International HR Adviser Autumn 2016 by International HR Adviser

AUTUMN 2016

ISSUE 67

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International HR Adviser The Leading Magazine For International HR Professionals Worldwide

Features Include: Managing The Risks And Challenges Of Brexit Relocations Terrorism And The Leadership Role Of HR Conflict Management: Essential Skills For Expatriate Managers Global Workforce Agility: Analytics Driven Talent Sourcing And Deployment Tax: Localisation - A Potential Lower Cost Alternative To Expatriate Assignments Key Challenges In HR In Europe â&#x20AC;&#x201C; What Are Yours And How Do You Tackle Them? The Impact Of HR Trends On Mobility, Talent & Reward Advisory Panel for this issue:

Expatriate Adviser Summer

Autumn International HR Adviser

contents

In This Issue 2

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Terrorism And The Leadership Role of HR Stuart Birch, Griffin Birch

Conflict Management: Essential Skills For Expatriate Managers Cathy Wellings, The London School of International Communication

International HR Strategy: Global Workforce Agility: Analytics Driven Talent Sourcing And Deployment Cassandra Liu & Robin Brown, Deloitte LLP

Global Taxation Update Andrew Bailey, BDO LLP

Tax: Localisation – A Potential Lower Cost Alternative To Expatriate Assignments Andrew Bailey, BDO LLP

HR Technology: Key Challenges In HR In Europe - What Are Yours And How Do You Tackle Them? Fosway Group/HRN

The Impact Of HR Trends On Mobility, Talent And Reward Andrew Robb, Rumi Das & Beth Warner, Deloitte LLP

Private Banking: The Financial Challenges Facing Senior Executives Working Abroad Tom Sykes, Investec Private Bank

Hardship Premiums: Why There Is Something Fundamentally Wrong With Them ... Chris Debner, Chris Debner LLC – Strategic Global Mobility Advisory

Brexit Relocations: Managing The Risks and Challenges of Brexit Relocations: An Imperative Affecting Mobility Functions Around The World Mark Rising, Santa Fe

Serviced Apartments: Celebrating Milestones, Respecting The Past And Recognising The Future Of The Serviced Apartment Sector Jo Layton & Charlie McCrow, The Apartment Service

Global Mobility Insight: Does Diversity And Inclusion Play A Part In The Ever Shifting Global Mobility Platform? Nicole Milman, Philip Morris International

Employment Law: Brexit, Employment Law And Global Mobility Juliet Carp, Dorsey & Whitney (Europe) LLP

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Directory www.internationalhradviser.com Helen Elliott • Publisher • T: +44 (0) 20 8661 0186 • E: helen@internationalhradviser.com damian porter • Publishing Director • T: +44 (0) 1737 551506 • E: damian@internationalhradviser.com kim miller • Global HR Operations & Strategy Director • E: kim@internationalhradviser.com International HR Adviser, PO Box 921, Sutton, SM1 2WB, UK Cover Design by Chris Duggan In Loving Memory of Assunta Mondello While every effort has been made to ensure accuracy of information contained in this issue of “International HR Adviser”, the publishers and Directors of Inkspell Ltd cannot accept responsibility for errors or omissions. Neither the publishers of “International HR Adviser” nor any third parties who provide information for “Expatriate Adviser” magazine, shall have any responsibility for or be liable in respect of the content or the accuracy of the information so provided, or for any errors or omissions therein. “International HR Adviser” does not endorse any products, services or company listings featured in this issue.

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Terrorism And The Leadership Role Of HR Terrorism is not new, so why are so many of us now talking about it? And how does this affect business and how your company operates? There are four reasons: 1. Firstly, terrorism is now ‘on the doorstep’ of many western countries, far more so than it has ever been. As well as making the subject more news-worthy to mainstream western press, this also has an effect on business travellers, who treat travel around mainland Europe (for example) as “routine”. Historically, if an employee was travelling to Kenya, they would spend more time preparing than if they were travelling to France. This complacency is not changing at the same pace as the increase in terrorism, which brings us onto our next point 2. Terrorism is on the rise, according to specialist insurance providers. These companies offer payment after damage to property from a terrorist attack, and their own statistics show the increase in discrete terror attacks globally in the past two years 3. The targets of terror are changing from property to people, according to the insurer Allianz at the AIRMIC 2016 event. This has a particularly high impact on the results of terror, because different people require different methods of preparation. People are individuals, and as such need to be engaged and motivated, and also checked as to whether they are following good practice, which makes risk mitigation that much more complicated 4. Businesses are operating in more countries than ever before. The search for revenues from international markets has never been as compelling, and is set to increase. Global Mobility statistics will show you the sharp predicted rise in international assignments over the next five years. Yet have the practices for preparing these employees changed to match this increase in diverse locations and threats that your business will now operate within? So it seems the effects of terrorism on employees is here to stay, and if anything will grow over the short to medium term. Why should a company worry about this, and what does it have to do with HR? The effects upon the business world of this increase in terror have not yet been recognised or felt by the majority of Global PLC. We haven’t seen a sharp decline in business travel as a result of the recent,

horrific news stories, nor a sea-change in sign-off for travel and assignment. The Global Assistance providers – those companies who offer 24/7/365 emergency assistance for medical and security crises - have not doubled their client-base overnight after pictures of a truck driving through Nice dominated our news-feeds, and we have not yet seen Global Assistance become an employee benefit. In speaking to many Director-level contacts across multiple sectors, I can surmise that most businesses simply don’t have anyone focussed on this topic. In opening discussions about Employee Safety Overseas, everyone agrees that it is an important area, though perhaps not of the highest priority. When challenged on which of the current projects are of higher priority than the safety of travelling and assigned employees, the response is often an attempt to implicate another department. “I think our Travel Management provider deal with that” is a common response. This is understandable, as the question is provocative and no company wishes to be viewed in a negative fashion, but after speaking to many Travel Management providers I can confirm that they typically have specific terms within their contracts that state that they are not responsible for the overall safety and wellbeing of your employees overseas. That still lies with the Board of Directors. So what must be done to improve on this situation? I strongly believe that HR and Global Mobility have a clear and present opportunity

to provide leadership to the business on the issue of employee safety overseas. This topic has a number of stakeholders: Security, Risk & Compliance, Travel Management, the PA community, Operations, but as a group this requires someone to step up and lead the team. For the reasons of the possible effect on the safety, health, and wellbeing of employees, HR seems a natural fit for such an important spearhead project. The threat of terrorism should not stop business travel, but should bolster us into preparing our people better, to re-examine our travel sign-off processes, to measure the real risks of working in certain locations, and to hardwire all of this work into our employment contract and travel policies, so that the business as well as the employee is protected. Here is a list of questions for HR to take to the Board, to ascertain the business’ appetite in responding to the terror threat: • In the event of a terror attack, what percentage of employees can we track within the affected area? As an attack can be specific to a very particular area, for example to certain streets during the Charlie Hebdo crisis in Paris, simply knowing which airport your traveller has flown into isn’t good enough. Is there a method for you to proactively check-in with travelling employees and assignees in that location, to ascertain their status? Thomson-Reuters recently stated that only a few years ago they had an approximately 20% certainty of who was in the area of a

Terrorism & HR crisis location. Nowadays, they are one of the best at employee tracking • What is the real risk of the countries into which we send our people? Do you rely on a decades-old model of “high-risk versus low-risk” that was created by Oil & Gas exploratory work in the 1950s, or can you distinguish between the medical, security, and consular risks by each jurisdiction? Are you looking at the demographic of your employees? For example, a 25-year old female has a very different risk profile travelling to Nairobi than a 45-year old male. Are you using this model to alter our sign-off process for travel and assignment, linking this to training requirements? • In a crisis, who do our people call? Many of you in HR will already know the answer to this, and perhaps you already make it a point to keep your mobile phones switched on over the weekend. In my experience, crises often selfishly occur during late evenings and weekends, with difficult time-zone differences, and often HR gets the first call for help. If this is the case, how confident do you feel in arranging a medical evacuation, or dealing with a detained employee? Are there better services you could be using to manage this process? • What is our crisis management plan? This is a key component of your duty of care to

your employees overseas, and is something that could form the backbone of a legal challenge from a disgruntled employee who found themselves in difficulty and accuses the business of a lack of support. There are people and services that can help you to construct such a plan, and hardwire it into your travel policy. The world has changed, and businesses must adapt. Who better to help them through this transition than HR?

The world has changed, and businesses must adapt. Who better to help them through this transition than HR?

Stuart Birch

Director, Griffin Birch stuart@griffinbirch.com www.griffinbirch.com @Griffin_Birch Griffin Birch helps organisations with their employee safety overseas, focusing on the medical, security, and consular risks for business travel and assignment. In this changing world, Griffin Birch can help your organisation to assess and quantify the risks you and your people face, strategically plan to mitigate them, evaluate how existing services and insurances can be used more effectively, and dovetail this into your existing contractual structure.

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Conflict Management: Essential Skills For Expatriate Managers Because no two individuals have exactly the same expectations and desires, conflict is a natural part of our interactions with others. Thomas-Kilmann

Picture the scene. Alex has recently taken the role of Regional Head of Sales for Asia-Pacific and arrived in Singapore two weeks ago. She called a meeting with all the country sales managers to get a clear understanding of which markets are performing well and where more support is needed. The meeting started well but Alex quickly became frustrated that only a couple of the managers had prepared the detailed financial projections she had asked for. More time was spent discussing the strengths and weaknesses of various team members and the need for more resources. Several times she had to steer the discussion back on track and at the end of the allocated two hours she quickly wrapped up as she had another meeting scheduled straight after. Alex sent a follow up email that evening requesting more detailed figures and two days later she was disappointed only to have received one reply. It was going be tough to 4

get this team into shape. Should she call another meeting and openly confront the managers about their lack of response? Or perhaps a private call with each individual would be better if only she could make the time? Maybe a reminder email would be the quickest way to deal with this and they would soon get to know her style? We have all seen the surveys and know that a frequent cause of assignment failure or curtailment is poor cultural adaptation. When expatriate managers like Alex struggle to understand and respond appropriately to local norms and business practices, conflict can rear its ugly head and they find themselves feeling frustrated, anxious, stressed and sometimes unable to perform their role effectively. The impression of being in constant conflict and not having the tools to manage it appropriately sometimes leads to feelings of inadequacy and can have an impact on physical and psychological wellbeing. Not only does the expatriate manager underperform, but the local team can feel disempowered and their performance also suffers.

