Expat Compensation Package

  What's inside an International Compensation Package?

The content of an expatriate compensation package varies from one company to the next, depending on whether there are a larger or smaller number of expatriates, and whether the company has had such a package in place for a longer or shorter period of time. For instance, a large international group who has sent staff abroad for many years will have a clearly defined policy in line with the type of international mobility (duration of assignment, geographical area, candidate profile, family circumstances, etc.) Depending on the context, future expatriates may be more or less demanding, whilst considering the opportunities for progress that mobility may offer.

1 – Compensation during mobility

The compensation paid during expatriation is calculated on the basis of the reference salary in the home country. This corresponds to the compensation prior to leaving for a position of a level equivalent to that offered in the host country. After deduction of taxes and social security contributions, the net salary received is divided between the salary typically dedicated for use as spendable income and the complement which will, itself, be saved. The spendable income is adjusted by a cost of living allowance, allowing for a continued level of spending power whilst abroad.

Depending on the company’s policy, other allowances may also be paid such as housing allowance, mobility premium for the candidate, hardship allowance for “difficult” countries or a settling in allowance.

2 – Social coverage

In the framework of secondment, social security contributions in the home country will be maintained and the employee will continue to benefit from these during the term of mobility. Where secondment is not possible, it is important to seek information as to the level of social cover provided in the host country. The employer may propose that a voluntary/private special cover from the home country be maintained.

3 – Benefits in kind

Benefits in kind take due account of family circumstances and offer financial support from the tie of departure, in situ and upon return. Depending on the policies for which provision is made by the employer, removal costs, education expenses for children and transportation may also be covered. A pre-assignment trip may also be offered to the employee and his/her family so as to familiarise themselves with their new surroundings.

4 – Provider costs

A range of additional services may be offered to the employee. Often outsourced, immigration services, settling in assistance, tax formalities, intercultural training and language classes can represent significant fees for the employer.

It is recommended to include all costs so as to estimate the overall budget for international mobility of employees.