Whether you have employees permanently based overseas or you manage temporary assignees, it is important that you have the proper processes and procedures in place to protect both your organization and your people, according to John Cusack of Ceridian..

In today’s working world companies realise that global workforce mobility is a rising but essential cost of doing business. 62% of respondents to a recent survey by Mercer HR Consulting said that more than half of their company’s top executives have been on overseas assignments.

Companies sending employees abroad need to be clear on how to handle the home and host country payroll.

Once you have defined organizational policies and identified suitability of a candidate for international assignment, you must consider the regulations your employee will need to follow in respect of immigration, employment and healthcare. It is also important to be aware of the employee’s emotional needs. Implementing a global employee assistance program is an easy and cost-effective way of ensuring employees has access to counselling and advice before, during and after any overseas work.

It is also important to think through the re-partriation process ahead of time. International assignees and their families can experience reverse shock culture on return to their country of origin. You can minimize the shock of re-entry with clear communication before the employee returns by discussing the role to which they will return. If all goes as expected by both parties, the assignee needs to have a future career path clearly mapped out. An end goal is key for personal motivation and it is important that your line managers are briefed accordingly.

Complexities of international payroll

Payroll calculations for international employees can be handled in different ways.

The two most common approaches are:

It can be beneficial to have a single payroll provider that pays employees across all countries, so they can be paid in their chosen currency, or have their pay split between home and local accounts. Having a single payroll provider can also support consistency and control for the various policies and regulations relevant to the different assignees.

Other factors to be considered include tax – whether it is full liability (the international assignees pay all the host country tax), equalization (the assignee is tax-equalized) or protection (assignee is tax-protected).

Local and national regulations including work permits, residency rules and tax relief, social security agreements and the length of the assignment or follow-up assignments, are other factors to consider. Rules and regulations can vary widely from country to country.

The treatment of bonuses, pensions and benefits-in-kind should be clarified before the assignment takes place. Because an international assignee can have a tax liability in the host country as well as a social security liability in their home country, it may be necessary to operate two payrolls.

Often the host country payroll will be a ‘shadow’ payroll, operating only as a method of calculating and paying liabilities. However, some employers opt to have employees paid in both locations.

An international assignment is a significant cost for employers and a stressful time for the employee and their family. Payroll needs to ensure managers have accurate forecast costs to make their decisions. The comfort of proper support systems adds peace of mind to assignees and helps them concentrate on the job at hand while on international assignment.