Universal Causes Of Conflict

Of course, conflict is a universal phenomenon and occurs not only between people from different cultures but also between those who share the same background: family members, neighbours or colleagues who grew up in the same city. Conflict in the workplace occurs for a multitude of reasons such as competition over scarce resources, power struggles, opposing priorities and goals, different personalities and temperaments and misaligned processes and policies.

Interpersonal And Intercultural Conflict

Misaligned policies can cause conflict for expatriate managers who are often tasked with implementing head office procedures within local operations and quickly discover that the online performance management system that works well for corporate HQ in New York is not appropriate in Dhaka or Kampala. Cross-cultural conflict also occurs due to competing values or seemingly incompatible working preferences. A Norwegian investment manager working in the UK recently found himself in a serious

conflict with his senior management team when he sent a very frank note to a client questioning the ethics of a potential investment. He valued the absolute truth and found the British need for a more pragmatic approach and concern about possible litigation to be at odds with his sense of integrity. The conflict escalated and external help was required. Consider also how contrasting attitudes to time, rules and forward planning could cause conflict. Or think about practices such as giftgiving, corporate hospitality or recruitment through personal connections and how they throw up questions around our definitions of ethics and what is ‘right or wrong’.

Culture is the manner in which dilemmas are reconciled since every nation seeks a different and winding path to its own ideals of integrity. Fons Trompenaars

Cross-Cultural Responses To Conflict

Conflict is more likely to occur in crosscultural contexts and it is also harder to manage, partly because we don’t have the same understanding of what has happened but also because people from different cultural backgrounds respond to and handle conflict very differently. A major factor in cross-cultural conflict management is the differences in how collectivist versus individualistic cultures1 react to conflict. Individualistic cultures such as the USA tend to see conflict and disagreement as natural and place more value on

CONFLICT MANAGEMENT qualities such as ambition, competition and assertiveness. In collectivist cultures such as Japan, however, people are more likely to avoid conflict as maintaining the harmony of relationships and saving face are crucial. They tend to communicate indirectly and use avoiding tactics while people from individualistic cultures are more likely to confront conflict directly and show less sensitivity to preserving the relationship. This difference in approach can be magnified when hierarchy is in play. If the more senior person from head office is from an individualistic culture their subordinate from a collectivist culture will be even less inclined to express disagreement or confront conflict.

Pre-Departure Conflict Preparation

What can be done to help expatriate managers to prepare themselves for potential cross-cultural conflict before they embark on their overseas assignment? Development of the following three areas can enable expatriates to manage conflict more effectively: • Cultural knowledge – having a good grasp of local constraints, prevalent cultural values and working style preferences of local staff and partners can help managers who are new in town to be ready for and to understand behaviours and responses that are not always in line with their own • Self-awareness – knowing how we come across and are perceived by others is important when dealing with conflict. Diagnostic tools such as The ThomasKilmann Conflict Mode Instrument2 can be useful in measuring individuals’ natural predisposition to conflict • Intercultural competence - developing qualities and skills such as flexible behaviour, rapport building, emotional resilience and empathy, will help international managers to resolve conflict more appropriately.

Resolving Conflict On The Ground

And what can expatriate managers do when they find themselves in a situation of potential conflict? • Be ready to suspend judgement based on home cultural frames of reference – it is easy, but dangerous, to assume that what works well at home will work just as effectively in another part of the world • Be wary of over-relying on national stereotypes - understanding the values and behavioural norms of the local culture can of course be useful but assuming, for example, that all your Chinese colleagues will respond to conflict in the same way is short-sighted, particularly if they have worked with

western colleagues for some time or been educated overseas • Take time to listen to make sure you have all the facts and ask questions to help you gather information and to demonstrate that you are interested in understanding how things are done and why • Tune into the subtext and listen for what is not being said. Learn how to interpret non-verbal signals and remember that in some parts of the world it can be very difficult to say ‘no’ to someone more senior, and so differences of opinion can be suppressed • Give feedback based on your observations rather than your interpretations of behaviours you find challenging. For example, ‘I noticed that you didn’t make any contributions during the meeting’ is better than ‘you seemed very bored during the meeting – is there a problem?’.

There are three sides to every story - yours, mine, and the truth.

Cathy wellings

is Director of The London School of International Communication which helps organisations and their people to work more effectively across borders and cultures. LSIC provides practical intercultural, communication and leadership training and coaching to individuals, teams and organisations anywhere in the world. Cathy is an intercultural and global leadership trainer with many years’ experience of working with corporate and public sector clients. Contact Cathy at cathy.wellings@lsictraining.com Call +44 (0)20 7605 4189 Visit www.lsictraining.com

Robert Evans

The Message For Global Mobility Managers

The message from all of this for global mobility managers is that we should be selecting expatriate managers with high levels of emotional and cultural intelligence. They will be more likely to cope with ambiguous and unfamiliar situations and to have the interpersonal skills to pre-empt, interpret and resolve conflictive situations. Luckily these skills can be developed and pre-departure preparation is also important. Intercultural training should go beyond country knowledge and should include cultural sensitisation and the development of practical skills such as communication and conflict management. Conflict may be an inevitable part of an expatriate manager’s working life, but how they respond to and resolve it might be the difference between a successful and unsuccessful assignment. References 1. https://geert-hofstede.com/national- culture.html 2 http://www.kilmanndiagnostics.com/o verview-thomas-kilmann-conflict- mode-instrument-tki

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Global Workforce Agility: Analytics Driven Talent Sourcing And Deployment With the pace and complexity of business ever increasing, it is important for organisations to find new areas of growth, efficiency and competitiveness. For organisations with a global workforce, this means having access to the right data to make intelligent, proactive deployment decisions in a timely and cost-effective manner, whilst ensuring the business is compliant in the jurisdictions in which it operates. In our summer 2016 article we discussed the future of global mobility and the key challenges businesses are facing in light of an increasingly global workforce. Talent mobilisation – having the right talent available at the right time – was identified as one of the hot topics from business leaders and also

the key in driving business performance. As more organisations begin to expand across borders and into new industries, the international landscape can trigger a range of complex issues which means that talent sourcing needs to be both sophisticated and agile – what we term “global agility”. Organisations that are therefore able to “see” their global talent, match to critical roles and deploy swiftly in a cost-effective and compliant manner, may gain a significant competitive advantage. For many organisations, mobility might be used as a reactive function or as a blunt global resourcing tool with little alignment to business strategy. Additionally, identifying and sourcing the best talent can be both time consuming and labour intensive and often comes with many challenges including complex compliance requirements and meeting demands on speed of deployment and cost.

So where could organisations start in reassessing their global resourcing strategies? One of the first things is to start looking at their mobility function itself in terms of both scope and capabilities across a longer-term horizon and ensuring that their strategy is fit for the future by identifying areas for disruption. This means building proactive, responsive tools and processes supported by data and efficient technology to either automate and streamline ‘transactional' activities, or build and enhance a new scope of activities and capabilities. In the coming years, new and increasingly accessible disruptive technologies, such as cognitive and blockchain, will be become more commonplace as organisations adapt their core businesses and processes, enabling better, quicker, less risky and more costeffective decisions. Taken together with the development of global and rich internal talent

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and skills data, this presents the opportunity for mobility functions to be a more strategic partner with the business.

Challenges To Cross-Border Worker Selection

Some of the typical challenges faced by organisations in sourcing individuals for global assignments include: 1. Spending countless hours finding ways to effectively recruit and deploy the right talent. 2. It is expensive for organisations to hire the right talent. 3. Speed of deployment. Often organisations will need people to start projects immediately but find it difficult finding available internal candidates. 4. Different organisations and business functions have different objectives. An agile approach in sourcing and deploying talent is required. 5. Compliance requirements. Organisations need to take into account the extent and timing of issues such as immigration, tax and relevant employment laws at the time of candidate selection, rather than after the decision has been made. 6. Finding the individual with the right combination of skills.

Case Study- Typical Current State

Alessandro is the Italian software and design lead of a global technology firm. He is looking to expand into the APAC market and has recently agreed a project in China to implement the IT solutions for a large multinational bank.

The project is due to start soon and Alessandro has identified Vincent, an existing employee in his Italian team to be on-site full-time to project manage this. Alessandro starts to move forward and has informed the bank he has everything in place. What Alessandro hasn’t considered is any compliance or personal requirements for Vincent or the logistics of the employee relocating. After consultation with the mobility team, Alessandro learns that the candidate will require a work permit, which has a lengthy lead time, and was not aware of the internal relocation protocols he has to follow. In addition, he discovers Vincent is reluctant to take his children out of school until the end of the school year and is unlikely to make the start date of the project. Alessandro quickly realises that Vincent isn’t a viable option and he has to start the selection process again. Not only has Alessandro lost time in trying to recruit the wrong candidate, he also risks the project’s success as he is now struggling to meet the agreed timelines.

How Can Technology And Analytics Help And What Might The Future Look Like?

