deloitte LLP

Diversity, Gender Bias And The Rewards Of Being Internationally Mobile - Breaking The Glass Border….

It is essential to consider gender diversity at every level if organisations are to have a sufficient pool of female talent to choose from for international assignments. A survey for the RES Forum Annual Report found that more than 50%of organisations find it hard to find suitable female candidates for international assignments, and 40% find it hard to motivate women to accept foreign postings. What can organisations do to redress this balance? How might recent socio-economic developments such as the UK leaving the EU and the election of Donald Trump to the White House affect diversity and inclusion practices within global organisations and how can your organisation be prepared to manage the change?

Andy Piacentini, Head of Reward at Standard Life and founding partner at the RES Forum will host an informative session exploring these issues.

International Assignments & Business Traveller Update A review of current trends with regard to assignments and the tax & social security implications of having more business travellers/commuters.

Hosted by Andrew Bailey, BDO LLP

Managing Pay For International Assignees - Coping With Currency Volatility

With so much happening with currency values in key global economies, protecting expatriate purchasing power against currency fluctuations is a constant challenge.

ECA will provide insight into recent currency movements and explore the options managers have to maintain the purchasing power of their expatriates' remuneration when significant exchange rate fluctuations occur, including: Using Guaranteed Exchange Rates; Interim Reviews - establishing trigger points; Reconciliation - payment in one currency and Split Pay - the pros and cons.

UK Immigration Policy & Its Effect On Your Business

Do you employ international talent within your company? James Walters, a Director at UK immigration practice Smith Stone Walters, will present on the latest UK immigration news including how postBrexit immigration controls may affect your recruitment of specialist skills from overseas.

These sessions will be followed by time for networking with peers and speakers This event is being organised by Helen Elliott, who has run The 2017 Corporate Relocation Conference & Exhibition for 19 years, and launched International HR Adviser 16 years ago.

For further information, or to register for the event, please email helen@internationalhradviser.com or call Helen on 020 8661 0186

contents

In This Issue 4

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Reward Package Design – How Are Multinational Corporations Weathering The Storm?

Professor Michael F. Dickmann, Cranfield University School of Management & Heather Hughes, The RES Forum

Employment Law: UK Employment Law Post-Brexit Michael Farrelly, Excello Law

Management Of Assignee Compensation: Building A Centralised Global Compensation Solution Nathan Male & Natalie De Biasi, Deloitte LLP

Flexible Global Mobility Policies: Navigating A New Global Mobility World Simon Davies, Crown World Mobility

Flexible Global Mobility Policies: The Pros And Cons Of Core-Flex Policies Lisa Johnson, Crown World Mobility’s Consulting Group

Tax And Social Security Issues When Entering A New Location Andrew Bailey, BDO LLP

Global Taxation Update: Recent Tax Updates From Around The World Andrew Bailey, BDO LLP

Global HR Insight: Careers Without Borders At adidas Group David Enser, Senior Director HR Rewards, Head of Mobility & Rewards Innovation, adidas Group

Business Traveller Tracking – Why Should It Keep You Awake At Night?

Robert Day, Santa Fe Relocation Services

Language Skills & Training: Why Language Skills Are The Seed For International Business Growth Mike Mayor, Pearson English

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Diary Dates

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Directory

www.internationalhradviser.com Helen Elliott • Publisher • T: +44 (0) 20 8661 0186 • E: helen@internationalhradviser.com damian porter • Publishing Director • T: +44 (0) 1737 551506 • E: damian@internationalhradviser.com kim miller • Global HR Operations & Strategy Director • E: kim@internationalhradviser.com International HR Adviser, PO Box 921, Sutton, SM1 2WB, UK Cover Design by Chris Duggan In Loving Memory of Assunta Mondello While every effort has been made to ensure accuracy of information contained in this issue of “International HR Adviser”, the publishers and Directors of Inkspell Ltd cannot accept responsibility for errors or omissions. Neither the publishers of “International HR Adviser” nor any third parties who provide information for “Expatriate Adviser” magazine, shall have any responsibility for or be liable in respect of the 3 content or the accuracy of the information so provided, or for any errors or omissions therein. “International HR Adviser” does not endorse any products, services or company listings featured in this issue.

INTERNATIONAL HR ADVISER WINTER

Reward Package DesignHow Are Multinational Corporations Weathering The Storm?

Working abroad is about going outside of your comfort zone, accepting challenges, growing personally and professionally and, in the case of internationally assigned employees, showing exceptional commitment to an employer.

While the reward package is often designed to increase the attractiveness of international assignments, and to cushion some of the adverse effects of global moves, Multinational Companies (MNCs) systematically overestimate the importance of expatriate remuneration (Dickmann et al., 2008). Research into the motivational drivers of assignees has shown that they are most often motivated by career and developmental considerations. In addition, the thirst for adventure and the opportunity to understand and interact successfully with other cultures and the wider world are other key motivations (Caligiuri, 2013).

The RES Forum, an International HR and Global Mobility networking and information sharing group with over 1000 members in more than 500 companies based in over 40 countries around the world, surveyed its members about reward package design for international assignments in order to assess the major trends in the field of assignment remuneration. 78 large multinational companies (MNC's) took part in the survey and of those, more than half had 25,000 plus employees. Additionally, the large MNCs that responded had a substantial assignee population of traditional LongTerm International Assignments (LTIAs). This research forms the basis of the chapter, "Reward Package Design" in The RES Forum Annual Report 2016, Beyond UniformityA World of Opportunity, authored by Professor Michael F. Dickmann, Professor of International HRM at Cranfield University, School of Management, and a summary of the results is presented here.

Assignment Types And Durations

The most typical assignment durations for Short-Term International Assignments (STIAs) was three to twelve months while the most typical Long-Term International Assignments (LTIAs) lasted one to three years

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(55%), closely followed by LTIAs that could be up to five years (40%). Lengthy LTIAs are not obsolete and may be justified by a variety of reasons. Local Plus Assignments (LPAs) would often be permanent transfers (43%) but a sizeable number of companies restricted them to either one to five years (28%) or, up to three years only (28%). A minority of organisations indicated that they “don’t offer traditional home-based LTIA packages, all of our longer-term assignments are host based”. This approach is likely to be successful where mobility is at the core of the organisation’s activity and career progression and where it might be seen as a ‘rite of passage’ (Dickmann and Cerdin, 2014).

It does need an abundance of staff willing to be internationally mobile and often other contextual factors such as operations in non-hostile, non-hardship countries.

Assignment Package Design And Construction

Franklin D. Roosevelt, the American President during the Great Depression and the Second World War, observed that “Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.” It is in the balancing of incentives which link to individual assignee motivation and the assignment objectives, that GM specialists can create attractive and effective

global assignment packages.

Variety of Assignment Types. It appears that over time the complexity and variation of GM policy and reward design has blossomed. MNCs have developed a large number of separate policy guidelines for assignment types that go beyond STIAs, LTIAs and LPAs. MNCs have argued that they offer different packages depending on the move scenario.

In a further variation, some organisations argued that they would reduce benefits for employee requested moves, although they tend to classify them according to their length. Several companies work on corporate volunteering and sustainability activities. Latest research outlines a number of different stages to corporate sustainability and humanitarian volunteering assignments and makes it clear that a strategic dimension is highly important so as to make it beneficial for both the individual and the corporation (Cardarelli et al., 2016).

Rewards for Developmental vs. BusinessDriven Assignments. Almost half of MNCs (44%) distinguish between business driven/ strategic assignments and developmental assignments. Where these are initiated by staff, the policy is less generous as the primary beneficiary may be the assignee and crucially, there is a lesser need to motivate potential candidates (Dickmann, 2015).

Figure 1 - Does your organisation formally recognise any other assignment types via separate policy guidelines?

REWARD PACKAGE DESIGN Dickmann, Brewster and Sparrow, (2016) chart the human resource developments triggered by the financial crisis. In recent years organisations have become (even more) cost driven, and so it is no surprise that they normally reduce their packages for developmental assignments. In contrast, in some cases, business critical/strategic assignment support becomes more generous as the driver is more company-centred and the importance of the foreign work may be seen as higher.

Other RES Forum research (Chapter 2, RES Forum Annual Report 2016) has shown that many companies are struggling to acquire sufficient talent for international assignments.

MNCs simply need to be more flexible and generous with assignments where candidates need to go into highly volatile or hostile environments characterised by hardship and danger. This is also in tune with increasingly personalised HRM for people with special skills or talent. These ‘A Player’ talents have simply more negotiation power when it comes to their contracts or assignments.

(Sparrow et al., 2010; Conway and Briner, 2005).

Do MNCs preserve some flexibility by linking assignment compensation to performance?

In short, most companies do not. Two thirds of each of the different assignment types do not have such a link (STIAs 74%; LTIAs 70%; LPA 70%). Where there is a specified link, it is to annual assignment bonuses which is an approach operated by around a quarter

of all responding companies. The remaining companies prefer to integrate assignment related goals into their normal performance appraisal and review sessions.

Salaries and Cash Allowances for Assignment Types. The RES Forum survey identifies a strong trend towards homebased (balance sheet) remuneration for STIAs and LTIAs, while LPAs are compensated using a host market approach. At times, STIAs “simply remain on home payroll, no balance sheet”. However, this is normally paired with disruption and subsistence allowances.

With respect to LTIA reward packages, only a few MNCs (3%) used the higher of home or host salary, while 12% used a host market approach. Global salary scales remain a tiny exception for LTIAs (1%). The respondents were also asked to specify which Cost of Living Allowance (COLA) index they use in order to gain a feeling for the generosity of companies. A quarter of companies used the full expat COLA index for STIAs and LTIAs while no MNC used it for LPAs. The median (efficient purchaser) COLA index was the most popular. It was used in 41% of MNCs for STIAs, in 63% for LTIAs and in 27% for LPAs. The basic/low COLA index was used in one in ten MNCs for STIAs and LTIAs and occasionally (7%) for LPAs. Where COLA was not used, STIAs often got a per diem allowance while the LPA arrangement varied widely. To understand what the majority of organisations are doing, the following

Figure 2 - Which of the following cash allowances or support elements are payable in your organisation for each of the assignment types listed?

summarises those cash allowances for each of the assignment types given that are granted by at least half of the MNCs that participated in the survey.

STIA Allowances. Almost three quarters of MNCs pay host housing (72%) and a substantial majority pay home leave allowances (57%).

Allowances are sometimes paid directly to the suppliers, such as landlords or as per diems. They include a variety of things such as transportation allowance, utilities, medical, electricals/furniture/one-off costs.

LTIA Allowances. MNCs tend to be more generous with LTIAs than STIAs. These traditional assignees receive COLA payments (89%), host housing allowances (87%), home leave allowances (86%), education allowances (78%), hardship allowances (72%) and a mobility premium (51%). In some organisations only global nomads receive the mobility premium.

LPA Allowances. Given that most LPAs are on host country contracts, the cash allowances are different and expected to be less bountiful. LPAs often receive a housing allowance (63%) and the only other frequent allowance is related to education (60%).

Hardship allowances, COLA and mobility premiums are rare.

Adjustments during work abroad. It is obviously possible that during an assignment the exchange rates can fluctuate substantially and that inflation rates can be highly different.

So, do companies take these dynamics into account? The answer is normally for their LTIAs, only. COLA can increase or decrease for 77% of LTIAs for instance due to inflation or foreign exchange volatility. However, less than a third of STIAs (29%) and only 5% of LPAs would see COLA adjustments during their work abroad.

Contribution Toward Housing Costs.

MNCs push for the reduction of assignment costs, yet surprisingly, respondents indicated that few assignees are being asked to pay for their accommodation. 91% of STIAs and 69% of LTIAs are not contributing towards housing costs and almost half of the LPAs (46%) do not have to. Some indicated that they were reviewing this. Where assignees are asked to contribute to housing costs, the actual amounts are normally determined by the home housing norm based on external data (59% for LTIAs; 43% for STIAs). LPA contributions are highly variable and range from the individual paying for housing completely, to companies paying a gross allowance of market rent and the individual taking care of own tax and social security.

