Commentary: How to craft benefits packages for globe-trotting employees

Increasingly, corporate management structures and areas of accountability no longer follow the strict political boundaries that define countries.

As organizational lines blur, so do the lines that define how employee populations are managed. Mobile employees can land anywhere in the world in the pursuit of new deposits or joint ventures, and employment arrangements need to be flexible so that national boundaries do not create barriers to the speedy and seamless transfer of scarce skills between countries.

Unfortunately, domestic benefit laws and practices have not followed the advances in organization structures and continue to be country specific, creating challenges for mobile employees.

As a further complication, the supply of employees willing to relocate internationally is diminishing as baby boomers leave the workplace. The younger cohort replacing them are less enthusiastic about working abroad. Many have travelled widely as part of their education, and unlike their parents, they are likely to leave far less to trust when it comes to details about their employment contract and benefits arrangements.

Mining companies already have to work hard to attract scarce skills. When these are required for international assignments, miners will also need to ensure that robust benefit and safety net arrangements are in place, that plans are globally competitive (as opposed to nationally or regionally) and that lifestyle-oriented features are in place in addition to catering to medical facility visits.

Despite the differences in taxation and diminishing cost of living between countries, government-provided benefits and company-provided supplements are different when compared country by country.

There are different ways to provide employee benefits for mobile employees, and the approach that meets the needs of your international team will be determined by your talent-management strategy, cultural values and the intended jurisdictions.

If you are sending employees to locations where you do not have a local business or employees with local-benefit arrangements, the simplest option is to buy coverage through an international plan for short-term benefits and retain the employee in home-country plans for long-term coverage. Home country plans will generally be inadequate in the foreign location for medical and dental claims incurred in the host country.

Further, in the serious event of disablement or death, most employees (and/or their families) will return to their home country. Having the appropriate plan providing these coverages avoids home and host tax and banking challenges.

Medical coverage is the most important, most frequently used and often most challenging plan to replicate. Most inexperienced expatriates will want a plan that replicates their home country plan, often even if the host country is better. This can be a challenge for the employer who, looking to minimize costs, may want to use the local government plan in countries where services are deemed adequate or superior to the home location.

Make sure that the plan meets the expectations of the employee and their family, and that the insurance provider administers the plan to your exact specifications.

Be wary of international providers that cannot refer you to other clients in your base location. This usually means that they think they can follow a cookie-cutter approach in a new location, which often leads to unforeseen consequences with taxation, claims administration and banking.

In our experience, no two companies want their benefit plans to work in the same way — but all insurers want their administrative processes to be as standard as possible. This is where the most due diligence should be spent, and an expert’s opinion sought.

Ensure that there is a seamless process for submitting and administering claims (to the two systems if that is what you select), that there are no unforeseen banking charges and that an efficient protocol is in place for dealing with set-offs and medical evacuations. Most insurers, even the largest and most international, will promise a lot and fall short when it comes to tailoring plans to their clients’ needs.

In recent years, more lifestyle features have appeared in international medical plans that you will need to consider in determining whether to include: medical tourism, i.e., undergoing elective treatment in a third country, which can reduce wait times for treatment and/or recovery; help lines with medical advice in the first language of the employee; an employee assistance plan designed for the international family; non-traditional medical benefits, such as massage and naturopathy; and legal and financial services for employees in their new jurisdiction.

As the supply of employees willing to relocate diminishes and employers work harder to persuade their best people to relocate, these features will help you stand out and differentiate your employment brand.

It will also be important to understand how the host country’s social security system works and the relationship between contributions and benefits in both the home and host locations. Many countries have bilateral agreements that facilitate integration between the country’s plans. We have touched on medical-plan integration but this could also affect pension accrual, depending on whether the employee plans to return home for retirement or retire elsewhere. Understanding how reciprocity works and whether contributions result in an accrued benefit is critical.

Other benefits commonly provided by government agencies (or legally mandated by governments) — including workers’ compensation, unemployment and maternity — will also work differ
ently, and their impact in providing important security will need to be explored.

If you have benefit plans operating in the host country and you intend to enroll transferring employees, ensure that prior service with the company can be recognized to meet any waiting or vesting periods, and that pre-existing condition limitations can be waived upon an internal transfer.

Income tax impact should also be examined. Most savings or pension plans that have a tax advantage in one country will not have the same advantage in another country. Employee contributions may not be deductible, and employer contributions and investment returns may be taxable. Using an insurer to cover risks in a country where the insurer is not licensed to operate may also render medical, life and disability benefits fully taxable.

Yours may be a junior mining company with no expatriate employees, and it would be easy to assume that these concerns do not apply. But if you have a project abroad and people are travelling from their work location to the site, increased medical, disability and other risks exist that you need to mitigate.

Many new sites are in remote and often politically unstable locations, so additional risks such as medical and political evacuation, kidnap and ransom also need to be considered. Also make sure that the evacuation policy doesn’t require a runway at the site (unless you already have a jet aircraft-enabled one).

And don’t forget your directors. If they have meetings at site or visit international shareholders, they should also be included under these provisions.

As the need for globally mobile employees increases and candidates diminish, employers will need to provide the right benefit plans to attract, mobilize and reward the talent needed to grow their business.

While strides have been made in free trade and capital flow across borders, much remains to be done to integrate employee benefit arrangements.

— Paul Pittman is the senior partner and founder of The Human Well (www.thehumanwell.com), a collaborative HR consulting practice located in Oakville, Ont., with clients globally. He previously held executive HR positions with Alcan, RJR Nabisco/Japan Tobacco, Laidlaw and Massey-Ferguson, and was the Canadian HR practice leader for Arthur Andersen. He has lived in the U.K., Canada and Switzerland, and managed pension, benefit and compensation plans globally.