The case study example is a common dilemma faced by many businesses. How might an organisation make the process of candidate identification and selection more efficient? Is it possible to merge pre-initiation with initiation to consider key factors at the time of candidate identification? Will this produce

a process that is simpler, cost-effective and more time efficient? Is it possible to manage the internal supply and demand of talent? How does this fit into an organisation’s business and operational strategy? One of the top ten 2016 Global Human Capital trends from this year’s Deloitte’s report was people analytics, with 77% of organisations surveyed believing people analytics as important. However, most organisations are yet to embed analytics within mobility processes. From here we will consider how a future state candidate selection process enabled by analytics and technology might help streamline the candidate selection process and bring additional value to the business. The top three concerns organisations have in talent sourcing often include skills, cost, speed and difficulty. An effective talent sourcing process will involve consideration of 3 potential talent pools: 1. Local talent that can be redeployed, without the need for costly global relocations. 2. The full pool of global talent available to an organisation. 3. The availability of local talent for hire. An automated sourcing process should be able to identify the most suitable candidates that match requirements, enabling businesses to make faster/quicker/cheaper decisions based on a narrower selection of pre-screened and ranked candidates. As an example, the talent sourcing process might follow this process:

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1. Develop and collate global employee skills and talent data. 2. Identify the role requirements by skills, location and timing. 3. Test these requirements against global employee profiles and current status. 4. I dentify a pool of suitable global employees matching the requirements. 5. Analytical techniques, test the pool of suitable candidates against tax, social security and immigration rules to identify compliance requirements in the destination location. 6. Develop and apply a ranking methodology to the pool of potential candidates including: a. Compliance requirements b. Cost c. Speed d. Other potential factors (e.g. performance ratings, languages spoken, cultural adaptability survey results) 7. Review rankings and select the appropriate candidate. The reimagined candidate selection process now follows a funnel approach as shown above.

selection to give the best chance of making the role a success? Alessandro is now assessing requirements against global employees, not just his own Italian team. He inputs specific skills required

to fulfil the project manager role he is recruiting for. The technology pre-screens the global pool of employees and filters them down based on this criteria in addition to compliance requirements (immigration, tax

Case Study- Potential Future State

If we now revisit our case study and imagine Alessandro followed a process such as the above, would his decisions change? How is the speed of deployment/business risk/ cost affected? Can we optimise candidate

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Only 22% of global organisations would consider their ability to understand where their skilled workers are located as excellent. Deloitte 2016 Human Capital Trends and social security) and required speed/cost/ location parameters. Originally, Alessandro found out far too late in the process that immigration was a major roadblock with his candidate and is now working from a manageable number of viable candidates. Alessandro has now identified the 5 top viable candidates based on ranking and has identified Clara within the APAC design and technology team who has recently completed a similar project with a telecommunications company. Clara is already based in China and available to start immediately so any immigration, tax and social security requirements have been removed. A revised process now enhances Alessandro’s decision making by giving the project its best chance of success, by matching skills, and meeting cost and timeline requirements. He has found a suitable candidate and reduced very costly compliance and relocation costs in the process.

• Identify and estimate the full cost of deployment of cross-border workers • Proactively make staffing and resourcing decisions around the globe • Team deployment - identify groups of individuals to fulfil project work. The key idea that underpins the concepts discussed is the availability and maintenance of global skills and talent data sets. It is likely that only organisations that are committed to this idea will be able to unlock the benefits and insights that analytics can bring, and gain global competitive advantage. Broadening mobility’s role in talent identification and selection will mean that mobility becomes more closely aligned and integrated with talent teams and the wider business. Organisations that proactively manage their workforce using a global mind set, supported by rich skills and talent data, will be best placed to unlock the full potential of their people and will likely have the agility to deal with the increasingly rapid and changing global business landscape. For more information on this topic or to ‘look through’ our Deloitte Telescope please contact our Global Workforce Agility team:

Cassandra Liu

Email: cassanliu@deloitte.co.uk Tel: +44 20 7303 7707

Innovation is set to change the way we think about the big issues the world faces today. The way we utilise migration in particular will be transformed by both advancement in tech and government policy and mapping out a way forward is crucial to how business thinks about the future of their workforce. Immigration policy will be pressurised by a rapidly changing government policy environment, automation, and an ageing population, which means business will have to think up innovative ways of sourcing skilled talent in a fiercely competitive global environment. This seminar, led by both Deloitte’s Immigration and Mobility Transformation teams, will bring together leaders in tech, government, and media to talk about how best to respond to the changing nature of mobility and migration. Date: Monday, 28th November 2017 Time: 14:00 - 17:00 Venue: Deloitte Auditorium, 2 New Street Square, London, EC4A 3BZ

Closing Thoughts

Analytics techniques and technology have the potential to reshape the way that mobility interacts with the business by becoming a core component of an overall global talent strategy. Some key benefits would include: • Rapid and responsive decision making on project deployment • Access to skills and talent from across the breadth of the global organisation • Foresee immigration and other compliance related deployment challenges • Democracy of data - potentially available to HR and project leaders

Deloitte Immigration Seminar - The future of immigration

Robin Brown

Email: robbrown@deloitte.co.uk Tel: +44 207 007 6690

Get in touch with Elena Grayling if you would like to register for more information egrayling@deloitte.co.uk.

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Global Taxation Update Recent Tax Updates From Around The World Chile

Stock Options regulation after the Tax Reform Tax Reform in Chile has introduced major changes over various aspects of the tax legal system with one of these changes being the enactment of a new tax treatment for Stock Options. Before the enactment of the Tax Reform there was no tax legislation on this subject. In order to fill this legal gap, the Chilean IRS allowed beneficiaries of Stock Options to defer the taxation until the sale of the shares which gave rise to a less burdensome tax rate. These rules were completely modified under the Tax Reform establishing a new tax article as follows: 1) The benefit generated by granting the option to acquire shares, bonuses or any other kind of titles issued in Chile will be recognised as additional remuneration of the employee. (This rule has brought major difficulties regarding determination of tax value, whenever the right to acquire shares (the option) has a different value from the shares, options or other titles themselves). 2) Both the exercise of the option and the assignment of the option will be recognised as taxable income. 3) Finally, the capital gain over the sale of titles or instruments acquired through the option will be subject to income tax. BDO Comment Due to this new treatment, taxation will be triggered by the mere acquisition of an option that may or may not be exercised; therefore it is necessary to evaluate the real benefit of operating these types of plans in Chile. Revised Tax Rates For 2017 Reform has also lowered the two highest brackets of the Chilean employment income tax, from 35.5% on amounts exceeding 120 Monthly Taxable Units (UTM) to 35%, and from 40% on amounts exceeding 150 UTM to 35% equally, thus simplifying the system by reducing the amount of brackets available to calculate the tax and also lowering the tax burden for employers and tax payers. This tax reform was enacted during 2014 but will be enforced from 1 January 2017.

From that point all income subject to Chilean employment income tax will be subjected to this new lower tax bracket of 35% on earnings exceeding USD 8,445.60. As for many countries around the world, Chile charges employment income tax on progressive tax rates and this principle remains untouched. BDO Comment From 2017, foreign taxpayers and foreign employers should be aware that the cost of employment taxes for the use of expatriate labour forces in Chile has reduced. This should lead to lower assignment costs.

China

An insight into Chinese tax implications of expatriate dual contract arrangements The Chinese tax authorities have tightened the monitoring and supervision on foreign employees’ dual contract arrangements in individual income tax. Under a typical dual contract arrangement, foreign employees will sign two employment contracts, one with a Chinese employer and another with an overseas employer. The salary will be paid separately inside and outside of China. According to the China Tax Laws, the foreign employees need to file individual income tax returns for salaries paid from inside and outside of China. The Chinese tax implications of dual contract arrangements may vary case by case. Some foreign employees tried to argue that the portion of the salaries allocated to the overseas contract and paid outside of China were not subject to Chinese individual income tax because: • The income is paid from overseas • They are only liable to Chinese individual income tax on China-sourced income (as opposed to worldwide income); and • The Chinese employer has no statutory withholding obligation on the payment made by the overseas employer outside China. There is a published judgment case in Guangzhou Court about a dual contract arrangement. In the court judgment, the taxpayer (a UK resident) has signed two independent contracts with a China employer and a US employer and these two companies were related parties. The

Court upheld the decision made by the Guangzhou local tax bureau that the taxpayer’s employer in Guangzhou China has the statutory withholding obligation on the salary paid by his US employer. Also, the Court has confirmed that even if the income is from the US contract and subject to tax in the US, it does not mean that income would be exempt from individual income tax in China. The court judgment adopted the principle that substance prevails over format and agreed with the Chinese tax authorities’ persistent position toward dual contract arrangements. From our experience, the tax bureaus will become suspicious of the dual contract arrangements where the offshore payroll is excluded from Chinese individual income tax reporting and the reported income in China is far below the reasonable compensation for the expatriate’s job in China. BDO Comment The tax authorities’ monitoring efforts on foreign employees’ taxation are becoming more stringent. Chinese companies and their foreign employees need to review any existing dual contract arrangements carefully to manage the tax risks. It is also advised to seek help from tax counsel and communicate with local in-charge tax authorities proactively.

Italy

Tax relief for expatriates working in Italy Italy has typically been regarded as a high tax cost location but do remember that there are specific tax regulations concerning the taxation of workers assigned to Italy. The so-called “Internationalisation Decree” applies with effect from 7 October 2015 to the income of workers, whether Italians or foreigners, who after being abroad for more than 5 years become Italian tax resident, such that they will only be taxable on up to 70% of their income. Considering that the ordinary Italian tax brackets for individuals are fixed from 23% to 43%, this means that inbound expatriates in Italy could benefit from reduced tax brackets of 16.1% to 30.1%. In order to obtain such tax advantages, the following conditions should be met: a) Being non-resident in Italy during the previous five tax years

GLOBAL TAXATION b) The working activity should be carried out mainly within the Italian territory c) The working activities have to be carried out within a company resident in Italy and it should be supported by a regularly signed contract with the same company, or within other companies which, directly or indirectly control it or are controlled by it d) Transferring their residence to Italy with the commitment to stay for a period of at least two years e) Workers having an executive job position or having a high level of qualification and specialisation as defined in a decree of the Minister of Finance to be published within 90 days from the publication of the law. Interaction With The Previous Tax Relief Provided The criteria for determining the income described above (30% tax free) is also applied to those beneficiaries of the tax relief provided under previous rules (Law n. 238/2010 - whose benefits remain in force until 31 December 2017), which provided a reduction to the taxable basis to 20% (for women) or 30% (for men) of the taxable income base. The conditions set out by Law 238/2010 are as follows: 1) EU citizens having a university degree, who have resided continuously for at least 24 months in Italy and who, although residing in their country of origin, have continuously performed an employment, self-employment or enterprise activity outside their country and outside Italy, in the last 24 months or more, who are hired or have started an enterprise or selfemployment activity in Italy and transfer their domicile, as well as their residence to Italy within three months of hiring or starting an activity. 2) EU citizens who have resided continuously for at least 24 months in Italy and who, although residing in their country of origin, have continuously studied outside their country and outside Italy, in the last 24 months or more, taking a university degree or a post-graduate specialisation, who are hired or have started an enterprise or self-employment activity in Italy and transferred their domicile, as well as their residence, to Italy within three months of hiring or starting an activity. 3) The requirement that these workers had to be born after 1 January 1969 has been abolished. Steps for choosing either the previous tax relief (Law 238/2010) or the subsequent rules (D.lgs. 147/2015): are as follows • Individuals who have met both requirements provided by Law n. 238/2010 and D.lgs 147/2015 who moved to Italy by 31 December 2015, may decide whether to opt for the Regime provided by Law n. 238/2010 for the tax year 2015, 2016 and