Assignment Support and Family Considerations. Respondents were also asked in what way the company support differs if an expatriate goes on an international assignment while the family remains at home. About two thirds increase home leave and flight allowance if the assignee relocates alone for the whole term

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INTERNATIONAL HR ADVISER WINTER

of the assignment. In contrast, we know that the size of house (and number of bedrooms) increases when an expatriate is relocated with the family (Dickmann, 2014). Unsurprisingly, three quarters of MNCs reduce the housing allowance if the family remains in the home country. In addition, 45% of companies reduce the assignment allowances payable given that the family size is smaller.

Half of the responding MNCs support a temporary split family arrangement for more than a year (49%) while 16% would not support it at all. The remaining 35% support various lengths up to one year. Support differs when compared to expatriates who were split from their family for part of the duration of the assignment. The additional home leave (45%) and flight allowances (49%) were less frequently granted. In turn, assignment allowances (30%) and housing allowances (45%) were more rarely reduced. It appears that companies actively manage their allowances with respect to the specific family situation that their assignees have. This would entail granting a ‘different’ status once the family joined the expatriate abroad. In addition, some MNCs considered introducing a separation premium which would streamline and simplify the administration.

Spousal/Partner Support. Industry literature enthusiastically promotes the idea that it is important to provide support for accompanying partners and family, as this increases the satisfaction of family members, allowing the assignee to be emotionally more balanced and more proactive to focus on his/ her own adjustment. However, more recently authors have indicated that behavioural and cognitive adjustments that are more closely related to performance, may improve at any rate over time as emotional well-being is on a different adjustment dimension (Haslberger et al., 2013). Nevertheless, this is about the strength of influences on performance – it is not about whether there are any positive performance effects when an assignee and their partner are emotionally well adjusted to the host country. It is still widely held that a ‘happy’ family and a ‘happy’ expatriate is likely to be good for an assignee’s willingness to stay in the host location and for organisational performance.

Companies clearly distinguish their support for spouses/partners in relation to the different assignment types. Only one in ten companies provide any support for the spouses of assignees who are on STIAs (91%). In contrast, only a third of companies (33%) do not provide any support to spouses on an LTIA. One in five (20%) gives a one-time cash allowance, a third (30%) use specialist providers and one in eleven (9%) gives an annual cash allowance. LTIA and LPA partners also benefit from a range of other support such as financial payments,

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language lessons and cultural training, and professional support for the partner to find local work.

Educational Assistance. Companies are well aware that education lies at the heart of parental interests. MNCs feel that they want to offer the children of their staff a positive deal where they perceive that local, high quality schools are not available, or where the educational systems are so different that it would disrupt the schooling of expatriates’ children. Additionally, MNCs have moved to offer expatriation opportunities more to candidates who do not have a family at home or encourage less traditional ways to work abroad such as global commuting or International Business Travel.

There is a pronounced split according to assignment types with respect to the educational assistance that is offered by MNCs. STIAs do not normally benefit from any educational support (86%) while only 3% of LTIAs have no educational support. For their LTIAs, 43% of companies always offer international or independent schools while almost half (46%) only support their assignees’ families if a state school is not available.

A third of companies provide pre-school support for their LTIAs’ children. LPAs receive less support than LTIAs. Less than one in five (18%) have the benefit of automatic financing of an international or independent school and 28% may get this if a state school is not available. For 13% the support is scaled down during an assignment. Nevertheless, schooling support remains one of the main financial assistances that LPAs receive from their organisations and is likely to be one of the key decision parameters when considering to localise. Only a small percentage of assignees have to contribute toward the educational support provided by their organisation (LTIAs 11%; LPAs 20%). However, it is likely that the assignee’s family has to pay extra costs such as school uniforms or trips.

Resigning During an Assignment.

Generally, below a quarter of assignees resign during an assignment (Suutari and Brewster, 2003; Doherty and Dickmann, 2012). This is still a substantial percentage, and it is up to

the MNC to decide whether it claws back part of its investment.

Most claw backs seem to depend on the time since relocation for LTIAs, and on the length of time a contract has been in place for LPAs. Overall, LPAs are most frequently forced to repay some allowances (54%).

Nevertheless, a large number of MNCs are unwilling to claw back any payments, even including the assignment completion bonuses paid to STIAs and LTIAs. Areas vary where MNCs do demand their money back and will often be decided on a case by case basis. Companies strive to make sensitive and informed decisions, often factoring in the reasons why the expatriate wants to return early or leave the company, how long the expatriate was working abroad and general contractual obligations.

Conclusions

While GM reward experts should be conscious of the rational and emotional drivers of their expatriate population, they would be well advised to construct reward packages that clearly incentivise employees but that are all cost effective.

The RES Forum Annual Report 2016- Beyond Uniformity- A World of Opportunity.

This article is authored by Professor Michael F.Dickmann, Professor of International HRM at Cranfield University, School of Management and Heather Hughes, General Manager at The RES Forum. It is based on Chapter Four of the RES Forum Annual Report, authored

by Professor Michael F. Dickmann, Professor of International HRM at Cranfield University, School of Management, and produced

by The RES Forum, Harmony Relocation Network and Equus Software.

To read the full report for free, in-house GM and HR professionals can register to join the RES Forum at no charge. Just click “Join” and enter your details on our website at www.theresforum.com.

Relocation Vendors and other interested parties may request a copy of the report by emailing us at - office@theresforum.com.

Figure 3 - How is assignment compensation affected when an assignee resigns during an assignment?

REWARD PACKAGE DESIGN References: • Cardarelli, T., Grayson, D. and Dickmann, M. (2016). Human Resources and Corporate Responsibility, pp. 190 – 218 in Dickmann, M., Brewster, C. and Sparrow, P. International Human Resource Management: Contemporary HR Issues in Europe, 3rd Edition, London and New York: Routledge.

• Caligiuri, P. (2013). Cultural agility: Building a pipeline of successful global professionals. John Wiley & Sons.

• Conway, N., & Briner, R. B. (2005).

Understanding psychological contracts at work: A critical evaluation of theory and research. Oxford University Press.

• Dickmann, M. (2015). The RES Forum Annual Report: Global Mobility and the Global Talent Management Conundrum, RES Forum, UniGroup Relocation Network and Equus Software, 108 pages, London • Dickmann, M. (2014). Key Trends in Global Mobility, RES Forum, UniGroup Relocation Network and Equus Software, 102 pages, London.

• Dickmann, M., Brewster, C. and Sparrow, P. (2016). International Human Resource Management – Contemporary HR Issues in Europe. Edited Book (3rd Edition).

London: Routledge • Dickmann, M. and Cerdin, J.-L. (2014) "Boundaryless career drivers – exploring

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macro-contextual factors in location decisions", Journal of Global Mobility: The Home of Expatriate Management Research, Vol. 2 (1): 26 – 52 Dickmann, M., Doherty, N., Mills, T. and Brewster, C. (2008). “Why do they Go? Individual and Corporate Perspectives on the Factors influencing the Decision to Accept an International Assignment”, International Journal of Human Resource Management. Vol 19 (4): 731-751.

Doherty, N. and Dickmann, M. (2012).

Measuring the return on investment in international assignments: an action research approach. The International Journal of Human Resource Management, Vol 23(16): 3434-3454.

Haslberger, A., Brewster, C., & Hippler, T. (2013). The dimensions of expatriate a d j u s t m e n t . H u m a n R e so u rce Management, 52(3), 333-351.

Sparrow, P., Hesketh, A., Hird, M., Marsh, C., & Balain, S. (2010). Using business model change to tie HR into strategy: Reversing the arrow. In Leading HR (pp.

68-89). Palgrave Macmillan UK. Suutari, V., & Brewster, C. (2003).

Repatriation: empirical evidence from a longitudinal study of careers and expectations among Finnish expatriates.

International Journal of Human Resource Management, 14(7), 1132-1151.

Professor Michael F. Dickmann Professor of International HRM at Cranfield University, School of Management.

Heather Hughes

General Manager, The RES Forum T: +44(0)207 127 8075 E: office@theresforum.com

Diversity, Gender Bias And The Rewards Of Being Internationally Mobile - Breaking The Glass Border….

It is essential to consider gender diversity at every level if organisations are to have a sufficient pool of female talent to choose from for international assignments. A survey for the RES Forum Annual Report found that more than 50%of organisations find it hard to find suitable female candidates for international assignments, and 40% find it hard to motivate women to accept foreign postings. What can organisations do to redress this balance? How might recent socio-economic developments such as the UK leaving the EU and the election of Donald Trump to the White House affect diversity and inclusion practices within global organisations and how can your organisation be prepared to manage the change?

Andy Piacentini, Head of Reward at Standard Life and founding partner at the RES Forum will host an informative session exploring these issues.

This seminar is part of the seminar programme at

The 2017 Global HR Conference f o r G l o b al H R p r o fess i o nals o nl y

at Smith & Wollensky, 1-11 John Adam Street, London, WC2N 6HT The event is running from 1pm - 5pm To register your place at this free conference, please email helen@internationalhradviser.com 7

INTERNATIONAL HR ADVISER WINTER

UK Employment Law Post-Brexit Since the UK’s decision to leave the European Union, uncertainty surrounding the legal implications has been widespread; particularly within the UK employment law landscape. As a substantial component of UK employment law is grounded in EU law, withdrawal from the EU could translate into UK employment rights currently safeguarded by EU law no longer being guaranteed.

This current state of uncertainty is undesirable for both employees and employers, and the approach pursued by the government until now has followed a sense of continuity. Both the Prime Minister, Theresa May, and Secretary of State for Exiting the European Union, David Davis, have been at pains to offer reassurances that the rights of workers will remain largely unchanged post-Brexit. However, the politics of the situation dictate that this rhetoric may not translate into reality in practice.

The mechanism which the government has devised to undertake the complexities of the legislative landscape once Article 50 has been triggered, will lead to minimal change immediately post-Brexit. Furthermore, the forces within the party which helped drive the move towards EU withdrawal still carry momentum. Emboldened by the Brexit vote itself, and determined to procure a ‘hard’ Brexit, it can be assumed that leading Brexit advocates will seek radical changes to employment laws from the outset; as EU driven employment law has long been seen as a barrier to business and its growth.

The implications of the Great Repeal Bill – the instrument through which the government intends to deal with the legislative fall-out following EU withdrawal – must also be considered. The bill, announced in October, will have a dual purpose once enacted two years after Article 50 has been triggered. The first will be the repeal of the European Communities Act (ECA) 1972 and the second will impact employment law.

The enforcement of the bill will enable all current EU legislation to be preserved in UK law, in turn leaving the government free to repeal, retain or amend individual aspects of that law. Connotations of irony emerge, as the ‘repeal’ bill will in effect be a continuity bill, resulting in minimal changes in terms of employment law, particularly in the short to medium term. Arguably, the Great Repeal Bill

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was designed by the government to satisfy the demands of the pro-Brexit lobby in mainly symbolic terms (since the bill will not be enacted until after the UK leaves the EU, hence the repeal of the ECA will be strictly cosmetic), at the same time as avoiding the legislative chaos likely to result following a repeal of EU legislation.

As with so many aspects of Brexit, the practical details of how this process will be undertaken are unclear and open to speculation. According to a briefing paper ‘Legislating for Brexit: the Great Repeal Bill’, which was placed in the House of Commons Library on November 21st of this year: ‘The Government has stated that the Great Repeal Bill will delegate statutory powers to enable Ministers to make changes, by secondary legislation, to give effect to the outcome of the negotiations with the EU “as they proceed”.’

The Government has stated that the Great Repeal Bill will delegate statutory powers to enable Ministers to make changes, by secondary legislation, to give effect to the outcome of the negotiations with the EU “as they proceed”.

In effect, individual ministers will have the power to repeal or amend the legislation which has been absorbed into

UK law without the changes having to be scrutinised or passed by Parliament. The House of Commons Library itself describes it as ‘potentially one of the largest legislative projects ever undertaken in the UK’. The complexity of the task is exacerbated by the requirement to seek parliamentary approval for each step, emphasising the significance placed upon executive power. For those attempting to second guess the direction that Brexit will take, consider that the attitudes to employment legislation set out in the past, particularly by those with proBrexit views. These must be taken seriously as indicators of possible future actions.

