Negotiating relocation packages involves understanding what your needs are and how they can be incorporated into a legally binding agreement that is enforceable in your host country. There are a number of different areas you should take into consideration and in this section we take a look at them and consider how they should be approached when negotiating relocation packages.
1) Conditions of employment and renewal of contract
In addition to detailing how long an employees expatriate contract will be valid for (see contract duration and termination notice), the contract should also contain details of whether or not the employment constitutes a break in employment from the employer. If you have been working for a corporation for a number of years already, you should ensure that your contract notes the fact that the assignment abroad does not constitute a break in employment. This will ensure that you remain eligible for any benefits or rights that you should be entitled to as part of your employment with that company.
The majority of expatriate contracts are usually defined to cover a period of time of up to five years as, after this, the law in many countries may entail that the employee becomes liable to the tax obligations of the host country. In contracts such as these, there may be an option to renew the agreement on a rolling basis.
*Tips for contract negotiation*
- Ensure that you know how long your contract will be valid for and what will happen after the contract end date has passed.
- When negotiating relocation packages ensure the contract contains details of what your employment status will be once the contract has ended and whether the company will have any post assignment obligations.
- If the contract includes a provision for the company to reassign you after the contract duration entail that the need for them to do so under economic terms that offer you an equivalent standard of living in included.
2) Roles and responsibilities
Any expatriate contract should clearly detail the employee’s job title, reporting structure and a description of the roles and responsibilities expected of that employee. The place of employment should also be clearly detailed for legal purposes.
Any expatriate contracts that are put in place in a country where the official language in use is different from the home country language should always be translated into the host country’s language. This is important in the event that the employee needs to access legal assistance in the host country and also ensures that the contract is valid in that jurisdiction.
4) Compensation and Benefits
i) Salary and Tax Liability
When negotiating relocation packages you should ensure that the final contract contains specific details of how the employee will be compensated and the currency in which any monies will be paid. In ensuring that the terms you are offered are suitable to you, you should consider the following factors:
- Cost of living in the new country: When negotiating the terms of your expatriate contract you need to ensure that you take into consideration the cost of living in the host country. See “Cost of Living Allowance” for further information.
- Tax requirements: Expats should ensure that they take into consideration the potential tax implications of working abroad. In some countries, the US for example, permanent residents are subject to tax even when they are living and working abroad. If this applies to you, you should try and negotiate payment on the payroll of that country in order to avoid double taxation. Alternatively you will wish to ensure that any payment you are offered covers the additional tax expenses you will face.
- Currency exposure: If you are to be paid in an alternative currency than that of your home country, or paid in your home country currency whilst living in abroad, you should be aware of the potential negative impacts of currency exposure. You should do through research on historical trends between the two currencies and ensure that you fully understand where shortfalls may occur. You may wish to engage the assistance of a financial advisor in doing this.
Once you have a good idea of the financial implications you should use the information to negotiate a compensation package that can adequately cover the expenses of living in the host country.
*Tips for contract negotiation*
The key word when negotiating relocation packages is “equalization”. You should look to ensure that the payment and compensation you are offered ensures that you are financially the same, or better off, than you were in your home country.
Benefits are of upmost importance when negotiating expat relocation packages. There are a number of expat perks and benefits that are commonly available in addition to any salary and living allowance offered:
Accommodation Allowance: The provision of an allowance for housing in expat relocation packages really does vary from company to company. In order to understand if you will need such an allowance you should thoroughly research the property market in the country to which you are considering relocating. Don’t automatically assume that the proportion you pay of your existing salary will be sufficient to rent or purchase accommodation of a similar standard in a destination overseas. Our relocation guide will provide you with a thorough insight into the cost of property in your chosen destination and such information can help you to make a decision regarding what, if any, housing allowance will be appropriate to your situation.
When you are relocated abroad with a job offer it is usual for companies to offer expats temporary accommodation from which they can base themselves whilst they find somewhere suitable to live.
Car and Driver: Depending upon where you are located to you may need the use of a car and/or driver. If you are relocating to an area that is potentially unsafe or remote then you should discuss the potential for such a benefit with your employer.
Education: The majority of expat destinations do not offer suitable public education systems that are available to temporary residents. The cost of private tuition can be very high and will constitute a cost that expats potentially wouldn’t have previously had in their lives at home. If you have children you should always ensure that their education would be paid for or that your salary reflects the additional costs you will incur educating your children abroad.
In addition to tuition fees many private schools request a retainer fee or debenture that is payable once your child is offered a place in school. Such a fee will not be refunded until they leave. Debentures are often significant values of money and you should ensure that you would be in a position to lose the use of such a large value of money throughout your child’s education. Many employers may loan the debenture to you. The education sections in the city guides provide information about school fees and the values of debentures.
Flights: A one-way ticket to the new work destination is a bare minimum and some companies will offer annual flights home in addition to this. It really does depend upon the hiring company.
Hardship Allowance: This is particularly common in destinations that are not instantly deemed to be desirable places for expats to live, perhaps because they are unsafe and pose a personal threat, or because the quality of life available will be very low. Such an allowance would be paid in addition to the base salary.
Healthcare: Full medical insurance will be a prerequisite in many expat destinations and it is very common for hiring companies to provide this to any employees who are sent overseas for work. If you are not offered private healthcare you should ensure that your salary would be enough to cover the cost of insuring yourself. In order to establish what healthcare provisions are available in your chosen destination see the international relocation guides, which provide comprehensive information about what type of treatments are available at what cost.
*Tips for contract negotiation*
The most effective method when negotiating relocation packages is to ensure that you choose your battles carefully. Consider all the potential perks that could be available and prioritize them according to which will make the most impact upon your personal life in the country to which you are relocating. You may then need to be prepared to concede some benefits in order to secure those that are of the most importance to you.