2017 or for the new regime introduced by Decree n.147/2015 • Individuals who have only met the requirements provided by the latest rules (Decree n.147/2015) can opt only for this new regime • The option for the regime had to be completed via written request to be submitted to the employer by 29 June 2016 • The employer will have to withhold taxes on the 70% of the employee’s taxable income starting from the month following that of the relief request. If the employee opts for the Regime provided by Law n. 238/2010, the application of the withholding tax will be applied on 20% (for women) or 30% (for men) of the taxable income base. Lastly, it is important to specify that those who transfer their residence to Italy starting from 1 January 2016 (if they meet the requirements to be defined with a specific Decree) can opt only for the new regime (30% tax free). The option for the new regime has effect from 1 January 2016 and for the following four fiscal years (2016-2020). BDO Comment There are some advantageous tax reliefs for expatriate employees working in or moving to Italy. The applicability of these should be considered as appropriate planning and can significantly reduce the cost of assigning individuals to Italy.

The Netherlands

Material employment under the tax treaties with the Netherlands and the Dutch 60 days rule According to most double tax treaties with the Netherlands, as well as the OECD model treaty, income from employment is taxable in the country in which the employee is living, unless the employment is fulfilled elsewhere. As a main rule, this leads to taxation in the working country. The exception to this rule applies when: a) The employee is not present in the working country for more than 183 days during a 12 month period/tax year/calendar year (depending on the applicable double tax treaty); and b) The remuneration is not paid by or on behalf of an employer in the working country; and c) The remuneration is not borne by a permanent establishment of the employer in the working country. If these cumulative conditions are met, the remuneration will remain taxable in the country of residence. Assuming the non-resident employee is not present in the Netherlands for more than 183 days (in the respective period according to the treaty), the remuneration will also have to be paid by or on behalf of an employer who is not a resident of the Netherlands. As of 2006, in the Netherlands the employer

is defined as also including the material employer, the employer for who the benefits and risks of the activities are performed, and who has actual authority over the employee. When seconding an employee temporarily to perform activities within a group company, this can quickly lead to taxation and a withholding obligation in the Netherlands. However, in cases of a short-term secondment between group companies, it might be possible to benefit from the Dutch 60 days-rule. An employee who has been assigned within a group company to the Netherlands as part of an exchange programme, for career development, or on the grounds of speciﬁc expertise for a period of no longer than 60 days in a 12-month period, will not be considered as being under the authority of the Dutch group company. As a result, a non-resident employee who is not working in the Netherlands for more than 60 days within a group company and fulfils the above-mentioned conditions, will not be subject to Dutch taxation on their employment income. However, if this regulation would lead to double exemption from taxation, the Dutch tax authorities could decide to consult with the country of residence. BDO Comment Many countries are imposing an ever more stringent application of their tax laws on business visitors – the Dutch authorities are no exception although the 60 days-rule is a welcome relaxation. Tracking of visitors is mandatory and up front consideration of local tax legislation and overarching tax treaties must be considered at the outset.

Sweden

Tax treatment of key staff members Non-resident individuals may choose between being taxed as per standard provisions under the Income Tax Law (IL) or under the Law on Special Income Tax on Non-Residents (SINK). The latter is a final withholding tax regime of 20% on a gross basis. In addition, Sweden grants a special tax relief to qualifying foreign key staff members temporarily employed in Sweden under the so called Expert Tax regime. In short, the relief is applied by exempting 25% of their employment income from tax and social security contributions. On 13 June 2016, the Swedish Tax Authorities (STA) published clarification regarding their view on key staff members temporarily employed in Sweden and their ability to choose to be taxed under the SINK regime. The clarification touches upon two cases in which employees have been granted a special relief for key staff members. • In the first case, an employee left Sweden before being subjected to unlimited tax liability in Sweden. In such cases the STA’s

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standpoint is that the employee cannot benefit from the Expert Tax Relief when opting for taxation under the SINK regime. However, if the employee instead chooses to be taxed as per standard income tax provisions (IL), he is entitled to the reliefs for resident taxpayers • In the second case, an employee who was subject to unlimited tax liability in Sweden received remuneration from his employer after leaving Sweden and becoming nonresident. If the remuneration relates to work performed in Sweden while being tax resident here, the remuneration qualifies for the Expert Tax Relief although the employee is also eligible to be taxed under the SINK scheme after becoming a non-resident. Hence, in such cases, only 75% of the remuneration would be subject to the 20% final withholding tax. BDO Comment The special rules contained within SINK and the Expert Tax Regime can be beneficial to those who qualify; however, the STA has clear views and guidelines on this, and individuals need to be aware of the applicability of these laws to their personal tax position. Companies also need to consider this up front when seconding employees to Sweden, as it can have a significant impact on the overall cost of an assignment.

FATCA Reporting Deadline The Swedish tax administration updated its general information guidance regarding the reporting obligations under the Sweden United States FATCA Model 1A Agreement (2014). The updated guidance clarifies that, from 2016, the information relating to the previous year must be submitted by 15 May of the following year. Deductibility Of Representation Expenses The Swedish Ministry of Finance’s plans for tax measures for the Spring Budget 2016 and Budget for 2017 (announced on 31 March 2016), includes changes to the deductibility of representation costs for meals and other refreshments. For VAT purposes, the deductibility of input VAT will be limited to a maximum of SEK 300 per person and per occasion. The income tax deductibility of representation expenses relating to lunch, dinner, dinner parties or other refreshments, will however, be abolished from 1 January 2017, unless such expenses relate to consumption of lesser value.

All the articles featured in this issue of International HR Adviser, and previous issues of the magazine, are available to share, view and download on www.internationalhradviser.com

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Prepared by BDO LLP. For further information please contact Andrew Bailey on 0207 893 2946 or at andrew.bailey@bdo.co.uk

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BDO will be hosting Expat Academy’s Bitesize Briefing on Wednesday November 16th at our London offices, 55 Baker Street. The seminar will run between 10am and 5pm and will be focussing on the area of managing risk, a theme we consider to be increasingly relevant to international mobility. To elaborate on the BDO presentation, we have provided further details below:

BDO Session On Tax Risks Within The Assignment Lifecycle The session will briefly discuss recent developments in Expatriate taxation before focussing on the risks in relation to international mobility which will cover the following areas: • Appropriate consideration of whether host country taxation is triggered and where applicable the timing of inclusion on relevant payrolls • The duration of assignments and the impact on available tax concessions (including action to be taken by assignees) • The importance of a clear mutual understanding of tax policy to be adopted for an assignment • Understanding ongoing home country payroll obligations • Ensuring full visibility of assignment benefits and allowances between stakeholders responsible for company and employee level compliance • Reporting of post assignment bonus/share awards We will discuss the above principally from a UK tax and NIC perspective, sharing our observations of current HMRC focus areas and important considerations in the home country. Other industry speakers will similarly focus on managing risk from their specific sector perspective. To book please contact Carina Hyder at carina.hyder@bdo.co.uk or 0207 893 2007.

TAX

Localisation - A Potential Lower Cost Alternative To Expatriate Assignments The cost of an international assignee typically amounts to two to five times the cost of a local hire. This creates challenges for businesses trying to reduce costs and get a worthwhile return on investment from expatriate assignments. As organisations implement cost saving initiatives in employing mobile workforces, categorisation of the various sub-sets of employees is becoming an integral part of international assignment planning. Organisations are re-defining assignments into long-term, short-term, commuter, rotational, developmental, local & local plus and shortterm business travellers and, consequently, are developing variable policies.

When It Comes To Reducing Costs, Employers Frequently Think Of Localising The Individual. What Does This Mean?

Many recent global mobility surveys highlight localisation as a common low cost alternative to employing expatriate employees with many companies adopting localisation policies. â&#x20AC;&#x2DC;Localisationâ&#x20AC;&#x2122; is the term used when an assignee is placed on the host country terms and conditions of employment and is provided with local pay elements. The other major trend being seen is much greater use of commuters and short-term business travellers, which will be the topic of a future article. For employers, localisation typically refers to transferring the individual so that they are no longer an employee of the foreign (home) entity and they become an employee of the local entity in the host country. In this article we will look briefly at localisation in general, before considering some of the tax and social security issues that can arise.

Why Would An Assignee Accept Localisation?

While localisation may help businesses to reduce costs, there may be little to incentivise the assignee to accept the offer to localise or move as a local. The significant challenge for the Human Resource department is directing localisation to the right group of assignees. Added challenges include making localisation equitable for the assignee and the organisation,

and also clear as to its implications. Straight forward localisation policies do not usually provide premiums related to cost of living adjustments (COLA), tax assistance, and provision of housing and education costs. However, a one size fits all approach is certainly not always advantageous when planning international assignments. The comparison of income tax rates, wages, salaries, standard of living, benefits, cultural and living conditions between home and host locations, play a vital role when considering localisation as an alternative to employing expatriates. For instance, movement of an assignee from a moderate hardship location to a high hardship location, with dissimilar socioeconomic and cultural diversity, may result in opposition to any attempt to localise.

When Is Localisation Optimised As A Strategy?