Comments such as the following, from the Foreign Secretary, indicate that pledges to preserve current employment legislation cannot be taken at face value: “I envisage there being absolutely no regulation whatsoever – no minimum wage, no maternity or paternity rights, no unfair dismissal rights, no pension rights – for the smallest companies that are trying to get off the ground, in order to give them a chance,” – Andrea Leadsom, 2012.

“The weight of employment regulation is now back-breaking: the collective redundancies directive, the atypical workers directive, the working time directive and a thousand more.” – Boris Johnson, 2014.

Whilst the concept of the Great Repeal Bill gave rise to a sense of certainty, the High Court ruling on 3rd November 2016, stating that the government does not have the power to begin exit negotiations from the EU without parliamentary approval, has undermined this to an extent. The precise ramifications of this ruling remain to be seen. The aforementioned determination to maintain executive control over as much of the process as possible may be threatened, and the triggering of Article 50 itself seems set to be delayed.

Whilst it is clear that nothing in the field of employment law looks set to change in the short to medium-term, the longer-term prospects remain likely to be impacted by the kind of political and ideological machinations which fuelled Brexit in the first place.

The current state of flux, which includes a second court action launched in November by the pressure group British Influence, claiming that it will be illegal for the UK government to leave the wider European Economic Area (EEA) as part of leaving the EU, could lead to those in the employment sector being complacent. However, certain situations such as recruiting people from

EMPLOYMENT LAW overseas or retaining those EU nationals already in place, could become more difficult once the full ramifications of Brexit become evident. Presently, many EU nationals working in the UK do not feel safe; a situation likely to continue as long as the government holds back on issuing a guarantee of their status, regarding this as a valuable bargaining chip in future negotiations. Whether seeking to reassure current employees or making plans for the future, it is vital to set structures in place, or at least begin the process of doing so, at the earliest possible opportunity.

Indeed, there is a chance that a Brexit at the ‘softer’ end of the spectrum may result in minimal changes in the rules regarding visas. However, establishing systems to monitor any changes that are introduced will allow for a sense of preparedness if changes ultimately occur. Integral to the consequences of the longer-term approach would be the implementation of accessible lines of communication, enabling employees to ask any questions associated with the likely impact of Brexit. One of the side effects of the uncertainty surrounding the practicalities of Brexit has been the creation of an information vacuum, which in turn has been filled with speculation, rumour and the more lurid pronouncements of some sectors of the media. The need for

The wisest stance to take, whilst it seems that anything is possible, is to prepare for all possible scenarios. concrete facts, and correct information to be circulated amongst employees, is ever more critical to ensure that the increasing rumours and speculation do not have a detrimental impact and supersede the need for reassurance during this uncertain time.

Whilst the final form of Brexit may take many years to become apparent, the impact on employment law seems set to be a reflection of political machinations as much as anything else. The wisest stance to take, whilst it seems that anything is possible, is to prepare for all possible scenarios.

Michael Farrelly

Solicitor, Excello Law Founded in 2009, Excello Law is a fastgrowing, national law firm offering ambitious and successful commercial lawyers a compelling opportunity to work in a more dynamic, forwardthinking and independent environment.

Excello Law has created a flexible and collaborative working structure for lawyers who are looking for greater freedom to practice, underpinned by unparalleled administrative, compliance and technological support. Clients benefit from direct access to senior lawyers at more competitive terms. www.excellolaw.co.uk Twitter: @ExcelloLaw

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To apply for your free subscription please either complete the enclosed subscription card or visit our website www.internationalhradviser.com and complete the online registration International HR Adviser is the leading, quarterly magazine for International HR professionals globally. It has been publishing for 13 years and covers topics such as International HR Strategy, Benefits, Tax, Global Tax, Technology, Compensation, Trends in International Assignments, Healthcare, Insurance, Surveys, Country Profiles, Immigration, Moving & Relocation, Spousal Support, Education, Property, Cross-Cultural Issues, Case Studies, and more.

For further information please call Helen Elliott on +44 (0) 208 661 0186 Email: helen@internationalhradviser.com Website: www.internationalhradviser.com

MANAGEMENT OF ASSIGNEE COMPENSATION

Building A Centralised Global Compensation Solution In the current corporate climate there is pressure on organisations to deliver continuous growth and maintain a level of competitiveness.

This often drives the decision to carry out business internationally, and as more corporations operate globally, the ability to mobilise talent across international borders - quickly, easily and on demand - is essential.

As a result, Global Mobility as a business function is being increasingly recognised for its strategic importance. However, establishing and managing a successful employee mobility programme while remaining globally compliant with local taxation and payroll legislation is not without its challenges.

Regardless of the international assignee population size, one area which continues to be challenging is the management and delivery of compensation to assignees. This is largely due to the decentralised nature of global compensation structures which govern the management and delivery of assignee compensation data. With increased scrutiny from government authorities in recent years and the increase in penalties for non-compliance, companies are beginning to place the management and delivery of global compensation further up the mobility function priority list. In this article we will explore the need for a shift towards a more centralised operating model and the factors which can help achieve this.

What Do We Mean By A “Centralised Global Compensation Solution”?

Centralising the management of an employer’s assignee global compensation delivery model requires the development of a “blueprint” which allows a roll out to every payroll with one or more international assignees. At the core of this model there needs to a mechanism to hold and manage expatriates’ global compensation. Typically, this would be a global database which acts as a hub for multiple data sources, managed centrally. A key output and deliverable from the database needs to be the production and delivery of a consistent pay instruction per country which is delivered directly to payroll to process. After processing, payroll output would be imported back into the database.

This centralised approach to data management is key to ensuring payroll tax and social security withholding obligations are met, high quality and timely data is available to support the completion of assignee tax returns, and insightful reporting can be produced to manage assignment costs and inform mobility strategy.

A centralised solution also requires clearlydefined and consistent communication guidelines for Global Mobility and payrolls to follow, underpinned by robust and focused training. The training delivered to each payroll should be consistent, as should the monthly end-to-end process. It will, however, be necessary to take payroll calendars and local legislation into account when building a global solution.

Centralised Solution: Why Is There A Need?

When global compensation operations are decentralised, pay and compensation data is often stored in a dispersed fashion. Assignee compensation is generally processed by a number of involved parties, such as home and host locations, relocation providers and Accounts Payable, and the results are stored in separate systems.

This can potentially cause compliance issues at year end as the organisation’s tax provider risks under-reporting income on the assignees tax return.

Obtaining the required data can be challenging when multiple external providers are involved. Storing data in a single hub helps to mitigate the risk of incorrect reporting.

Aside from the risk of penalties and interest, under-reporting compensation on a monthly basis can potentially lead to cash flow issues for organisations due to large settlements at year end.

There may be further compliance challenges with regards to shadow payroll if global compensation is not managed centrally. Shadowing requires the transfer of pay data processed for an assignee to another country where a reporting or withholding requirement exists. Unless the process is managed centrally and a structured mechanism is in place to provide clear guidance to payrolls, situations may arise where the correct data is not provided to the location that requires it.

A centralised solution also helps to enhance the assignee experience which is paramount for an employer managing crossborder

assignments. If assignees are paid incorrectly while on assignment this can reduce their confidence in Global Mobility and the payroll process. The operation of clearly-defined processes and procedures which are adopted and adhered to by all payrolls globally will help to reduce this risk.

When the treatment of global compensation is decentralised, Global Mobility has limited visibility of operations at a local level and the ability to identify which locations require attention or support. This often results in a negative impact for the assignee.

Knowledge and experience of international payroll also varies significantly from country to country, potentially making assignees travelling to or from certain locations at greater risk of receiving under or over-payments. For example, payrolls in locations with small international populations may lack the required knowledge to process an expatriate payroll free from error and in line with mobility policy.

A centralised approach ensures that payroll data processed becomes readily accessible to Global Mobility so the necessary action can be taken to address any issues which may arise.

Similarly, it enables Global Mobility to monitor adherence to assignment policies and enforce where necessary.

Centralising the management of global compensation also benefits the organisation by providing complete data to deliver insight via data analytics. There is one “version of the truth” as opposed to multiple streams which result from decentralised operations, and so reviewing and comparing compensation across assignment policies, countries and regions allows management to identify trends and inform business decisions.

Data can also be used for “actual vs forecast” analysis, giving organisations the ability to compare cost projections prepared at the start of the assignment with the actual assignment costs.

The most compelling reason why companies are moving towards more central i sed global compensat ion management is to reap the benefits of standardisation.

A globally streamlined solution helps drive process efficiency and eliminates duplication of time and effort, consequently reducing costs. Decentralised management of global compensation often sees multiple business units performing the same function. Not only is this an inefficient use of resources but often the approach taken by each unit varies and so there is a lack of consistency in data processing.

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INTERNATIONAL HR ADVISER WINTER

Some questions to consider when assessing the need for a new or improved centralised global compensation solution:

HOW CAN A CENTRALISED SOLUTION BE ACHIEVED? Investing Time In Stakeholder Management

There is no doubt that moving towards a more centralised approach to global compensation management requires investments in time and resources. Adopting greater centralisation requires buy-in at all levels in the organisation, from Global Mobility leaders to local payroll administrators. Experience in the marketplace has shown that local payrolls can struggle to adjust to change where there is a perception that it is being imposed on them, especially if no relationship already exists with the central party coordinating the change. A significant investment in time and effort therefore remains critical to achieve buy-in from the global network. To achieve a truly global solution, the mobility team must engage key stakeholders and foster a shared vision. It is vital that every active participant in the process understands why the changes are necessary, the benefits which can be expected across the organisation, and how each individual can support delivery of the changes. In order to do this Global Mobility must identify and partner with the right people with a structured and focused communication programme to ensure that everyone is working towards

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the same objectives and end goal. Although an increasing number of corporations now outsource all or part of their global compensation management services, providers can face challenges implementing such changes should the initial groundwork not be laid internally as part of the transition to the new process and/or provider.

Investing In A Central Technology Platform

An appropriate infrastructure must be in place to enable a centralised global compensation programme and technology largely underpins this. When developing a central technology platform, all key stakeholders should be consulted and their requirements must be considered and, where possible, incorporated into the system design. It is also important to consider the impact of any pending projects such as potential change to payroll providers.

Primarily the technology must have the ability to store and sort large volumes of data to produce a consistent pay instruction file for each payroll with international assignees.

Upload functionality can provide value with large volumes of data as it helps to reduce time required for manual input and mitigate risk. The technology solution should also have the ability to import payroll output data and a reporting function. This will allow total assignee compensation to be extracted

for the tax return process and other business reporting and analytical purposes. The more sophisticated the technology, the greater the level of centralisation and therefore benefits that can be realised from economies of scale. A highly sophisticated system will have the capability to accommodate multiple countries, currencies, payment types, policies and pay cycles. In addition to a robust database, a workflow tool can also provide value to a centralised operation to enable secure data transfer between individuals involved in the process. This reduces the need for methods of communication to operate the agreed global compensation process, such as email or telephone calls which are more difficult to track and monitor. Workflow functionality provides a clear audit trail and is more secure for communication of confidential assignee compensation data.

Summary

Managing global compensation centrally allows organisations to realise a number of benefits which are shared by all parties involved in the global compensation programme: Global Mobility, local payroll, finance, tax, international assignees, payroll vendors and an organisationâ&#x20AC;&#x2122;s tax provider.

Maintaining assignee compensation data centrally enables greater control and the opportunity to improve data quality. As a result, organisations are less likely to be

MANAGEMENT OF ASSIGNEE COMPENSATION

Maintaining assignee compensation data centrally enables greater control and the opportunity to improve data quality. declared “non-compliant”, with the potential for fewer financial settlements at year end. There is greater visibility to the global network of the processing of compensation, allowing organisations to operate controls and mechanisms to ensure that policies are

being adhered to and that assignees are being treated fairly and accurately. This has a positive effect on the assignee experience and reduces unnecessary errors.

