| International
Employment |
|
| When expatriates are offered
international employment in Asia there are challenged to research
conditions of international employment contracts and
packages. Remuneration and benefits of international employment
vary considerably from home packages and need to be carefully
studied and negotiated to maximize the results of an international
assignment. |
 |
|
| |
The process, more often than not, is of
a highly private nature and this eliminates advice from colleagues
and other people close to the company who should not know of
your international employment in advance. Additional pressure
results from a tight time frame, as decisions often
have to
be made
quickly. |
|
|
| |
It is not uncommon for an expatriate to
be sent to the new country before his work contract is finalized
while the family is still staying at home. You have to take
quite a risk! |
|
|
| top |
|
|
|
|
|
Contract Assistant |
| |
The Contract
Assistant provides you with a checklist and an overview
of the terms usually used in an overseas assignment. Guidelines
are offered and you are able to use this table during your negotiations
and note down the results. Print out your copy! |
|
|
| top |
|
|
|
|
| Soul
Searching |
| |
You should try to gauge your value to the
company in the first place and find out about in-house competitors
for the job abroad. Chances are high that there is another colleague
keen to take up the position. Especially in international companies
and institutions you are expected to work with a global perspective
rather than traditionally in a national or purely domestic environment.
In other words: the boss expects you to take up the assignment
- or would not have suggested you! |
|
|
| |
Search your soul if you are willing to go
abroad not just for the money but also for the challenges in
your professional and private life. The answer will imply a
route to follow and, more importantly, the decision which sacrifices
you are willing to make. |
|
|
| |
In any case, you have to approach the contract
negotiations by finding a balance between |
| |
 |
Your career
expectations and career risks. |
|
Your family's/partner's
expectations and the benefits offered. |
|
Your financial
situation at home and in the targeted host country. |
|
|
|
| top |
|
|
|
|
| |
| •
Income Comparison Assistant |
|
|
|
The Income
Comparison Assistant will assist you to determine
your financial status in the host country in comparison
to what you earn at the moment. In the new window choose
View and click full view or export to
Excel for optimum use of the table. |
|
|
|
Before you fill in your own figures
see our Disclaimer.
Please note that the computed results are very
rough estimates only and enterAsia Information Services
Pte Ltd does not guarantee the accuracy of the information
appearing. |
|
|
|
|
| top |
|
|
|
|
|
|
Company Policy |
| |
Some companies do not have a
standard policy for sending employees abroad. In this case,
you may negotiate what is important and affordable. Always create
a win-win situation for both parties, as companies need to approach
expatriate cost management with a clear cost-benefit analysis
in mind. |
|
|
| |
There is a growing
trend of tying salaries of expatriates to the levels of the
host country and not anymore guaranteeing the same standard
of living at destination as at home in order to integrate expatriates
into the local salary structure. As long as the basic needs
as security, medical care, education of children and adequate
housing are not compromised, many expatriates have accepted
those contracts in view of career opportunities or local family
ties such as a mixed marriage. |
|
|
| top |
|
|
|
|
|
New Compensation Trends |
| |
New developments and rapidly changing business
requirements within corporations have changed the expatriate
overseas remuneration package. Traditionally this used to be
very generous taking into account incentives, hardships and
lack of local expertise. The following three trends are emerging: |
|
|
| |
|
|
|
| top |
|
|
|
|
|
Balance Sheet Approach |
| |
Many companies determine your remuneration
package by applying the balance sheet approach to find a balance
between your home-country income and your income abroad. |
|
|
| |
Basically you stay in the home country salary
structure and receive allowances to meet any differences in
expenses that will occur in the host country (balance sheet
allowances). |
|
|
| |
Thus your home country net income is grossed
up in consideration of host country allowances, taxation and
social security contributions and topped up with incentive allowances,
cost of living allowances and housing cost contributions. |
|
|
| |
In most countries the housing allowance,
car, home leave flights and education expenses are considered
as benefits in kind and need to be grossed up if the company
is prepared to pay the taxes for these benefits in kind. |
|
|
| |
| •
Balance
Sheet Example and Assistant |
|
Note:
the figures below are purely
exemplary to clarify the calculation process |
|
|
| |
| Fig. |
Status |
Home Country |
US$ |
Fig. |
Host Country |
US$ |
| 1 |
|
Gross remuneration:
Salary + bonus |
150,000 |
1 |
Gross Remuneration:
Salary + Bonus |
150,000 |
| 2 |
minus
|
Income
tax 27% |
40,000
|
2 |
Income
Tax 27% |
40,000
|
| 3 |
minus |
Social
Security Contributions 11% |
16,000 |
3 |
Social
Security Contributions 11% |
16,000 |
| 4 |
minus |
Housing
Cost (15% of fig. 1) |
23,000 |
4 |
Housing
Cost (15% of fig. 1) |
23,000 |
| 5 |
|
Net Income
Home Country |
71,000 |
5 |
Basic Net
Income Host Country |
71,000 |
| 6 |
plus
|
|
|
6 |
Cost
of Living Allowance 10% of fig. 5 |
7,000
|
| 7 |
plus
|
|
|
7 |
Incentive
Allowances 25% of fig. 1 minus fig. 2 |
28,000 |
| 8 |
plus
|
|
|
8 |
Housing
cost contribution as in fig. 4 (15% of fig. 1) |
23,000
|
| 9 |
|
|
|
9 |
Net Income
Host Country |
129,000 |
| 10 |
|
|
|
10 |
Social Security
Contributions Host Country 12% of fig. 1+6+7+8 |
25,000 |
| 11 |
|
|
|
11 |
Income tax
Host Country 26% |
54,000 |