Localisation strategy may be optimised among a particular sub-set of assignees that may include early career expatriates or developmental employees, where the deal breaker is not so much remuneration, reward and benefits, when compared with the potential for career progression and development. Additionally, movement from a low salary index ratio to a high salary index ratio may not require much intervention as a positive response to localisation is possible once the assignee grasps the concept of the earning potential and spending power in the host location. Attaching detailed salary build-up calculations with referenced notes in terms of variables used to calculate the assignee net take home pay, can be a valuable tool in creating localisation success stories.

How To Introduce Localisation

Designing a localisation policy framework requires research relating to host country norms and practices. Strategy and policies may vary from one location to another as certain remuneration or other related trends are directed at a subset of the assignee population, which may require country specific localisation policies. Depending on affinity between home and host locations and to facilitate transfers, a Local Plus Package may be implemented. This method of pay includes local salary benchmarked in the host country plus for

example, education, housing, tax return preparation and/or home leave travel assistance or other benefits. An alternative to the local plus package is the Lump Sum Approach. Here the assignee is transferred directly to the host country payroll and a lump sum payout or cash buy out is provided to compensate for costs associated with COLA, housing and education costs. A disadvantage in adopting this approach is the organisation may lose the assignee to a competitor soon after paying the lump sum, which can be a common scenario. There may also be tax disadvantages. Depending on the host location, an alternative to the Lump Sum Approach is perhaps the transitional Phase-Out Approach. This approach involves payment of the lump sum in tranches and pay elements and/or allowances are graduated and phased out over a period of time. Payment delivered in tranches may result in a smoother transition for the assignee with an increased return on investment for the organisation.

Timing Of Localisation

Once a decision has been made to localise, for most employers the main question remaining is one of timing. Does an individual go immediately to local status from the date of arrival or are they transferred at the end of a particular period or occasion? A challenge is worthwhile at this juncture - is localisation really the only option?

Assignment Then Localisation

The traditional route to localisation is to cap the length of time on expatriate status, with longer-term assignees making either a gradual or immediate change to local status at a fixed point in time as indicated above. This provides the assignee with the benefits of mobility and means that the majority of assignees will have these throughout the assignment. At a certain point in time the individual will transfer from the foreign (home) employment to local employment, terms and conditions.

Localisation From Outset

Increasingly however, employers are often seeking to localise from the immediate point of relocation. The position can be simpler if the employer puts the individual onto

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immediate local status and employs them in the host country, as one does not have to worry about the tail off of tax equalisation and tax credits. Nonetheless, it is worthwhile the employer taking time at the outset to review matters such as the availability of expatriate concessions and social security (see below). By looking at planning opportunities costs can be minimised to the benefit of both employee and employer.

Assignment As An Expatriate But On A Local Package

An alternative, which more companies are now exploring, is keeping the employee as an expatriate employed by their home country but paying them as a local in the host country. Essentially this means doing away with some or all those extra benefits and allowances such as housing and education, which in turn reduces the direct costs of employing expatriates. There may also be savings for the employer on items such as social security.

Tax And Social Security Issues

Localisation at any point in the transfer may not be as simple or as cost effective as it may at first appear. Tax and social security can influence the outcome, for example:

Expatriate Concessions

Expatriate concessions are usually time bound. Where they exist the rules vary from country to country. For example, in the Netherlands you can qualify for the 30% facility, which allows the employer to pay a tax-free allowance of up to 30% of present employment income and tax free reimbursement of international school fees for up to 10 years. In other countries concessions apply but conditions attach to these, for example, you actually have to be employed by resident employers or permanent establishments to qualify. Employers should consider the impact of putting the individual onto local status or onto a local payroll. What is the effect on any concessions that may be available? Employers may ask should they care if there is no tax equalisation. One reason for doing so, is that is the ability to utilise concessions and flex the individual’s package possibly resulting in a lower cost to the employer but with higher net pay for the employee.

Social Security

Putting the individual onto local status generally means payment of social security into the local system. This may or may not be more expensive and you should check before you take action. A cheaper alternative may be to phase out or cut allowances without an immediate change to the employing entity. Social security liabilities generally depend on a number of factors including employment status and available treaties. Social security treaties will also be for varying periods. For example, UK agreements with Canada, Japan

and the US are for five-year periods, whereas the agreement with Jersey is for three years. The social security position becomes much more complicated when you look at transfers within the European Union. The general rule is you pay where you work; however, the agreement can apply in certain circumstances such that contributions will be due where an individual is habitually resident or perhaps where the employer is located. The UK’s impending Brexit is likely to add an additional layer of complexity, particularly for roles that involve working across a number of EU countries. Again, as an employer you should consider social security implications before deciding to localise an individual. Social security can be an expensive burden particularly within Europe, and to some degree there may be an element of choice as to whether one wishes to utilise the benefits of the treaty.

tax rate jurisdictions several years ago are now struggling to move them to higher tax cost locations, with the individuals naturally wanting to maintain their net salaries, which leads to significant increases in the costs of the gross compensation package required.

Tax Equalisation

Summary

Tax equalisation and the transfer away from this also cause problems when localising. Choosing the appropriate time is made more difficult as tax years differ between countries. Whilst the tax year for most countries is a calendar year, several other countries apply a different year-end. For example, the UK has a year-end of 5 April, Australia’s year-end is 30 June and Hong Kong’s is 31 March. It needs to be decided when tax equalisation will cease and how income will be dealt with in the year of cessation. For example: • How are allowances, deductions and rate bands split? • Does localisation begin on the assignment anniversary, the start of the host tax year or, the start of the home tax year? • What happens if the individual receives a bonus in a period after tax equalisation has ended but the bonus clearly relates in whole or part to a tax equalisation period? • How is this tracked? • How do you deal with spousal income? • How do you deal with stock and stock options earned during a tax equalisation period? • How do you deal with the astute individual who takes advantage of tax equalisation policies and accelerates or defers payments to their advantage and their employers’ expense in the full knowledge of impending localisation? Employers cannot simply say that the individual has been localised and then immediately walk away from the tax equalisation issue. The issue could exist for some time. Some astute expatriates are instigating their own transfer to a local package, as they have calculated that lack of application of hypothetical taxes and tax equalisation, can mean more in their pocket if they utilise favourable local tax rules that are available. This is a valid point to consider as many companies who localised individuals in low

Tax Credits

Tax credits and tax refunds generated are also additional matters that employers need to think about. An accumulation of, for example, foreign tax credits on the US return may have been attributable to payments made by the employer during the tax equalisation period. Are systems in place to track utilisation of this credit? What mechanism do you have to track employer tax payments in the year following localisation, or of refunds generated by such payments? Failing to monitor this can not only be costly, but can provide inequitable results.

Maintaining flexibility is the key to reducing costs for both the employee and the employer. In all cases much depends on the reasons why an employee is required, the existing location of the best person for that job and the driving force behind the transfer. Once you know whom you want, keeping an open mind as to planning possibilities can make a significant difference to overall costs. Employing an expatriate does not have to be expensive and can actually be cheaper than employing a local. Naturally there are a many other issues associated with localisation, such as company philosophy, headcount, employment law and immigration. Tax, social security and other fiscal effects are important but are not the only things to consider.

Andrew Bailey

National head of human capital at BDO LLP. He has over 30 years’ experience in the field of expatriate taxation. BDO is able to provide global assistance for all your international assignments. If you would like to discuss any of the issues raised in this article or any other expatriate matters, please do not hesitate to contact Andrew Bailey on +44 (0) 20 7893 2946, email Andrew.bailey@bdo.co.uk

INTERNATIONAL HR ADVISER AUTUMN

Key Challenges In HR In Europe What Are Yours And How Do You Tackle Them? The days when international HR professionals only focused on core HR transactions such as payroll, managing absence and organisational headcount are long gone. Today’s HR professionals are often working for organisations which are going through tremendous change, technologically, culturally and politically. Segmentation, differentiation and agility matter, so a ‘one size fits all’ approach often fails to deliver the flexibility and speed modern business demands. The challenges of European HR decisionmakers in particular, is highlighted in the research conducted by independent HR analyst Fosway Group, in association with HRN (the organisers of HR Tech World).

HR’s Focus Is Becoming More Strategic

HR has evolved beyond its historically transactional responsibilities into a potentially strategically important business function that can define and pinpoint what makes an organisation a success or a failure. HR leaders tell us their key business challenges are increasingly focused on their organisation’s performance and profitability (92%), reducing costs (89%), and improving customer satisfaction (86%). The good news

is that these are measurable goals. The bigger challenge is defining what practical actions HR can take to positively impact them. As a function, HR is increasingly taking a role in enabling business success through its people strategies. by building a passion in organisation’s for attracting, keeping and optimising talent. It is also focusing on energising and engaging employees, and optimising

how their talents are applied within their organisation. This has been a fundamental shift not just for HR professionals, but also its technology and what their systems need to deliver.

HR Technology Is A Critical Enabler For Success

The top five critical enablers of HR success are seen as quality analytics, quality HR systems,

HR TECHNOLOGY strategic influencing, next generation technology and business systems integration. It is no coincidence that with the exception of ‘strategic influencing’, four out of the top five are linked to technology! Evidence from our research shows satisfaction with HR technology is low (less than one in ten is extremely satisfied). So the drivers for changing and innovating HR solutions are clear. More than 50% envisage changing their core HR, learning, succession, reward or workforce planning solutions within the next three years. And 75% expect to see increased spend on HR technology in the years ahead. Be ready for more innovation around key technology areas including user experience, employee engagement and analytics; all evolving with the aim of the supporting HR’s switch away from the transactional to the strategic.

Business Agility Is One Of The Most Significant HR Challenges

One of the top challenges faced by European HR professionals as part of this overall shift, is delivering business agility (82%), a measure fundamentally different to performance, profitability and the like.