NATHAN MALE

Partner, Deloitte LLP T: 020 7007 8364 E: nmale@deloitte.co.uk

Centralised operations give way to greater process efficiency and provide the business with the necessary tools to continuously improve the mobility programme.

natalie De biasi

Consultant, Deloitte LLP T: +44 20 7007 2383 E: ndebiasi@deloitte.co.uk

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INTERNATIONAL HR ADVISER WINTER

Navigating A New Global Mobility World The modern business world is evolving at a rapid pace, influenced by changes in society, changes in global culture and advances in technology; so keeping pace with that change is a major challenge for global mobility in 2017.

Over the past year we have seen increasing evidence of corporations listening to the voice of millennials who view assignments in a different way to many of their predecessors and who have different requirements and expectations.

But there remain some serious tests ahead as businesses consider how best to support their employees through this new territory - and how to cope with ever-tightening budgets as they do so.

Here are two key areas where global mobility will need to evolve in 2017:

1. Managing the rise of CoreFlex Policies

The days of a standard set of lucrative policy benefits, designed to persuade a senior level employee to uproot their family and taken on a foreign assignment, are short lived.

For a start many assignees need less persuading - they see working and living abroad as a way to build their career. They are also far more comfortable planning much of it themselves.

As a result, Core-flex policies, which combine a company’s “must-have” policy elements with an optional approach for elements that allow for choice (typically by a manager or an employee) are growing in popularity.

For many employees in the past, the financial upside was an important motivating factor for a move, with the expectation that they would be able to bank a substantial amount of their assignment benefits. Today, expectations and budgets are different.

Moreover, companies often had policies that assumed all assignees' and families’ needs were the same, regardless of location, assignment goals and family situation. This “one-size-fits-all” approach made planning and managing assignments simpler; it also made assignment support expensive and inflexible.

However, it is not a given that introducing Core-Flex policies will save money, which is often one of the primary reasons for their introduction. If not implemented appropriately they could even prove more expensive.

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Here are five top tips to keep Duty of Care policies up to date: 1. Policy approach needs to consider service as well as financial assistance 2. Policy should be easy to follow and clearly communicated, including roles and responsibilities 3. A provision may be offered as a core element but the content may be flexible.

For example, offering assistance with home country auto disposition is core, but an allowance is provided rather than direct reimbursement of expenses, so that the employee can apply the funds as appropriate 4. Companies may find flexible policy to be more expensive than the policy it replaced 5. All assignment/destination locations are not created equal - an assignee going to London may not face the same challenges as an assignee going to Nairobi.

Company approach needs to take this into consideration.

Innovation and technology are changing the industry with businesses now embracing digital options.

2. Updating Duty of Care policies

In a year when significant terrorist events, natural disasters and major political upheavals have all made headlines, there is a challenge ahead for corporations to keep their duty of care policies up to date and relevant.

A survey carried out recently by Crown World Mobility found that 50 per cent of companies have not made any recent changes to their policies - despite these significant world events - and 34 per cent had not devised any protocols to communicate with assignees during a largescale crisis.

Another concern is that special briefings tend to only be given to those people moving to traditional high risk locations such as Iraq and Russia. Now however, high risk locations can be anywhere in the world - as the Paris bombings proved - and therefore adequate training, communication and resources need to be provided.

The rise of ‘do it yourself approach’ whereby employees are organising their own relocation but still require support, is another consideration.

Here are five top tips to keep Duty of Care policies up to date

1. Assemble a stakeholder group: Pull together a cross-functional team and set up regular meetings to discuss key points that have affected, or are likely to affect, assignees and consequently the company’s duty of care strategy.

2. Communication: Assignees are given a lot of information when they relocate so, as a long-term approach, the employer should send regular emails and texts to remind them what services are available.

In addition, companies should make sure they have communication protocols in place in the event of a crisis.

3. Tracking can improve safety: Some companies have implemented travel tracking into their strategies for high risk zones. Being able to locate an individual 24/7 is advised if the person is relocating to an area where kidnapping is a significant threat.

4. Update policies to allow for flexibility: The DIY approach isn't going away.

Therefore, companies should consider how they can make their policies more flexible to allow employees to book their own trips, or parts of their trip, without jeopardising safety.

5. Provide a thorough briefing: Our survey found that almost a quarter of companies provide assignees with security briefings designed for the general population rather than specific to the assignment location. In the interest of safety, companies should tailor each briefing and provide an induction. Assignees and their families need to have information at their fingertips of who to contact and what to do in a real emergency.

Simon Davies

Head of Business Development UK, Ireland & Northern Europe, Crown World Mobility.

Flexible global mobility policies

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TAX

Tax And Social Security Issues When Entering A New Location Increasingly, HR professionals are faced with the challenge of supporting the home business as it expands into new locations.

If you have an existing overseas assignee population the challenges of individual tax and social security may be familiar. However, when entering an entirely new location there are wider considerations to address, from payroll compliance, VAT, Corporate Tax to Transfer Pricing.

Many of the decisions made in setting up an assignment could impact other areas of taxation and if you fail to consider these, potential planning and cost savings could be missed.

Some Familiar Ground

From an HR perspective you will be under pressure from the employees to confirm their tax position.

Tax rates vary greatly between countries from 0% in UAE through to top rates in excess of 50% in Denmark. Therefore the answer to this question will be determined by where they are taxed.

Typically countries tax in two ways - they tax individuals who work in their territory and/or individuals who are resident in their country. There are exceptions, for example, the US taxes its citizens and green card holders on their worldwide income wherever they are resident or perform their duties.

It is also possible, based on the above, that two countries may seek to tax an individual on the same income bringing about what is commonly known as ‘double taxation’.

Double Tax Treaties

In this scenario, the first option will be to check if your country has a double tax treaty with the new location.

Typically, but this will vary, taxation of employment income is covered in Article 15. As a rule of thumb, employment income will be taxable in the country in which the employment is exercised.

The article will usually contain a second test useful for your short-term assignees and business travellers.

If this test is met, then the assignee may be exempt from tax in the host location where; • They have spent less than 183 days in the host country • Remuneration is not paid by, or on behalf of a resident of the host country

• Remuneration not borne by a permanent establishment (PE) or fixed base of the employer in the host country.

However, it is important to note that treaty wording varies, always check the relevant treaty. Do also check that you meet all the conditions within the treaty. Most individuals are aware of the 183 day test but forget that there are other tests that must also be met.

You do need to meet all requirements of the treaty test and not just one.

Do bear in mind that Base Erosion and Profit Shifting (BEPS) rules have lowered the threshold for what constitutes a PE. Additionally, the BEPS rules also seek to improve the alignment of transfer pricing outcomes with value creation with the greater expectation and scrutiny going forward of recharges of costs. Both of these action points are likely to limit the scope for treaty exemption in the future. As opposed to treaty exemption we are likely to see a need to file in multiple countries but with associated claims for double taxation relief.

The reporting and compliance burden is on the increase.

Tax Planning

Once you have established the tax rates and obtained local cost of living and salary information the next step will be to establish the package the employee will receive.

Many countries operate special tax regimes for expatriates. Before drafting the assignment contract confirm which local rules and tax savings might be applicable.

One of the biggest tax savings available can be the choice between paying cash or providing a direct benefit. For example, paying for accommodation directly could offer tax savings in Hong Kong but cash is generally taxed at a higher effective rate.

Timing can also be a great planning tool.

Leaving a country for a complete tax year may result in non-resident status for the whole tax year whereas leaving part way through the tax year may result in continuing resident status for the remainder of the tax year. Regular return visits and continuing ties to the home country may also be factors considered when considering home country residence status.

Social Security

So where will the employee (and employer) pay social security?

International social security is a complex area and it will usually be best to consult a specialist where there is any doubt over social security.

The world of social security is essentially governed by three separate sets of rules, • Europe (EEA) - EC Regulations • Bi-lateral Agreement countries (‘Reciprocal’ or ‘Totalisation’) • Non-Agreement countries.

Which rules apply may depend on the following: • Home / host country combination • Nationality of the assignee • Where assignee was last insured (paying contributions) • Duration of assignment • Location (residence) of the employer.

For moves within Europe the general rule is that you ‘pay where you work’. As an exception to this you may apply for an A1 certificate to keep the employee within their home system.

For other moves, do check if your country has a bi-lateral agreement with the new location. That agreement should exempt them from social security in the new location where a valid Certificate of Coverage is obtained.

Time limits and conditions will apply to both of the above situations, and individual rules and agreements should always be consulted.

Where no agreements exist at all, then home and host country rules will determine whether social security is payable and for how long. It may be payable in both!

Payroll

Typically, either as a matter of policy or because there is no local payroll in the new location, an individual may be kept on the home payroll.

Many companies do not realise that there may still be an employer withholding obligation in the new location. It is essential that you explore local rules and regulations in advance of an assignment, and where necessary establish a “shadow payroll” to account for local taxes from day one.

It may be possible to run this payroll through a local agent, and some countries offer relaxed payroll rules for certain expatriates, so always seek advice.

Do not assume that just because an individual may be treaty exempt that there is no employer withholding obligation in the

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INTERNATIONAL HR ADVISER WINTER

host country/country of working, and there is no need to seek local tax authority approval for not withholding. Increasingly, countries are focussed on business travellers and are more aware of the issue of recharges. Formal steps and ongoing reporting obligations may be required in order not to withhold in the host location.

Dual Withholding

Where you keep assignees on your home payroll, and also find that there is a withholding requirement in the assignment location, this can create a cash flow issue.

Companies often overlook possible solutions to dual withholding requirements which might be available in your home country. For example, in the US it may be possible to take advantage of certain exclusions and foreign tax credits within the payroll, rather than waiting for the employee to file a tax return, providing the relevant forms are completed.

Unfamiliar Territory

Business needs and opportunities can mean that before premises, a branch or subsidiary have been established, an employee may be deployed to the new location. They often work out of temporary office accommodation, a client site, or even a hotel.

It will be crucial to understand the exact nature of the individual’s role in the new location to ensure that you are not faced with an unexpected corporate tax bill or penalties for failure to comply with local laws or regulations.

Corporate Residence

In some situations, the seniority of the individual posted overseas, and the role which they undertake, may actually jeopardise the existing company residence status and therefore the corporation tax bill.

A company is generally taxed based on its residence status. Each country will have its own definition of residence. In the UK for example, a company is generally resident when it is incorporated, or centrally managed and controlled in the UK. As an illustration, a senior member of the board who relocates to the UK from Iceland to establish a new UK company, but holds board meetings of the Icelandic company in the UK, will find that the UK authorities will argue that the central management and control of the Icelandic business is being carried out in the UK and the company is resident and subject to corporation tax there.

Advance planning around the role the director performs in the UK and the location of board meetings could avoid this issue.

What Is A ‘Permanent Establishment’?

Countries may also seek to tax a non-resident

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company where it has a taxable presence as defined by local laws, as a result of the activities of individuals assigned there.

Where a double tax treaty exists between the home and host location countries, it will typically exempt the non-resident company from local corporation tax if its presence does not amount to a ‘permanent establishment’.

Double tax treaties generally define a permanent establishment (PE) as being a ‘fixed place of business through which the business is wholly or partly carried on’, with certain exemptions.

The important issue to highlight is that a PE can be created by the activities of employees, or in some circumstances agents or contractors. Prior to BEPS, the key test of whether an employee's activities can create a PE concerned their ability to conclude contracts with customers. The new BEPS changes will look more closely at the exact involvement of individuals and one who ‘habitually plays the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the enterprise’ can create a PE. Other factors can also lead to a PE, and all fact and circumstances should be explored before the individual is assigned to the new location.

Where you become aware of an assignment to a new location, simply linking in with the appropriate colleagues such as company group tax, company secretarial and legal, could allow significant savings to be made and avoid unintentional corporate taxation and unexpected filing.

Recharging Costs

Another significant issue that is often overlooked at the planning stage of the assignment is the recharge of costs. It may seem essentially an internal company matter, however, this decision can have three major tax implications;

You should consult with group tax or a tax adviser before finalising recharge arrangements between locations.

3. VAT

Cost recharge of expatriate salaries may also attract irrecoverable Value Added Tax (VAT).

For example, a UK company assigned several UK employees to work with a Swedish company as part of a joint venture. The costs of the assignees’ salary were recharged to Sweden. This recharge was subject to Swedish VAT. As this was a joint venture and the companies were not within the same VAT group, the VAT cost could not be recovered.