| 12 |
Total |
Gross Income
Home Country |
150,000 |
12 |
Gross Income
Host country |
208,000 |
|
|
|
| |
Before you
fill in your own figures into the Balance
Sheet Assistant and compute your gross and
net income in the host country. In the new window click
full view or export to Excel for optimum use
of the table . |
|
|
| |
Please note that the computed
results are very rough estimates only and enterAsia
Information Services Pte Ltd does not guarantee the accuracy
of the information appearing. see our Disclaimer |
|
|
| top |
|
|
|
|
|
|
Compensation Overview |
| |
The exp@ navigator has compiled a list of
terms used in negotiations between the future expatriate and
his/her employer. This is not an "add to the contract list"
but rather a compendium to walk you through the process and
the above mentioned "cafeteria style menu" in search of what
might be most important to you. |
|
|
|
Your remuneration package may include several
of the following terms and conditions: |
|
|
| |
|
|
|
|
|
| |
| •
Incentive Allowances |
|
|
|
|
| top |
|
|
|
|
|
| |
| •
Relocation Costs On Transition (In and Out) |
|
|
Look & See Trip
expenses |
|
Temporary living
costs |
|
Home leaving costs |
|
Renting a home
|
|
Owning a home |
| |
• |
Home
owner selling his house |
| |
• |
Home owner
renting his house |
| |
• |
Home remains vacant during
assignment |
|
Home
cars |
|
Pet
transfer costs |
|
Shipping
and storage |
|
Transfer |
|
Home
searching costs |
|
Settling-in
cost |
|
Cultural
and language adjustment |
|
|
|
| top |
|
|
|
|
|
| |
| •
General Living Cost |
|
|
Housing
allowance |
|
Servant's
allowance |
|
Car
and driver allowance |
|
Security
expenses |
|
Club
memberships |
|
Education
expenses |
|
Spouse/double
career payments |
|
|
|
| top |
|
|
|
|
|
| |
| •
Medical/Benefit Cost |
|
|
Medical
and family emergencies |
|
Your
retirement plans |
|
|
|
| top |
|
|
|
|
|
| |
| •
Other Considerations |
|
|
Holidays
and working hours |
|
The
length of your assignment |
|
Involuntary
termination |
|
Home
leave |
|
Dismissal |
|
Resignation
|
|
|
|
| top |
|
|
|
|
|
| |
| |
|
Base pay depends on the pay
location, which can be either the home country or host
country and is often predetermined by the company's compensation
system used for expatriate assignments. |
|
|
| |
| Host
Country Based |
| You will get the
same salary as the equivalent employee in the host
country with additional benefits to be negotiated.
Popular with lower management level employees. |
|
| top |
|
| Home
Country Based |
| Your position abroad
is seen as if performed in your home country. You
maintain your salary structure. Adjustments are
made for additional duties and your reentry status
is verified if duties change once you repatriate.
Popular with transfers of managers of up to 5 years.
Generally, double income with contracts in each
country are becoming less popular due to national
tax implications and complicated administration
procedures. |
|
| top |
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| •
Discretionary Payments |
|
Discretionary payments may be made at home as to enable
you to meet your obligations towards social security,
mortgage, financial savings, student's allowances, etc.
in your own currency rather than having to exchange and
transfer money from your host country. |
|
|
| top |
|
|
|
|
|
| |
| |
|
As
taxes have to be either paid in the home or host countries
or even both, this may be a heavy burden to take on by
the employee, the employer, or both. It is very important
to be clear who is taking which share of this burden.
|
|
|
| |
It is advisable to consult
tax consultants at home and at the foreign location rather
than enter into a laissez-faire policy. Responsibilities
should be shared. |
|
|
| |
Combinations of the following
three methods are possible using different choices on
company, personal, federal and state income. |
|
|
| |
| One-Time
Tax Adjustment |
| The
employee is given an annual lump sum and taxes are
his/her own responsibility. |
|
| top |
|
| Tax
Protection |
| Your position abroad
is seen as if performed in your home country. You
maintain your salary structure. Adjustments are
made for additional duties and your reentry status
is verified if duties change once you repatriate.
Popular with transfers of managers of up to 5 years.
Generally, double income with contracts in each
country are becoming less popular due to national
tax implications and complicated administration
procedures. |
|
| top |
|
| Tax
Equalization |
| The employee contributes
an amount equal to the home taxes and will neither
gain nor loose in tax costs. |
|
| Publication: |
The
Expat's Guide to US Taxes - Hands-on Help
for Americans Overseas
Order: http://www.aca.ch
(American Citizen Abroad) |
| The
British Expat order at http://www.wtfry.com (The
Fry Group) |
|
|
| Check bilateral taxation
agreements of your host country! |
|
| |
|
| back
to Tax Reimbursements |
| top |
|
|
|
|
|
|
| |
|
|
|
|
|
| |
| |
|
There are
many ways to persuade a prospective expatriate and his
family to leave the everyday security and comfort of home
and part with close relatives and friends in exchange
for a life in a country they do not know. Basically incentive
allowances comprise: |
|
|
| |
|
Hardship
and danger allowances |
|
Mobility
and foreign service premiums |
|
Relocation allowances. |
|
|
|
| |
| Hardship,
Danger (Area Allowance) |
| Are
based on a system determined e.g. by the US Department
of State with consideration of seven hardship conditions:
isolation, education, community, facilities, food,
importation, altitude, climate, housing, recreation,
natural hazards, sanitation and disease, crime and
harassment, medical and hospital facilities and
political violence. |
|
| By US regulations,
it can be anything between 15% and 25 % of your
base pay. Some companies use the term area allowance
to represent both allowances combined. |
|
| Increasingly, in
Asian countries, the quality of life is as good
and as safe as at home, so hardship and danger allowances
| | |