Creating an agile, entrepreneurial, digitally savvy and future facing organisation is critical to business survival in the C21st. ‘It refers to distinct qualities that allow organisations to respond rapidly to changes in the internal and external environment without losing momentum or vision. Adaptability, flexibility and balance are three qualities essential to long-term business agility’ (HRZone). It is a complex concept, and one that will vary according to the circumstances of each individual organisation. But, just because it is challenging to measure, doesn’t mean you can’t assess the readiness of HR and your HR technology to deliver business agility; however, what you don’t want is your architecture and systems to stand in the way of achieving it. Any organisation can strive to be more agile, whether large, medium or small, but HR must examine both its operations and its systems against the three key elements of customer satisfaction, organisational energy, and dynamic architecture in order to begin achieving it. “Creating an agile, entrepreneurial, digitally savvy and future facing organisation

is critical to business survival in the C21st” said HRN’s Director of Research and Development, Peter Russell. “What we are seeing is that many organisations are now realising that the challenge is more than just hiring the right talent, it’s also about looking in the mirror and facing up to the reality that a deep cultural and structural change and re-invention is essential.” The desire to deliver increased performance and profitability whilst reducing costs and improving customer satisfaction and increasing business agility certainly puts a lot on the shoulders of HR professionals. But, by continuing to develop HR into a more strategic business partner, a top priority in the research for 53% of respondents, HR professionals can work to deliver these goals. One of the keys to success is access to the right data and insights, whilst ensuring HR systems are acting as an enabler, not a barrier. 80% identified a lack of data integration across HR silos as a major challenge for them. Which is potentially why more than half of the survey participants envisage changing their existing core HR, learning succession and workforce planning solutions within the next three years. This nods to the importance of getting the right HR technology in place, ensuring adoption and interpreting the organisation’s data using analytics to generate valuable business insights.

Looking Beyond The Technology…

The research also demonstrates that change should not be limited just to HR technology. As the role of HR constantly evolves, so do the metrics of organisational success. Our statistics highlight that participants believe HR’s future success is dependent on upskilling HR teams (72%), new or enhanced processes (69%) and re-organisation to create a better business alignment (54%).

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All of the above ought to be considered together as a package: if you adopt new ways of working, you need new operating structures to bring them to life and maximise the opportunities they offer. The new insights you gain by implementing them can bring you closer to dealing with those challenges HR professionals have to successfully tackle both now and in the future. Whilst the focus on investment may be systems and upskilling, innovation doesn’t always come without some pain. And for HR the pain is likely to come from reduced headcount. 35% expect to see a reduction and that was before the turbulence and economic uncertainty caused by Brexit this summer. Overall, headcount is the biggest focus for reducing future investment in HR and very few expect to see it grow. With an HR desire to switch to being a strategic business partner, and an increase reliance on influence, analytics and systems, in our view the headcount pressure is most likely to be felt in HR teams that are more transaction focused. And we believe that technology can potentially fill in some of the gaps that reduced headcount might create. The only way to realistically pick up the slack, is for analytics and machine intelligent systems to be implemented, along with the next wave of employee and manager self-service. The migration of manual processes into

an HR system – which has often been at the core of HR transformations of the past – is not enough. Our research indicates that HR needs to change its DNA – and to truly transform, HR cannot just be dependent on the technology. It requires a shift in HR’s fundamental vision for how it adds value to the organisation. And these fundamental questions start to raise the questions about HR’s future purpose and goals, its role, its structure and its relationship with the people it serves, as well as evolving the services it provides - in an increasingly digitised and automated world. The hard facts seem to indicate a shift is starting to happen and not just in systems. It’s not just about changing HR technology – it’s about changing HR.

It’s not just about changing HR technology – it’s about changing HR.

ABOUT Fosway Group

At Fosway Group we understand that developing and engaging people is how complex global organisations deliver performance and achieve success. Just as every employee’s talent journey is unique, so is every organisation’s people strategy. Fosway Group’s analyst and advisory services deliver the insights your organisation needs to achieve results and eliminate risk. We know that every aspect of next generation HR and talent are more intertwined than ever. You can depend on us to tell you what you need to know to succeed. Visit www.fosway.com

ABOUT HRN

HRN is a new breed of networkers, researchers and event managers. We produce the fastest growing HR events in the world. Our events include HR Tech World Congress & iRecruit Expo. HRN ranks as the largest Corporate HR Network focused on the Future of Work & Technology. Global research confirms that technology is the foundation for Strategic HR. We are involving leaders from over 80 countries to shape our community and harness the opportunity HR technology holds for organisations today. Visit www.hrn.io

New Website To Support Expatriate’s Moving To, Or Living In The UK Www.Expatsguidetotheuk.Com This brand new website, where you can also view The 2016 Expatriate’s Guide to Living in the UK online, supports expatriates who have moved to the UK from anywhere in the world, by providing key information about living in the UK. Living and working in the UK can provide a fantastic opportunity to any individual expatriate and their family. The UK offers a diverse range of cultures and if you have relocated for business, family or lifestyle reasons, this website will prove to be an invaluable resource.

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HR TRENDS

The Impact Of HR Trends On Mobility, Talent And Reward Deloitteâ&#x20AC;&#x2122;s Human Capital Trends annual survey is one of the largest HR studies. The report identified several potential workforce changes which will have a fundamental impact on global deployments, international reward structures and talent development programmes now and in the future.

Whilst we have analysed all of the top 10 HR trends in the report, we believe three of these could have a significant impact on Mobility, Talent and Reward.

The Key Trends Trend 1: The Complex Workforce (The gig economy)

There is a lack of understanding among leaders as to who and what their workforce comprises and how to manage todayâ&#x20AC;&#x2122;s diverse combination of worker types. Impacts Talent now need to understand a new cadre of individuals â&#x20AC;&#x201C; those within the organisation with a range of backgrounds, generations, aspirations, but also those outside the organisation. Alongside this, Mobility may need to expand the range of assignments (e.g. swap schemes, project workers and commuters) to encourage international moves.

Talent will face the initial task of attracting, managing, engaging and retaining a diverse set of individuals with a range of contractual relationships with the organisation. An increasing use of sources such as LinkedIn and Topcoder are likely to become commonplace. Traditional Reward approaches may no longer be suitable. Challenges such as compliance implications associated with cross border remuneration come to the surface, as well as the question of fairness in Reward for employees versus contingent workers.

Trend 2: The Lack Of HR Skills And Capabilities (HR capabilities)

HR need to have skills which ensure they understand business strategy and can leverage future technology. There is a gap in the understanding of wider business strategies, preventing HR from effectively embedding and aligning themselves with the business.

In this article, we have considered the trends identified and have evaluated the impact in a Mobility, Talent and Reward context. We believe the trends and their impact can be categorised into three areas; strategy, business partnering and agility.

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Impacts Talent need to focus on recruiting and training individuals across Mobility, Talent and Reward with the future skills required. The brand of the organisation will play an important role and so the culture and strategy need to be clearly defined and communicated. With the need to focus on strategic activities, it will be necessary for administrative processes and tasks to either be outsourced or offshored. Mobility will need to determine the right tasks to transition, depending on volume and level of standardisation. The Reward approach needs to be agile to support exponential changes to business strategy. As a first point, though, the wider business strategy needs to be understood by the Reward professionals to ensure the Reward strategy supports this.

Trend 3: The Rise Of Teams (Organisational design)

There is a movement towards a network of teams, whereby small teams deliver results faster, engage people better and stay closer to their mission. The digital revolution helps teams stay aligned. Impacts Traditional performance management will need to evolve to accommodate this shift in the organisational structure – global and more project-based objectives will become more important. As we move towards a culture with less restriction on where talent comes from, organisations are starting to look at the global supply and demand matching. In particular, we have seen a rise in supply/ demand technology tools taking a global approach. This may mean a rise of employees (and contractors) in different locations, working together. This is likely to increase the volume of short-term, project-focused assignments and business travel.

As outlined above we have highlighted the three key trends that we believe will have the biggest impact on Mobility, Talent and Reward. We have also included below our analysis in relation to all HR trends identified in Deloitte’s 2016 trends report.

Strategy Culture (high impact)

Culture can determine success or failure during times of change. However, leaders struggle to understand their culture and it is often poorly documented. • The impact of this is that Mobility, Talent and Reward may find it challenging to articulate a strategy which is successful and aligned to the organisation’s culture • Mobility can be utilised to help develop a global mindset of their workforce and embed a global culture.

People Analytics (high impact)

There is a rapid adoption of integrated cloudbased systems and the recruitment of people with analytics backgrounds coming into HR, to be able use people data to inform decisions. • Mobility should ensure that the data they hold can be integrated with people data to help inform decisions related to predicting factors for successful assignments, understanding issues on repatriation and begin to articulate the return on investment. Insightful data will also enable Mobility to engage with key business stakeholders and contribute to strategic partnering.

Design Thinking (low impact)

Organisations need to focus on the employee experience, however processes are not designed with the user experience in mind. • Mobility, Talent and Reward need to partner with HR to update processes that complement technology whilst ensuring the user experience is at the forefront • Mobility also need to determine if employee experience is a priority for the organisation balanced with the need for consistency and cost control.

The Gig Economy (high impact)

There is a lack of understanding amongst leaders as to who and what their workforce comprises. Corporate cultures are also unreceptive to parttime and contingent staff. • Mobility should be able to provide a more globalised view of the workforce and enable getting the right talent, to the right place at the right time • Talent will face the task of attracting, engaging and retaining a diverse set of individuals with a range of contractual relationships with the organisation • Reward packages should be designed to meet the requirements of this diverse population (e.g flexible options, lump sums, commuter packages).

Business Partnering Leadership Awakened (medium impact)

There are leadership gaps due to an ageing population and a focus on positional leadership. Millennials need to develop their experience

before they are ready to lead and there is a need for a more team-centric workforce. • Investment can be made into Mobility to develop leadership pipelines earlier in careers by providing leadership and developmental assignments • In addition, Mobility can support in providing global mentoring and learning programmes by facilitating assignments that focus on closing current and future leadership gaps.

HR Capabilities (high impact)

HR needs to have skills which ensure they understand business strategy and can leverage future technology. They will need to be a valued talent, design and employeeexperience consultant. • Mobility, Talent and Reward are experiencing the same capability gaps. There is a need to provide strategic, value-added support rather than a purely administrative function • Talent needs to focus on recruiting and training those individuals with the future skills required and utilising the tools they have available to begin strategic business partnering • Mobility service delivery needs to be structured in order optimise operations and facilitate strategic business partnering.