By establishing a shadow payroll in the UK to account for social security and pension contributions, and transferring the assignees to a local Swedish payroll, the company was able to recover the cost of the VAT.

Prevention Is Better Than Cure!

As an HR professional you may be one of the first within your organisation to hear of a new assignment. Many of the decisions made in setting up that assignment could impact other areas of taxation.

In international tax, the only consistent rule is that the rules will be different! An awareness of the key issues is a great asset when setting up in a new location.

This should help you establish controls and strong lines of communication to ensure that all key teams, HR, Tax, Legal and external advisers are involved at the planning stage to maximise tax relief and minimise exposure to penalties.

1. Treaty Exemption

As we saw above, the decision to recharge the costs for short-term assignments to the new location may mean exemption under the treaty is not available.

2. Transfer Pricing

This refers to the payment for assets, services, and funds transferred within an organisation, including costs of assignees.

This is a major concern for tax authorities around the world who have become increasingly concerned that multi-national companies set transfer prices on cross-border transactions in order to reduce taxable profits in their jurisdiction and/or shift profits to low tax cost countries. This has led to the new BEPS rules, making transfer pricing even more of a major tax compliance issue for multi-national companies.

Andrew Bailey

National head of human capital at BDO LLP. He has over 30 years’ experience in the field of expatriate taxation. BDO has offices in 154 countries and is able to provide global assistance for all your international assignments. If you would like to discuss any of the issues raised in this article or any other expatriate matters, please do not hesitate to contact Andrew Bailey on +44 (0) 20 7893 2946, email Andrew.bailey@bdo.co.uk

INTERNATIONAL HR ADVISER WINTER

Global Taxation Update Recent Tax Updates From Around The World China & the Netherlands

New social security agreement The Dutch and Chinese government recently signed a social security agreement; however, this agreement differs from the regular bilateral agreements the Netherlands has concluded as it does not include all social security insurances.

Based on the agreement, for Dutch employees who are seconded to China the following applies: • The employee remains covered by the following Dutch social security insurances: • Dutch state pension (AOW) • Survivors Dependant Insurance (ANW) • Unemployment Insurance (WW) • There is an exemption for paying contributions to the Chinese base pension and unemployment insurance, but not for the contributions for medical and disability insurances in China (if applicable).

For Chinese employees who are seconded to the Netherlands the following applies: • The employee remains covered by the following Chinese social security insurances: • Base state pension • Unemployment Insurance (WW) • There is an exemption for paying contributions to the Dutch state pension (AOW), Dutch Survivors Dependant Insurance (ANW) and the unemployment insurance (WW), but not for the contributions for other insurances in the Netherlands.

The above applies for a maximum period of 5 years.

Certificate Of Coverage The Certificate of Coverage should be requested in the home country. Based on the social security agreement between China and the Netherlands this Certificate of Coverage should be requested within 6 months of the commencement of the secondment.

Current Secondments In the agreement a transitional period is taken into account. This means that for current secondments, if the requirements mentioned in the agreement are fulfilled at the beginning of the secondment, the above can be applied from the date the agreement enters into force. In this case,

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this can be applied for 5 years from the date the agreement is ratified. Certificates of Coverage still need to be filed in time.

Entry Into force Please note that the exact date this agreement will enter into force is as yet unknown.

BDO Comment This is a key change for secondments between the Netherlands and China and means that employees can remain in their home country systems. It will even apply to those individuals currently on assignment and the applicability of the new agreement should be considered for those employees as well.

Italy

Moving to Flat Tax Regime for new residents Italy is introducing a flat rate of income tax for those moving their tax residency to Italy.

The tax payer will pay a flat 100,000 Euros tax per year on all foreign income. The flat rate option will be valid for 15 years. It is possible to choose to exclude income sources arising in a specific country, to which the ordinary tax regime will apply. In such cases taxes paid abroad can be used to offset Italian taxes.

The tax amount is reduced to 25,000 Euros for each family member.

Individuals applying for the flat tax regime are exempt from tax on real estate owned abroad and from wealth tax on foreign financial investments. Additionally, they do not have to fulfil the requirements provided by the foreign investments monitoring legislation.

The flat tax does not apply to: • Italian source income • Capital gains on qualified shares, for five years after application.

The regime applies to individuals moving their tax residency to Italy. An individual is considered to be an Italian resident for tax purposes if, for the greater part of the tax year, one of the following conditions is met: • He/she is registered in the Office of Records of the Resident Population • He/she physically lives in Italy • His/her centre of business or sphere of interest are in Italy.

They must have been non-Italian tax resident for at least nine years in the previous ten years. To apply for the regime, a ruling has to be submitted to the Italian Tax Authorities and an agreement must be reached before 30th September of the following year.

The benefit ceases in the case where a flat tax payment is missed. The loss of requirements to benefit from the flat regime for a family member does not imply the automatic exit of the main taxpayer; vice versa, the end for the main one implies the end of the regime also for other family members.

BDO Comment The new flat regime will be beneficial for those with large amounts of non-Italian income. In such cases application should be made to the Italian tax authorities for the flat regime to apply.

The Netherlands

The Directive on Intra-Corporate Transfers (ICT): changes to the existing rules As of 29 November 2016, the Intra-Corporate Transfer Directive will be implemented in Dutch national laws. This ICT Directive provides the possibility to companies from outside the European Union with an entity in an EU member state to temporarily second managers, specialists or trainees to their entity in the EU. Purpose Of The Regulation The purpose of the ICT Directive is to harmonise the admission rules of the different EU members and to simplify the short-term mobility within the EU members.

The aim is in order to make the EU as a whole more attractive for international business so that it enhances the competitiveness of the European labour market and economy.

For Whom?

The ICT Directive is applicable to ‘managers’, ‘specialists’ and ‘trainees’. These employees need to be employed for at least three months with the company outside the EU, and their place of residency at the time of the filing of the request should be outside the EU as well. It should concern a temporary secondment to one or more group entities within the EU. The employment with the

GLOBAL TAXATION home country company should remain in place (no local contract with the host company). Furthermore, it is important the employment conditions are competitive in the local labour market.

Ict Permit The ICT permit is a combined work and resident permit. This permit should be requested in the country in which it is the expectation that the employee will stay the longest. The ICT permit will be granted for a maximum period of three years for managers and specialists and for a maximum of one year for trainees. An extension based on the ICT Directive is in principle not possible.

Short-Term Mobility As mentioned, one of the benefits of the ICT permit is the simplification of the shortterm mobility to other group entities within the EU. Under 90 Days In case of a transfer to another group entity within the EU for a period less than 90 days within a period of 180 days there will only be a notification obligation. However, this is only possible if the employee will not move his residency to this country. In the Netherlands, this notification should be filed with the UWV (Dutch social security authorities for work). The employee is allowed to start working per direct.

employees under 30 years (amounts for the year 2016).

Request The ICT permit can be requested with the IND. The IND informs that for employees for which the ICT Directive applies, but whom have been granted with a permit based on the Highly Skilled Migrant Rule, these permits will remain in place for now as long as the permit is valid. The costs for the request of the ICT permit will be the same as for the other permit requests according to the IND. BDO Comment The new rules may make it easier to be able to temporarily transfer certain currently employed non EU individuals to the EU providing the employment is within the same group. Do ensure the correct procedure in each country is followed.

Sweden

Highly Skilled Migrant Rule The group of employees for which the ICT Directive is applicable, would in principle also fulfil the requirements of the Highly Skilled Migrant Rule. Even though, in these situations it is not possible to choose which permit will be requested. If the requirements for the ICT Directive are fulfilled, this ruling prevails. If an employee is not seconded for a group company outside the EU, but hired locally, the Highly Skilled Migrant Rule is still applicable according to the IND.

Tax penalty waivers based on information received from abroad Submitting incorrect or incomplete tax return information can lead to penalties.

The tax authorities may however, under certain circumstances, waive such penalties, for example, where the factual risk for tax evasion is minimal.

On 21 October 2016, the tax authorities published their opinion on waiving tax penalties based on information received from abroad due to an exchange of information agreement, Directive or a tax treaty provision.

According to the publication the tax authorities regard information received based on automatic information exchange as normal control information and hence tax authorities may waive tax penalties (partly or wholly) for undisclosed or misrepresented information in the same way as for locally available information provided that: • The tax information from abroad is available to them within 1 year from the end of the fiscal year in question and • Before the tax authority’s investigation into the incorrect information submitted has begun.

The above will not apply on arbitrary assessment situations, e.g. when no tax return has been filed at all.

Required Salary There is no salary threshold. The offered salary must be competitive according to Dutch standards. According to the IND, for the time being the salary thresholds that are applicable for the Dutch Highly Skilled Migrant Rule will be used. These salary thresholds are EUR 4,240 excl. 8% holiday allowance for employees above 30 years, and EUR 3,108 excl. 8% holiday allowance for

Payroll And Data Protection – New Legislation In 2018 In January 2012, the European commission proposed a comprehensive reform of data protection rules and the official texts of the Regulation and the Directive were published in the EU Official Journal in May 2016. The regulation will apply from 25 May 2018 and the Directive entered into force in May 2016 with EU Member States having to transpose

Over 90 Days In case of a transfer to another group entity, a simplified and shorter request procedure is applicable. In the Netherlands, this request should be filed with the IND (Dutch immigration services). Also in this case, the employee is allowed to start working immediately.

it into their national law by 6 May 2018.

The objective of this new set of rules is to give citizens better control over their personal data and to simplify the regulatory environment for businesses in this respect, and to ensure that the same provisions apply regardless of where the data is processed.

Penalty charges imposed for non-compliance may be up to €20,000,000 or 4% of the organisation’s revenue.

From a Swedish perspective the new regulations will, for example, most likely imply that employers and payroll providers will be prohibited by law from sending payslips by email. Further details on the implications will follow when a formal legal proposal is presented.

Tax Authority Clarification On Special Payroll Tax On Certain Earned Income On 3 November 2016, the Swedish Tax Authority (STA) published clarification in respect of the special payroll tax on certain earned income that is not subject to social security contributions. The special payroll tax is levied at a rate of 24.26% for insurance companies on payments made under severance, work accident and group health insurance schemes and for employers making provisions for profit-sharing funds.

The tax is also levied at a rate of 6.15% for earned income paid to individuals as from the year in which they reach the age of 65.

The STAs November statement clarifies that foreign employers without a permanent establishment (PE) are not subject to the special payroll tax.

Proposed New Provision For Taxation Of Shares In Closely Held Companies The Swedish Ministry of Finance released a consultation document on changes to the regime for the taxation of shares in closely held companies on 14 November 2016. The main purpose of the special scheme for taxation of such shares is to combat tax avoidance through income conversion i.e. to prohibit shareholders converting earned income to capital income to benefit from the lower tax rates applicable for dividends and capital gains.

The current proposal includes various changes e.g. in respect of calculation of qualifying salary levels and on taxation on transfer of sales of shares to related parties.

According to the proposal the amendments should apply from 1 January 2018 and the consultation period closes on 10 February 2017.

Further details will follow as developments occur.

Prepared by BDO LLP. For further information please contact Andrew Bailey on 0207 893 2946 or at andrew.bailey@bdo.co.uk

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INTERNATIONAL HR ADVISER WINTER

Careers Without Borders At adidas Group ‘’Bring your talents to an international stage. And then be ready to learn, contribute and grow fast. Getting exposure to as many different countries, cultures, languages and points of view as possible is the best way to grow as a person and a professional. It's also the fastest path to creativity and innovation.’’

A bold statement and one central to the employer brand of adidas Group as we aim to attract the brightest and best talent, both internal and external, to work with us in our seven international Headquarters and 20 international hubs in 92 countries.

The adidas Group embraces multi-cultural diversity, through the almost 1900 employees we have on some form of international assignment, as well as the many others that commute across borders, travel frequently or work on a day to day basis with colleagues and friends around the world. At our World of Sport in Herzogenaurach, our German Headquarter, we have people working from more than 80 nations.

So how do we continue to bring this to life?

Firstly, we continue to reinforce the brand….