Engagement (low impact)

The needs of the workforce are changing where job changes happen rapidly and development is needed quicker. Employees want more flexibility, creativity and purpose. • Mobility touches every HR process which provides the Mobility team with a privileged position of close interactions with the assignee • Mobility should adopt the “always on” approach to keep up with changing objectives of the assignee and co-worker and be willing to adjust the level of support, as appropriate • Metrics are required in order to constantly measure engagement both within the Mobility lifecycle of an assignment, as well as post-assignment.

Agility Organisational Design (high impact)

There is a movement towards a network of teams, whereby small teams deliver results faster, engage people better and stay closer to their mission. • This will mean a rise of employees (and contractors) in different locations working together. This is likely to increase the volume of short-term, project-focused Mobility assignments and business travel • Mobility also needs to ensure that they are considered one of the small teams that solves business problems by working closely with Talent, Reward, Tax, Finance and the business

HR TRENDS Digital HR (medium impact)

With the emergence of digital HR solutions, HR has to rethink the way people work and understand the channel of preference for workers. • The key challenge for Mobility is ensuring that the solutions adopted by the organisation can track and store Mobility data due to the complex nature of assignments • Self-service platforms are now developing and Mobility should consider the best channel for interaction with their assignees depending on their Mobility drivers

Andrew Robb

Partner, Deloitte LLP T: +44 20 7303 3237 E: anrobb@deloitte.co.uk

Learning (low impact)

Organisations need to move towards providing innovative platforms that enable people to develop themselves. Skills are not being developed fast enough. • Individuals want self-learning opportunities and self-select type Mobility assignments will become more in demand as Gen Y and Gen Z enter the workplace • Skills gained via Mobility assignments contributing to the development of global leadership should be tracked and shared • Talent need to consider ways in which

Rumi Das

Director, Deloitte LLP T: +44 20 7007 0433 E: rudas@deloitte.co.uk

employees are trained and developed whilst on assignment (e.g. coaching, online courses etc). As this article shows there is a fundamental link between the trends within HR and how these impact Global Mobility, Talent and Reward. For an organisation to be considered ‘best in class’, they must remain aware of these trends and work to mitigate any negative impact. Deloitte continue to monitor the HR environment, with a survey being conducted in 2017. Sources: 2016 Deloitte Global Mobility Insights, 2016 Deloitte Human Capital Trends Survey

Beth Warner

Associate Director, Deloitte LLP T: +44 20 7303 8643 E: bewarner@deloitte.co.uk

INTERNATIONAL HR ADVISER AUTUMN

The Financial Challenges Facing Senior Executives Working Abroad In today’s increasingly globalised economy, it’s quite common for senior executives of international businesses to spend a period of time working overseas. Most companies provide a comprehensive support structure to make an overseas assignment as easy and hassle-free as possible, but one area that can still catchout the inexperienced is financing a property purchase in a different country. It’s not simply a matter of managing exchange rates and getting to grips with an unfamiliar legal system. There are factors such as regulations and the borrower’s credit history - or, to be more accurate, lack of a credit history in the country in which they want to purchase property – that have the potential to become major stumbling blocks. Take, as an example, a senior executive working for an international business and wanting to buy property in London – a not uncommon scenario. London is not only a leading global financial centre, but is second only to California as a global technology hub. It goes without saying, therefore, that there are a lot of senior executives working here in the UK who are not British. Many opt to live in rental properties for the duration of their assignments, but increasingly some are choosing to buy property in the UK, as they recognise the investment potential that cities such as London have to offer. However, buying property in a country such as the UK when you’re not a permanent resident can be a challenge, particularly if the purchase is being made with a mortgage. Why is that? You would be forgiven for thinking that a senior executive who generates a significant income, has a lucrative bonus scheme and perhaps even vested shares in the company they work for, would have no problem applying for a loan? Unfortunately, it’s not that straightforward. An issue they may encounter, for example, is that they have no credit history and therefore no credit ‘footprint’ here in the UK. Banks will therefore be unable to assess their credit status via UK credit records. Yes, the applicant may have an exemplary credit status in their home country, but that may be of no use in the country in which they want to purchase property.

It’s also quite probable that the applicant’s bank account will be based in their home country and not here in the UK. Unfortunately, many UK financial institutions require mortgage repayments to be made from a UK bank account which, again, can cause issues (many lenders also insist on a UK

It’s not simply a matter of managing exchange rates and getting to grips with an unfamiliar legal system. solicitor so that if notice ever needs to be served, they can do so easily). And to add to the difficulties, a new piece of regulation was introduced not only here in the UK in March this year, but across Europe. Known as the European Mortgage Credit Directive (MCD) its primary objective was to harmonise the regulation of mortgage lending across EU member states, including the United Kingdom. Britain’s decision to leave Europe won’t have an immediate effect on this directive, which is now in force in the UK and across Europe. The MCD, amongst other things, introduces a new definition of a foreign currency loan to the UK market. It considers a foreign currency loan to be: • A mortgage in a different currency to that which a borrower receives income • A mortgage where the borrower is using an asset held in a different currency to fund any part of the loan; or • A mortgage in a different currency to the European Economic Area (EEA) in which the borrower is a resident. Some typical borrower scenarios that are managed under this new definition include:

• If they receive an element of their income (salary or bonus) in a currency other than GBP pounds sterling and that income is required to repay any part of the mortgage; or • If they use any assets held in a currency other than GBP pounds sterling to repay any part of their mortgage; or • If they are not a resident in the UK and want to purchase a property in the UK. So, take for example, a senior executive living and working in the City and buying property in central London. They may receive their annual salary in GBP pounds sterling, but their annual performance bonus in euros or dollars if they work for an international business. If the bonus is used to repay any part of the mortgage, then the loan is classified as a foreign currency mortgage under the new regulations. If the borrower uses any assets (not just salary or bonus – it could be shares or property, for example) that are in a currency other than GBP pounds sterling, then again the loan is classified under MCD as a foreign currency mortgage. Why is this a big deal? Because a significant number of lenders don’t offer foreign currency mortgages. The reason they give is because the number of foreign currency mortgages they deal with is so small it isn’t cost-effective to change their systems and procedures to accommodate the new MCD regulations – such as disclosing to borrowers fluctuations in exchange rates of more than 20%, for example. The same principles outlined above apply in other typical scenarios. The senior executive may be British and working abroad, but wanting to buy property in the UK for investment purposes. If they use any element of their salary or assets that are held in a foreign currency, then the loan is classified as a foreign currency mortgage. The applicant may be a foreign national working for a foreign (or British company) in the UK and wanting to apply for a mortgage here in the UK – the same issues arise. So what can be done to help senior executives address these issues? The good news is that there are specialist financial institutions that can help such borrowers. Here at Investec Private Banking, for example, we’ll not only accept mortgage applications classified as foreign currency loans, but will also provide UK banking as well as mortgage facilities. All mortgage

Private Banking applications are assessed by skilled underwriters, who understand how to deal with issues such as foreign nationals’ lack of a credit footprint here in the UK. What’s more, we are also able to provide a range of complimentary services such as foreign exchange and investment support. However, our mortgage services are designed for borrowers earning a minimum of £300,000 a year or with a net worth of approximately £3million. We’re therefore not for everyone. If you have employees who do not fit the profile described above, it’s worth them taking professional financial advice from a regulated financial adviser. Individuals and firms can be checked on the Financial Conduct Authority register at register.fca.org.uk Employees wanting to buy property abroad can find managing their finances more challenging than they expected and it’s therefore worth understanding which organisations, be they lenders or specialist financial advisers, are best positioned to help. Your property may be repossessed if you do not keep up repayments on your mortgage.

Tom Sykes Investec Private Bank Tom manages business development for the Corporate Executives team at Investec Private Bank. Focusing on the Corporate community, Tom and his team have assisted a number of multi national corporations relocate C suite executives to the UK. Working closely with Global Mobility Managers and HR executives, Tom has developed a deep understanding of the demands in the industry particularly when relocating HNW executives whose finances tend to have an additional layer of complexity. Tom has worked in private client financial services for seven years. Tom studied economics at Edinburgh University before beginning his career at an award winning city based wealth manager where he qualified as a chartered financial planner. Tom advised HNW and UHNW city professionals and executives on all aspects of their personal finances, including investment management, trusts, pensions and taxation. Join a Private Bank that gets you. Call +44 (0)20 7597 3532 Email tom.sykes@investec.co.uk Visit investec.co.uk/privatebanking

INTERNATIONAL HR ADVISER AUTUMN

Hardship Premiums: Why There Is Something Fundamentally Wrong With Them…. Hardship premiums or hardship allowances are paid to employees who are assigned to a country with difficult conditions. They can make up to 30% or sometimes more of their salary. There is something fundamentally wrong with them. Policies define a host of benefits that an assignee and their family are receiving before and on assignment. Basically all of them are defined based on family size. A housing allowance is dependent on it, shipping allowances, spousal assistance and schooling are only provided when accompanied. Often the relocation allowance is based on family size as well, and certainly the cost of living adjustment which is based on spendable income, which is calculated based on family size. With one notable exception: the hardship premium… Hardship premiums are generally calculated as a percentage, on gross or net salary. The percentage is in most cases derived from cost of living provider data and based on numerous factors that constitute a hardship in a destination country. I tend to call it a “financial band aid” because the hardship will not go away because of the extra money. But it helps of course to attract employees to accept assignments into so-called hardship locations.

Benefits paid according to family size

A few companies have recently completely abandoned hardship premiums and just provide material benefits to counter the hardship (e.g. chauffeurs, air filters, family transportation, security training and support etc.). These benefits tend often to be paid on top of a hardship premium where it is still used. If it is still in use, there are two different schools of thought about applying a pointto-point or a so-called western-centric point of view. But I do not want to elaborate on the pros and cons of one or the other approach here, but rather point out something that escapes my mind why it is done in the way that it is commonly done: The ignorance of this allowance about the family.