If we promise an international career as a key part of the employer brand, we need the infrastructure to back this up. As of July 2016, we launched the first global mobility policy to all adidas Group companies in all locations worldwide.

That’s not to say mobility now looks the same for everyone. After all, we have different drivers for assignments and different tools to meet the realities of different locations.

But by developing and launching our global approach, we send a powerful message to our current and future employees – wherever you want to go in the world, you’ll receive consistent support and encouragement, and a consistent employee experience. It also gave us a chance to stamp some common principles on the adidas Group – that we want to encourage more people to make the leap and gain international experience, and that we are keen to remove barriers and points of concern to whomever wishes to take this step, regardless of gender, age or country of origin.

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Second, continue to invest in attracting talent to key locations through collaborations between International Mobility and the Talent Futures team on microsites and location specific content.

In addition to the popular microsites developed for Herzogenaurach, Germany (www.herzo.adidas-group.com) and adidas CIS, launching the Careers without Borders concept resulted in our developing media & video content for a number of other key Group locations: Emerging Markets, Northern Europe, Amsterdam, China, Slovakia, Hong Kong, Japan, Portland, OR and Canton, MA. All of these showcase each location’s uniqueness and demonstrate the passion of those already living and working there to entice others to join. This content can be viewed at careers.adidas-group.com/lifehere/without-borders

Thirdly, greater flexibility and freedom of employer location…

Workforce mobility is a rapidly evolving commercial reality. The greater diversity of cross-border employment models facing multinationals today is both a risk and an opportunity.

Whilst adidas Group now acts as a truly global family when it comes to supporting international assignments, at times we simultaneously encounter concerns regarding traditional cross-border opportunities such as the short-term assignment, long-term assignments or (semi) permanent moves.

Simply put, some employees want the opportunity to see the world but on their terms; be it duration or even location.

“A local package in Amsterdam?

No thanks – but I’ve always wanted to live in Paris…’’

This is fast becoming the framework within which all international companies must play today - a challenging employment market; employees have more leverage to state what they want and where they want it. The ongoing ‘war for talent’ and a new, multi-generational workforce with its own demands, realities and personal circumstances add fuel to this fire.

Beyond the traditional commuter and short-term business visitor, other forms of cross-border working are springing up - the virtual employee; employed in one location

but working in the office of another group affiliate overseas; the employee with a global role that rarely travels yet serves different subsidiaries with technical support and, thirdly, the employee with a multinational role and responsibilities sited in one location but supporting several other countries.

These developments all present significant and different challenges from remuneration to tax issues to social security to permanent establishment to transfer pricing to cost allocation implications. And all of them can create major problems with serious consequences if not structured appropriately.

Risks of non-compliance are significant and of consequence for both employer and employee. These can include blacklisting, backdating of personal and corporate taxes and even criminal conviction for immigration fraud.

Doom and gloom aside though, if we work towards a landscape of cooperative compliance – that’s to say, control processes and technology that simplify and properly account for these evolving employment models - the rewards will be significant.

After all, get it right strategically and an organisation will far more easily balance talent supply inequalities with global business growth, putting it in a much stronger position to engage and retain key talent. Plus, from a tactical perspective, it enables a faster response to short-term business demands and socio-economic risks, as well as a more rapid deployment of management and technical skills.

From an employee engagement perspective, the effective application of these new mobility opportunities help ensure that organisations are more responsive to individual wants and needs. This enables the company to present more rounded and attractive career and developmental opportunities. Increased flexibility around working locations balance personal and career objectives which drive greater employee engagement and a willingness to remain with - and be an advocate for - an organisation in today’s challenging employment landscape.

Lastly, how to make the most of the international talent we hire and grow?

Building a dynamic, internationally diverse and culturally fluent organisation is a longterm commitment and also comes at considerable cost.

How do we ensure we get the best return

GLOBAL HR INSIGHT for this investment?

Firstly, we continue to listen better to what our international employees have to say to us. We conduct period pulse checks directly with our international employee population.

Not the classic and enormously long expat engagement surveys of the past, but rather a targeted and much more punchy pulse check on a much more frequent basis. With these, we hear pain points and suggestions for improvements to our overall programme.

Next, by leveraging the adidas Group Talent Carousel programme (an internal development programme that offers cross-functional and cross-cultural career experiences to prepare future leaders to lead in a VUCA world) we continue to develop intakes of our high potential managers.

Thus, we provide opportunities for closely managed cross-functional international career development. Such a fantastic pathway equips our next generation of leaders with a better understanding of overseas markets, cultures, languages and, of course, a great international network.

Finally, we continue to build better capabilities around succession planning for those employees with a clear plan to return to their original location after assignment.

Why would any organisation invest so much in talent if they run the risk of losing talent

through lack of planning and forward vision?

Forethought and oversight is key to keep the talent you invested in.

It may seem like common sense, and indeed to many organisations it is, but conversely in my broader experience, so many organisations overlook this and, in doing so, pay the price of seeing employees developed at a great cost:

walking out the door.

For adidas group, our diverse and international employee base is a precious asset and a strategic differentiator â&#x20AC;&#x201C; we must continue to shape and develop our international demographic, continue to inspire those who are a part of it, and unleash the creativity we gain from it.

David Enser

Senior Director HR Rewards, Head of Mobility & Rewards Innovation, adidas Group Originally from the UK, David first moved to Germany in 2007 to work for Nokia on a short-term assignment before returning to work in Herzo for the adidas Group in June 2010. David found it so motivating to be surrounded by so many colleagues, both inside and outside his team, who have made the leap and taken the opportunity to work outside their country of origin â&#x20AC;&#x201C; He is certain that he could never go back to a dreary 9-to-5 job surrounded

by English people. Since David was a kid, his passion was always for all things international, and now he finds it exciting to have the chance to both encourage people to take up opportunities they may not have done otherwise, and also to find employment solutions to make this happen in practice for themselves and their families. Living in a small village outside Herzo, David loves the balance of an outdoor lifestyle, walking/running/cycling with his son, maybe driving his Land Rover off-road now and again, and also being in the heart of Europe with so much to explore.

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BUSINESS TRAVELLER TRACKING

Business Traveller Tracking – Why Should It Keep You Awake At Night?

What’s It All About?

Short-term business travel is becoming one of the biggest hot potatoes. It is high on the agenda for governments who are placing increasing focus on compliance.

Current trends suggest that organisations are increasing their reliance on business travellers, with a number of factors leading to this, such as the cost of alternative options and the increasing need to keep up with the pace of globalisation whilst balancing or managing a mobile workforce to focus on and reduce costs. These pressures endorse the view that business travellers are a necessity in the business world today.

Short-term assignments and international business travel are rising, and many employers leave it up to the traveller to make all their own arrangements. Often, employers and employees make assumptions about the immigration requirements or overlook them completely. This can place both the individual and company at risk of penalties and fines, coupled with serious consequences which can place the organisation's ability to conduct business at risk in certain countries.

Recent research has shown that HR departments expect a 73% rise in business travel, whilst only 30% believe that they have the right tooling and programme in place to manage their business traveller population and associated risks efficiently and appropriately. In essence, there is no surprise that it is all about risk and compliance.

So, What’s The Risk Associated With Business Travel?

Immigration non-compliance is rising for employees who are taking extended business trips and short-term assignments. In many countries, the authorities and enforcement agencies use sophisticated technology to track business travel and take a hard stand on employers who are not conforming to the rules and regulations. There is an example where a company recorded 40,000 business travellers but circa fifteen percent of them were found to be non-compliant with border regulations!

It is vital that companies have a robust business travel policy and process in place to protect themselves from potential risk and be aware of business travel rules and regulations to avoid consequential penalties and fines. Authorities do not accept ignorance as a defence.

Short-term assignments and international business travel are rising and many employers leave it up to the traveller to make all their own arrangements.

The risks associated with employees who travel without correct immigration and tax planning along with the conflicts that this can create, sometimes can result in companies suffering reputational damage incurring significant costs. In extreme cases, this can lead to prosecution. In one instance, a large multinational technology company lacked the ability to know where its employees were at any time, with no process in place to ensure compliance

to this requirement from the company or employee perspective. The possible penalty for this breach was $1million, a significant sum which demonstrates the importance placed on compliance by authorities.

Business travel is not necessarily straight forward. Some business travel can be allowed without any immigration requirement, whilst some travel may require a business visa or even a work permit. A further consideration is tax regulations around shortterm assignments which can be missed by employers. It may be that there is a taxation liability in the destination country but, regardless as to whether this is the case or not, there may be immigration requirements.

To complicate matters further, there are no hard and fast rules about what tasks and activities each country considers to constitute as ‘business’ travel. Each country has its own interpretation and legislation to cover it. When entering a destination country, the local border agencies do not take the seniority of an individual into account, even if barring entry. For some countries, the business travel legislation is unclear and poorly documented, meaning immigration attorneys and consultants need to rely on their own experience and discretion to advise clients. It is not possible to apply one country’s rules to determine another. It is important to understand the rules specifically for the destination country to ensure full compliance. As the legislation

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INTERNATIONAL HR ADVISER WINTER

can vary significantly from one country to another, activities that are considered exempt in one country may mean a business visa or work permit is necessary in another, which can take time to obtain.

The negative consequences can include (but are not limited to) the following: • Business Reputation Risk The press coverage alone for breaches or litigation can be sufficient to tarnish the standing and reputation of a company.

• Employee Dissatisfaction There can be an impact on the individual from both an immigration and tax perspective if the requirements are not handled appropriately. As a result, employees can seek to blame their employer and may lead to the individual leaving the company. If the individual faces an entry ban to the destination, it could have repercussions elsewhere as a result.

• Budgetary Risk If any costs are incurred for unexpected tax or penalty costs, these can be high, which can hit the bottom line and are almost never included in any financial planning. The impact will be negative and, if sufficiently high, require explanation to investors.

• Risk of Prosecution Failure to adhere to immigration or tax regulations consistently can lead to authorities prosecuting the organisation, which may include specific officers of the company.

• Employment Law Risk Understanding the location of employees can help to ensure that the employment laws are adhered to in the destination jurisdiction for these individuals.

• Duty of Care In the current climate with increasing incidences of terrorism, knowing the whereabouts of the business traveller population in real time means that, if there is an incident, individuals in the area can be identified quickly so steps can be taken to locate them to provide the necessary support.

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What Can You Do?

Doing nothing if you do not understand your business travel activity could be a significant risk and issue in terms of compliance and can cause significant expense in penalties and fines. Often the business travel population is not on a formal assignment programme in a different work location or seconded to another host entity. As such, these individuals can be overlooked and may not be included in immigration policies and procedures within an organisation. There are two main solutions: 1) An in-house process – Internal resources may permit the development of a tool built in-house to track and manage the business traveller population specifically tailored to the business. This may have proactive capabilities to cover both the immigration and tax angles. Some companies rely on a retrospective view by using travel or expense claim reports which may help to track number of days abroad, but is retrospective and, therefore, does not ensure that the appropriate immigration steps have been taken.

The information captured would offer management reporting and the ability to monitor the programme.

2) Outsource – There are immigration providers who can offer a solution to track the business traveller population for you. This would allow travellers to input information about themselves and this, coupled with the logic included in the solution, would allow for a pre-travel assessment to determine the appropriate immigration path for the activities intended and access to immigration professionals. The tooling promotes compliance, tracking each occurrence of use to provide detailed and summary reporting for the company. Provided the information entered into the tool by the individual is accurate, the appropriate immigration route will be ensured.

Santa Fe is launching a compliant solution called the Business Travel Tracker, which is an innovative risk and compliance management

system, allowing organisations to track their business travel globally: a) I mmigration – Immediate online assessment of the travel requests and technical advice from our immigration team of experts. Full work authorisation and visa application support. b) Tax and Social Security – The tool contains basic tax treaty logic and the traveller is provided an assessment for guidance as part of their travel request. c) Review and Reporting – In-depth reviews of all travel requests and tailored reporting on a regular basis.

D) Business Traveller Policies – Santa Fe is able to support organisations with developing and maintaining their business traveller policies.

Having considered your current programme, do take time to evaluate the best way forward for you and your company to ensure immigration compliance proactively so that you can rest easy in the knowledge that you have a robust policy and programme in place to mitigate your risk around the business traveller population.

Are you confident that you know who is travelling, where they are and if they have the appropriate visa or permit? Santa Fe Relocation is launching a tool which can help organisations with various aspects of their business traveller requirements so they can address many of the concerns mentioned in this article.

Robert DAY

Robert Day is the acting Head of Global Immigration at Santa Fe Relocation Services. He has had a long career in large multinational companies, having a background in finance and operations prior to taking a mobility focus. He has managed the end to end mobility programme in the UK for a large blue chip company, lead an immigration practice in the Nordics, managed the global coordination for a large global pharmaceutical company along with leading the coordination of European immigration in a Big 4 environment. At present, he is leading all aspects of the global immigration capability for Santa Fe. If you have any thoughts or questions you can contact Bob on Robert.Day@SantaFeRelo.com

LANGUAGE SKILLS & TRAINING

Why Language Skills Are The Seed For International Business Growth In today’s global business environment, clear communication is essential. And for companies to thrive in the international marketplace they need to overcome potential language barriers. Indeed, research has found that companies that are effective communicators have a 47% higher total return to shareholders over a five-year period compared to those who are not[1].

As the language of global business, a level of English language proficiency is increasingly seen as one of the keys to business success. But today organisations report that the standard of language skills, specifically English language skills, varies drastically. A recent survey from Pearson revealed that although 92% of employees said that English was important to their career progression as a second language, only 7% felt their English was good enough to do their job.

To make the most of global opportunities and ensure that employees can communicate effectively with their international counterparts, businesses need to assume a level of responsibility for language learning and commit to raising the level of English proficiency amongst their international staff. This is particularly the case for more senior employees where their language skills need to be adequate for the more complex communicative tasks they face daily, such as leading meetings, delivering presentations and influencing senior decision makers. Organisations may be missing out on the best talent if they don’t invest in up to date language teaching, offering employees clear pathways to develop relevant business English skills.

So how can businesses ensure they make the most of the language training programmes they offer? First, businesses need to make sure that their employees’ foreign language skills are relevant for the workplace. Rather than training based on general skills, focusing on the specific skills required to perform a particular job leads to faster, more relevant results that can be put into practice immediately. As a response to challenges such as this, Pearson has developed, and recently launched, a set of Global Scale of English Learning Objectives for professional English. The learning objectives are aimed at those developing their skills for work or professional purposes, documenting the skills needed at different levels of proficiency,

from understanding emails on work topics, to conveying a negotiating position, to describing change. An online, fully searchable Global Scale of English Teacher Toolkit hosts all the Professional learning objectives along with associated grammar and vocabulary to help teachers and trainers plan a curriculum or lesson and better meet employee demands for relevant language skills. This ensures learners can gain the real-world communication skills needed in the workplace, such as negotiation, clarity of thought and polite persuasion.

A level of English language proficiency is increasingly seen as one of the keys to business success.

The fact that many words in English have more than one meaning compounds the challenge. For example, if a native English speaker were to call an idea “novel”, fellow native speakers would of course understand that they were describing the idea as new, different or unusual. Understandably, this might cause confusion amongst non-native speakers given that the word can also refer to a type of book or writing. The GSE teacher toolkit also includes 36,000 vocabulary word meanings and 80,000 collocations, meaning that vocabulary is taught within a relevant context and becomes easier to apply.

Training tools like this are more likely to equip employees with relevant, up to date and applicable language skills that are ready for the global marketplace. Training should, of course, always lead to progress and results.

So, it is important that employees understand where they need to improve and how they can continue to develop their language skills.

With language learning in particular, students often struggle to overcome the "intermediate plateau" and feel like they are spending years at the same level. Generally, this leads to a lack of motivation and a decreased

willingness to improve their language skills.

Using a framework that offers a detailed and graded model to target performance areas across a range of skills offers a much more rewarding and motivating route to increased competence. Assessing employees against a globally recognised and internationally consistent framework, makes it much easier for HR teams and training providers to identify improvement areas and work collaboratively with their employees towards a mutual goal.

By investing in employees’ language skills, specifically their English language skills, global businesses can better communicate with foreign partners in the international marketplace, with far reaching potential. For a start, improved communication can lead to new growth opportunities in all markets. It can help professionals to make more meaningful connections with their global colleagues and expand their careers in the long-term. And finally, it can support in generating increased revenue worldwide - which is essential for every global business.

References: [1] Towers Watson, Communications ROI Study Report, 2009/2010

Mike Mayor

Director of Global Scale of English within Pearson English. In this role, Mike heads up the team developing learning objectives that describe what learners can do at each point on the Global Scale of English. On leaving university, Mike worked as a teacher of English in France before embarking on a career change and joining the world of publishing as a lexicographer. Mike joined the Longman Dictionary division of Pearson in 2002 and headed the list until his move to the Global Scale of English in 2013.

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diary dates

INTERNATIONAL HR ADVISER WINTER

The 2017 Global HR Conference - FREE TO ATTEND*

Monday 6th February 2017 from 1pm - 5pm Smith & Wollensky, 1-11 John Adam Street, London, WC2N 6HT If you would like to join us for this educational afternoon that is aimed at supporting Global HR professionals, then please email helen@ internationalhradviser.com to register your place.

The seminar programme is as follows: Brexit: What Will It Mean For Employers?

The UK people have voted to leave the EU and the UK government has declared that “Brexit means Brexit”, but what does this mean for employers and their mobility and reward policies?

Discover how your organisation can ensure it is well prepared in an unfolding landscape.

Hosted by Deloitte LLP Diversity, Gender Bias And The Rewards Of Being Internationally Mobile - Breaking The Glass Border ...

It is essential to consider gender diversity at every level if organisations are to have a sufficient pool of female talent to choose from for international assignments. a survey for the res forum annual Report found that more than 50%of organisations and it hard to and suitable female candidates for international assignments, and 40% and it hard to motivate women to accept foreign postings. What can organisations do to redress this balance? How might recent socio-economic developments such as the UK leaving the EU and the election of Donald Trump to the White House affect diversity and inclusion practices within global organisations and how can your organisation be prepared to manage the change?

Andy Piacentini, Head of Reward at Standard Life and founding partner at the RES Forum will host an informative session exploring these issues.

International Assignments & Business Traveller Update A review of current trends with regard to assignments and the tax & social security implications of having more business travellers/commuters.

Hosted by Andrew Bailey, BDO LLP Managing Pay For International Assignees Coping With Currency Volatility With so much happening with currency values in key global economies, protecting expatriate purchasing power against currency fluctuations is a constant challenge.

ECA will provide insight into recent currency movements and explore the options managers have to maintain the purchasing power of their expatriates' remuneration when significant exchange rate fluctuations occur, including: Using Guaranteed exchange rates; interim reviews - establishing trigger points; reconciliation - payment in one currency and split pay - the pros and cons.

UK Immigration Policy & Its Effect On Your Business Do you employ international talent within your company? James Walters, a Director at UK immigration practice Smith Stone Walters will present on the latest UK immigration news including how post-Brexit immigration controls may affect your recruitment of specialist skills from overseas.

These sessions will be followed by time for networking with peers and speakers.

To register, please email helen@ internationalhradviser.com or call Helen on +44 (0)20 8661 0186. *This event is open to Global HR Professionals only.

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JANUARY 2017 Hong Kong Summit

18 January, 2017 Regal Hongkong Hotel, Hong Kong Changing demographics, declining workforces, immigration issues and slowing economies are concerns for companies headquartered in or doing business in the Asia-Pacific. And there are some amazing opportunities in the region, too, as APAC mobility professionals capably manage complex talent and skills shortages, compensation and compliance concerns, diverse global teams and HR technology. The 2017 Hong Kong Summit brings insight, solutions and strategy from thought leaders and worldclass speakers; connects mobility professionals for in-depth discussions and collaboration; and features an active and productive Marketplace to learn about service partners and peers. Learn more and register at www.worldwideerc.org/ Pages/2017Events.aspx

FEBRUARY 2017

6th HR Minds Summit

February 2 & 3, 2017 Vienna, Austria In HR, global trends are likely to influence organisations, the next generation coming into the workplace, and what they are going to expect. How to develop a strategy of Right Job for the Right Person at the Right Career Developmental Stage? What motivates people and keeps them engaged?

What are the most successful and handy TECH innovations worldwide? How to promote the company brand within the employed colleagues hence creating a higher rate for retention? How can HR add value when anchoring a new business culture?

For more details about the event and for the registration form please check our website: glceurope.com/6th-hr-minds-summit

Learning & Development World Congress 2017

21-24 February, 2017 Singapore Implementing Learning & Development Solutions and Strategies that increase knowledge, improve performance and provide impact are key to any organisation in their global business strategy. However, it's easier said than done, and numerous challenges await such difficulties including the effective learning transfer, process and programme design, employee and stakeholder satisfaction, getting buy-in and delivering a successful business case, benchmarking and measuring your programme, programme selection, technology implementation amongst many others.

Equip Global’s Learning & Development World Congress in 2016 was rated the World’s Leading MUST-attend event for Learning & Development professionals globally. To get a copy of the conference brochure, please email lucastan@equip-global.com Event Website: www.equip-global.com/6th-learning-anddevelopment-world-congress-2017. *Readers of International HR Adviser magazine are eligible for a 10% discount. Email to Equip Global to find out more!

Global Mobility Specialist (GMS)® Module 3 Training

23 February, 2017 (London) and 23 March (Shanghai) Engage in interactive learning and connecting with mobility peers at the in-person presentation of The Intercultural Challenge: Supporting Successful International Assignments, one of the three-part series in the Worldwide ERC® global accreditation, offered in London and Shanghai just prior to the Worldwide ERC® Summits in both locations. Learn more and register at www.worldwideerc.org/Pages/2017Events.aspx

Worldwide ERC® London Summit 2017

24 February, 2017 Grange Tower Bridge Hotel, London, UK A full day of cutting-edge content including roundtable discussions on the key talent mobility challenges and opportunities throughout EMEA, and a Senior Strategists Dialogue panel, with Worldwide ERC® President & CEO, Peggy Smith, SCRP, SGMS-T presiding as moderator.

Corporate HR delegate registration is complimentary. Find information and further details on www.worldwideerc.org/Pages/ LondonSummit-2017.aspx

FEM Global Mobility Conference - Houston

February 28, 2017 Hyatt Regency, Houston, USA Don’t miss the opportunity to attend the FEM Global Mobility Conference in Houston and hear from leading global mobility professionals from across America. Join us to share best practice and network with your peers while coming away with valuable insights and ideas for your own programme. Find out more information at www.houston.forum-expat-management.com

MARCH 2017

Worldwide ERC® Shanghai Summit

24 March 2017, Pudong Shangri-La, East Shanghai

Worldwide ERC® Singapore Summit

31 March 2017, Intercontinental Singapore Bringing talent mobility professionals together in region for more than a decade now, Worldwide ERC® will continue to build on creating an outstanding forum for APAC-wide and countryand region-specific mobility information sharing, peer policy benchmarking, dialogue with strategic leaders and an extensive marketplace, showcasing innovations in mobility. Stay current with regulatory challenges, compliance and risk management and the role talent mobility can play in leading organisations through turbulent times.

Learn more and register at www.worldwideerc. org/Pages/2017Events.aspx.

If you would like to advertise a conference or exhibition on our Diary Dates and on www.internationalhradviser.com please email damian@internationalhradviser.com

directory

BANKING SERVICES INVESTEC BANK PLC

2 Gresham Street, London, EC2V 7QP, UK Contact: Tom Sykes Telephone: 020 7597 3532 Email: Tom.Sykes@investec.co.uk Website: www.investec.co.uk/privatebanking Twitter: @Investec LinkedIn: www.linkedin.com/company/4483 Investec Private Bank is part of Investec Bank plc, an international financial services institution employing nearly 8 000 staff worldwide with an estimated £80.5 billion in funds under management in the UK (as at December 2015). In the UK, Investec Private Bank offers bespoke financial services designed to meet the needs of individuals earning £300,000 and above per annum.

LLOYDS BANK INTERNATIONAL LIMITED

Telephone: From the UK, call: 0808 169 6411 Outside the UK, call: 033 3014 5287 Mon-Fri 8am-6pm and Sat. 9.30am-1.30pm UK time. Calls may be monitored/recorded Email: londonbdm@lloydsbanking.com Website: international.lloydsbank.com Registered Office and principal place of business: PO Box 160, 25 New Street, St. Helier, Jersey JE4 8RG. Registered in Jersey, number 4029. Regulated by the Jersey Financial Services Commission.

We abide by the Jersey Code of Practice for Consumer Lending.

The Isle of Man branch of Lloyds Bank International Limited is licensed by the Isle of Man Financial Supervision Commission and registered with the Insurance and Pensions Authority in respect of General Business.

Business Address: PO Box 111, Peveril Buildings, Peveril Square, Douglas, Isle of Man IM99 1JJ.

NATWEST GLOBAL EMPLOYEE BANKING

Eastwood House, Glebe Road, Chelmsford, Essex, CM1 1RS, UK Contact: Craig Boe, Manager, NatWest Global Employee Banking Telephone: +44 (0)1245 355628 Email: craig.boe@natwestglobal.com Website: www.natwestglobal.com NatWest Global Employee Banking is a specialised department within NatWest who work with Company HR functions/ Relocation agencies to offer a streamlined account opening service for relocating employees. One of the main benefits of the service is that employees can apply for their account before they arrive in the UK so their account is ready when they arrive. This may also help if they want to transfer funds to their new account in preparation for relocation.

INSURANCE AND FINANCIAL SERVICES ZURICH CORPORATE LIFE & PENSIONS Tricentre One, New Bridge Square, Swindon SN1 1HN Contact: Adele Cox

Telephone: +44 (0) 118 952 4253 Fax: + 44 (0) 118 952 4300 E-mail: adele.cox@zurich.com Website: www.zurichinternational.com Zurich International Life is a global provider of life insurance, investment and protection products. Our corporate range offers flexible, portable solutions, designed to suit multinational organisations with an internationally mobile workforce. The International pension plan offers a cost effective, bundled retirement benefits solution comprising of trust services, investment funds and online administration.

International group protection is designed to protect an employers’ most important asset – their employees – and offers a range of life and disability protection.

With a local presence in key global business hubs and over 20 years experience of implementing and administering plans world wide, we’ve developed our knowledge and understanding of key markets to meet the needs of our customers and business partners.

INTERNATIONAL HR CONSULTANTS DELOITTE LLP

Stonecutter Court, 1 Stonecutter Street, London, EC4A 4TR Contact: Robert Hodkinson, Partner Telephone: +44 (0) 20 7007 1832 Fax: +44 (0) 20 7007 1060 E-mail: rhodkinson@deloitte.co.uk Website: www.deloitte.co.uk Whether you are creating your first international mobility programme for employees or addressing fundamental changes to an existing programme, our International Human Resources team can help. Deloitte provides consulting support that has an appreciation for each company’s size, background and unique cultural environment, aligning your international programme goals with corporate business strategies. Our consultants have developed deep expertise in many fields based on first hand experience with many of the world’s leading organisations: international assignment policy and process design, benchmarking, service delivery modelling, improving vendor management and helping our clients become more compliant and their administration more cost-effective.

INTERNATIONAL MOVING DT MOVING LTD

49 Wates Way, Mitcham, Greater London, CR4 4HR Contact: Tim Daniells Telephone: +44 (0) 20 7622 4393 Fax: +44 (0) 20 7720 3897 Email: london@dtmoving.com Website: www.dtmoving.com DT Moving is a world leading international moving company. Founded in 1870, we serve corporate customers all over the globe with an award-winning* move management and destination service programme. Through our London and Paris headquarters and worldwide

network of global partners, we help clients achieve their workforce mobility goals.

Every employee we relocate receives a dedicated DT Moving team member as a central point of coordination, support and advice to ensure every part of their relocation runs smoothly.

Our goal is your complete satisfaction, and with a 97% customer rating for 2016, we offer unrivalled quality at competitive rates. *Awarded 11 global relocation awards since 2010.

RELOCATION CARTUS

Frankland Road, Blagrove, Swindon, SN5 8RS Contact: Nigel Passingham, Vice President, Strategic Business Solutions EMEA & APAC Telephone: +44 1793 756065 Email: Nigel.Passingham@Cartus.com Website: www.cartus.com Twitter: twitter.com/cartus LinkedIn: www.linkedin.com/company/cartus For more than 60 years, Cartus has provided trusted guidance to organisations of all types and sizes that require global relocation solutions.

Cartus serves more than half of the Fortune 50 and in 2015 moved employees into and out of 185 countries, providing the full spectrum of relocation services, including language and intercultural training. Cartus is part of Realogy Holdings Corp. (NYSE: RLGY), a global leader in real estate franchising and provider of real estate brokerage, relocation and settlement services. To find out how our greater experience, reach, and hands-on guidance can help your company, visit www.cartus.com or read our blog www.cartus.com/en/blog/ for more information.

SANTA FE RELOCATION SERVICES

Central Way, Park Royal, London, NW10 7XW Contact: Richard Lucas Telephone: +44 (0) 203 691 8302 Mobile: + 44 (0)7833 451 259 email: Richard.Lucas@SantaFeRelo.com website: www.santaferelo.com Thinking Relocation?

Think Santa Fe Relocation Services.

Santa Fe Relocation Services provides the full range of relocation services to support businesses with international interests from diverse industry sectors. Santa Fe is conveniently located across six continents and offers holistic relocation solutions to support businesses and relocating employees.

Last year, we handled 120,000 relocations globally.

Our core services are Immigration, Moving, Relocation, Real Estate and Records Management.

We make it easy.

RELOCATION ASSOCIATIONS ASSOCIATION OF RELOCATION PROFESSIONALS (ARP)

9&10 Diss Business Centre, Dark Lane, Diss, Norfolk, IP21 4ND Contact: Tad Zurlinden Telephone: +44 (0)1379 651 671 Fax: +44 (0)1379 641 940 Email: enquiries@arp-relocation.com Website: www.arp-relocation.com The ARP is the professional association for

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the relocation industry in the UK. The ARP’s activities include seminars throughout the year, an annual conference, the publication of an annual Directory of Members and a website, which is updated regularly.

THE EUROPEAN RELOCATION ASSOCIATION (EuRA)

9&10 Diss Business Centre, Dark Lane, Diss, Norfolk, IP21 4ND Telephone +44 (0)1379 651 671 Fax: +44(0)1379 641 940 E-mail: enquiries@eura-relocation.com Website: www.eura-relocation.com EuRA is an industry body for Relocation Professionals in both Europe and Worldwide.

EuRa have launched The EuRA Quality Seal, the world’s first accreditation programme for relocation providers. This pioneering initiative provides a straight forward, cost effective audit to reflect your company’s excellence in providing relocation services.

SCHOOLS

ISL Group of Schools ISL Surrey

Old Woking Road, Woking, Surrey GU22 8HY Contact: Marc Carter Telephone: +44 (0)1483 750 409

ISL London

139 Gunnersbury Avenue, London W3 8LG Contact: Yoel Gordon Telephone: +44 (0)20 8992 5823

ISL Qatar

PO Box 18511, North Duhail, Qatar Contact: Nivin El Aawar Telephone: +974 4433 8600 Website: www.islschools.org Email: hmulkey@islschools.org The International School of London (ISL) Group has schools in London, Surrey, and Qatar. The internationally recognised primary and secondary curricula have embedded language programmes (mother tongue, English as an Additional Language, and second language) which continue throughout the student’s stay in the school. A team of experienced and qualified teachers and administrators provides every student with the opportunity to grow and learn in an environment that respects diversity and promotes identity, understanding, and a passion for learning.

MARYMOUNT INTERNATIONAL SCHOOL LONDON

George Road, Kingston upon Thames, KT2 7PE Contact: Mrs Cheryl Eysele Telephone: +44 (0)20 8949 0571 Email: admissions@marymountlondon.com Website: www.marymountlondon.com With an outstanding record teaching the respected International Baccalaureate for over 30 years, Marymount offers day and boarding to girls aged 11-18 who gain places at the world’s best universities.

Consistently ranked within the top 5% globally, Marymount also offers the pre-IB Middle Years Programme; this stretches students without the need for incessant testing. The nurturing, supportive Catholic Community welcomes all faiths and achieves a shared purpose for girls of more than 40 nationalities.

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TASIS THE AMERICAN SCHOOL IN ENGLAND

Coldharbour Lane, Thorpe, Surrey, TW20 8TE Contact: Karen House Telephone: +44 (0)1932 582316 Email: ukadmissions@tasisengland.org Website: www.tasisengland.org TASIS England offers the International Baccalaureate Diploma, an American college preparatory curriculum, and AP courses to its diverse community of coed day (3-18) and boarding (14-18) students from 50 nations. The excellent academic programme, including ESL, is taught in small classes, allowing the individualised attention needed to encourage every student to reach their potential.

Outstanding opportunities in art, drama, music, and athletics provide a balanced education.

Extensive summer opportunities are also offered. Located close to London on a beautiful and historic 46-acre estate.

SERVICED APARTMENTS THE ASSOCIATION OF SERVICED APARTMENT PROVIDERS (ASAP)

Suite 3, The Business Centre, Innsworth Tech Park, Innsworth Lane, Gloucestershire GL3 1DL Contact: ASAP Office Telephone: +44 (0)1452 730452 Email: admin@theasap.org.uk Website: www.theasap.org.uk Twitter: @ASAPThe LinkedIn: The Association of Serviced Apartment Providers ASAP is in the industry association representing, promoting and improving the serviced apartment sector. Our 124 members including serviced apartment operators and agents represent in excess of 25,000 serviced apartments in the UK, Europe, USA and Canada.

When booking your serviced apartment, look for our Quality Accreditation kitemark which confirms the operator is fully compliant with all the core legal, health and safety practices and means you can book with confidence.

BBF

Avenue de Roodebeek 78 box 9, Brussels Contact: Bernard Kerkhof Telephone: +32 (0)2 705 05 21 Email: info@bbf.be Website: www.bbf.be Twitter: @BBFBelgium LinkedIn: www.linkedin.com/company/bbfserviced-apartments BBF is specialised in the rental of serviced apartments since 1992.

Today we are leader in the market of temporary housing with a portfolio of over 1500 apartments in Brussels. We also offer corporate housing in other cities such as Budapest.

Our flexible rental packages include excellent solutions for short and long term accommodation for personal and business travellers. For long term accommodation, minimum one year, we can offer unfurnished apartments where one has the choice to install their own furniture.

TAXATION BDO LLP

55 Baker Street, London, W1U 7EU Contact: Andrew Bailey Telephone: 020 7893 2946 Fax: 020 7893 2418 E-mail: andrew.bailey@bdo.co.uk Website: www.bdo.co.uk BDO LLP is the award-winning, UK Member Firm of BDO International, the world's fifth largest accountancy network with more than 600 offices in 100 countries.

We have a partner-led approach, which delivers the highest quality of service by using short, functional chains of communication to aid decision-making. Clients benefit from our fresh thinking, constructive challenge and practical understanding of the issues they face. Developing strong, personal relationships with our clients is at the forefront of our service approach.

Tax advice is just one of our award-winning services and our expatriate team give practical and direct advice, delivering solutions which suit your needs.

GLOBAL TAX NETWORK LTD

Norwich House, 14-15 North Street, Guildford, GU1 4AF Contact: Richard Watts-Joyce CTA Telephone: +44(0)20 7100 2126 Email: help@globaltaxnetwork.co.uk Website: www.GTN.uk Twitter: @GTN_Tax LinkedIn: www.linkedin.com/company/globaltax-network Global Tax Network Ltd is the UK member of Global Tax Network (GTN), an international affiliation of professional firms in over 100 countries specialising in global mobility tax consulting. We provide assistance to employers with the tax administration of international assignment programs and private client services to high net worth individuals, non-domiciles, professional sportspersons and entertainers.

Our consultants include members of the Association of Taxation Technicians, Chartered Institute of Taxation, and US Enrolled Agents.

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