Benefits paid not according to family size

Cost Of Living Adjustment Housing Travel Shipping Schooling Allowances Health Insurance Spousal Assistance Cultural Training Language Training Relocation Allowance 26

Hardship Premium

If someone is enduring a hardship in a country that has e.g. a very unfavourable climate, poor health services and high crime rate, he or she is entitled to financial compensation for living in these circumstances. Now if he or she is accompanied by their spouses and two children, the policies do not differentiate the payment that the employee is to receive. It should be crystal clear that four persons, let alone two children, who live in a hardship location, do significantly increase the hardship an assignee and their family needs to cope with. Why would a single assignee in a hardship country receive the same amount of compensation for being there, as a father or mother of two, with his or her spouse who endure the same hardship? While policies are promoted as family friendly, and additional allowances are sometimes added even in times of cost savings - in order to counter the demographic challenge of dual-career couples, where the spouse needs to give up his or her job when relocating – the hardship premium is the one that is not paid based on family size. Some may argue now that if you use the net salary to base it on, the tax, which is lower in some jurisdictions depending on family size, represents an inclusion of family size. This might hold true in countries like France, where the tax system favours families and makes them pay significantly less taxes, but not true in other jurisdictions and tax systems. And what about the net salary of Mr. Dubois, who chooses to relocate without spouse and children? He would receive the same as if he chose to take his

HARDSHIP PREMIUMS

Typical Hardship Criteria Taken Into Account By Various Data Providers: • Climate • Crime rate • Pollution • Diseases and health standards • Ease of communications • Public transportation • Physical remoteness • Education • Type of accommodation • Recreation facilities • Family status

spouse and children with him to the same location given a tax equalisation. Where is the consistent treatment and fairness that is likely promised in the foreword of policies or HR philosophies? If you can agree with the points I make above, you are now probably in the search for a solution to the problem. Whilst the cost of living providers produce only percentage points to date, which are not differentiated by family size, one feasible way - that many companies that I advised in the past have followed – is to use the spendable salary to base the hardship premium on. The spendable salary is calculated based on family size and is higher if the family size increases. It is based on spending statistics and the only valid indicator that represents the family situation in relation to the salary. You may now say that this will lower the amounts paid out to assignees, since the basis of calculation is lower, and you are right of course. So it’s basically your choice if you up the percentages by a few percentage points for using this new approach, or even do away with hardship premiums altogether, or if you see it as a welcome cost savings opportunity to lower the hardship premiums, while at the same time providing them in a much more consistent, fair and family friendly way.

CHRIS DEBNER

Managing Director of Chris Debner LLC – Strategic Global Mobility Advisory. He has nearly 20 years of experience in Mobility Advisory from working for a professional services firm. Last year he was awarded the Global Mobility Professional of the year award by the Forum for Expatriate Management. Chris is based in Zurich, Switzerland and provides his mobility advisory and coaching worldwide. For further information: www.chrisdebner.com +41 797966908 or email contact@chrisdebner.com.

INTERNATIONAL HR ADVISER AUTUMN

Managing The Risks And Challenges Of Brexit Relocations: An Imperative Affecting Mobility Functions Around The World During one of the most notable political times in recent history, Global Mobility and Talent Management functions have the opportunity to be pro-active with the most senior business executive by applying their insight and expertise to the possible business models. Interestingly, approximately 60% of ‘c-suite’ leaders in Circle Research’s Mobility Survey advised they would have to have their Global Mobility teams focused on business succession planning, workforce planning and helping them to articulate the return on their investment. Here, as articulated by Chris Debner, is a perfect opportunity for Global Mobility to demonstrate such value. Chris Debner is a renowned leader in strategic mobility advisory and the relocation of organisations and their employees. In the past fourteen years, Chris has supported and advised on more than twenty-five company relocations between various countries within Europe. It is essential that business leaders work in unison with their specialist advisers. Too often, business leaders will take un-informed decisions or make promises publicly, without fully understanding the fiscal, people and compliance risks associated with such promises. There is often a desire to convince or please employees whom they see value as key talent that need to be retained. When such promises cannot be delivered – for a variety of internal and external reasons, this can then lead to subsequent back-tracking, loss of confidence, and credibility that could have been avoided by getting the specialists engaged in the earliest possible stages. This is a multi-dimensional transformation project that has to be delivered in a compressed time-scale. No easy task. Planning, stamina and communication are key ingredients in a successful large-scale relocation project. If an organisation’s relocation is to be successful - with a high acceptance rate

of targeted employees, minimal business disruption, and the retention of key talent - then the mobility and talent functions have to play a major role from the onset of discussions about the possibility. This article provides insights into the key aspects of relocation that should be considered, and highlights how to overcome the related risks and challenges. At the end of the paper you can also find a list of key questions. Having a structured and better understanding of a relocation can help provide more meaningful input into management.

Key Aspects Of Relocating A Group Of Employees

It takes more to relocate a group of employees than to manage a standard expatriate programme. The relocation of groups of employees share a few common characteristics that distinguish them significantly from the usual international assignment management business. The following six aspects will be explored in more detail: 1. Permanent move characteristics 2. Destination attractiveness 3. Relocation attractiveness 4. Employee communication needs 5. Group dynamics effect 6. Change management aspects.

Permanent Move Characteristics

A permanent move aims at integrating an employee fully into the organisation in a new country, which has implications for human resources, compensation and benefits, taxation and social security. The linkages back to the home country are effectively broken and there is no return ticket issued. Potentially, this can lead to a much lower attractiveness for an employee to make the move other than specified (for a 3-year assignment for example). The alternative in a group move is often to become redundant. This is due to the job moving versus the employee moving to a job in a different country.

Destination Attractiveness

Multiple factors determine the choice for a

new location for a company. However, the attractiveness for employees should be one of the key decision criteria in the location decision. The best tax rates or employerfriendly labour laws, for example, are of secondary importance, particularly if the targeted employees and their families cannot be convinced to relocate and be retained in the new location.

Talent Location Assessment Criteria, Include:

Other, more miscellaneous criteria, can include; access to work permits, primary and secondary languages, immigration policies, and relationship with local government agencies.

Relocation Attractiveness

A group relocation for employees and their families can be a very tough decision. In order to keep employees and their families engaged, and positive, companies need to show that they care for their needs. Since financial aspects are a clear driver for attractiveness, a bespoke group relocation strategy and policy should be designed, and packages developed that balance the attractiveness with cost. The company should allow employees to make an informed decision about their future, by being transparent and supportive, and allowing employees sufficient time to make up their mind.

Employee Communication Needs

Employees who are asked to relocate permanently with their families to a new location normally have much higher information requirements than the temporary international assignee and their family. Comprehensive country information should be provided, which includes details such as pension plans, health insurance, social security, labour law, and aspects about leaving the country. All these factors are relevant to the decision process. The timing of communication is a key success factor. Ideally comprehensive information on the offered relocation packages, the future compensation and benefits, and location information should be made available

BREXIT RELOCATIONS immediately after the announcement of a relocation. Answers to potential questions and a clear timeline for the employees should be given. Any delay in communicating this information, or pre-empting answers to typical questions, will ultimately create insecurity. This can influence employee engagement and in its absence can often lead to wrong answers.

Group Dynamics Effect

The effect of the group dynamics should not be underestimated. In employee groups there are always different attitudes to a planned relocation and the people with a negative stance towards it will influence other members of the group. Any insecurity due to a delayed or incomprehensive communication about the location can become detrimental for the acceptance success of the targeted employee(s). Top management commitment and the use of strategic messaging is a great way to mitigate the risks of group dynamics.

Change Management Aspects

Understandably, a group relocation is a big change for any organisation. There are multiple change management aspects such as stakeholder management, strategic messaging, and management buy-in, considerations of interfaces, effective project management and timing. Considerations around non-movers and the impact on their careers, in order to retain them, is often overlooked. It is important to make considerations about change management, and plan and prepare thoroughly before announcing a planned relocation.

What Are The Key Risks And Challenges Relocating A Group Of Employees?

The following are considered by various companies from different industry sectors as the key risks and challenges associated with a group relocation(s): • Business disruption • Costs • Competency and capacity • Confidentiality • Compliance • Commuters.

Business Disruption

The biggest risk in group relocation is a potential business disruption. Well managed relocations generate typically a ‘pick-up’ rate of up to 95% of the targeted employees. If the pick-up rate drops below 80% there is a risk that replacement hires cannot be completed quickly enough. The newly hired talent could have a negative impact, with their inexperience, on successful business operations in the new location.

Costs

When reviewing costs, it has proven successful to separate one-off relocation costs from ongoing employment costs. Costs play a major role in the location decision for a business. While at this time the policies and compensation packages are likely not yet designed, it becomes a challenge to make valid estimates. The relocation costs should be looked at in comparison to the potential replacement cost that could be incurred when a targeted employee rejects the relocation offer, or becomes redundant. A new employee needs to be found on the market to replace the incumbent of the relocated position. Depending on the level of seniority, typically the cost is between one and four times that of an annual salary per position. This includes severance payments, hiring costs and training costs - without even taking into consideration the likely costs of a performance lag of a new employee versus the experience of the previous role holder. This is something companies should keep in mind when designing bespoke group relocation policies and individual packages. By adopting a more holistic approach to the group relocation proposition, global mobility teams can demonstrate their value to the business by helping business leaders to assess their options from all aspects. Not only focusing on some of the more reactive and emotional tensions – especially in teams that have tightly knit units, including business leaders.

Competence And Capacity

Another challenge is to realistically assess your competencies and capacity in Talent and Mobility functions, in both the location of origin as well as in the new location. If groups of more than ten people - or as some discuss several hundred employees - are intended to be relocated, most mobility functions will reach their limits in terms of capacity. The same is usually true for the HR function and organisation in the new location as a whole, particularly when they have to manage an intake of numerous new employees all at once. With this, coupled with the additional project planning and change management efforts needed, it’s clear that (external) help is likely to be needed. It is therefore important to identify and consult with potential partners in both the current and future locations. Partners can act as a filter and an independent extension of the company’s team to address employee’s concerns more objectively – helping to ensure exceptions to a relocation policy are minimised or even better, consistently but differentially based on the employee’s situation.

Confidentiality

Traditionally the mobility function has a major role in group relocations because it has the relevant strategic and operational expertise and vendor network. What should definitely be avoided, however, is that the Mobility and Talent functions learn about a planned group move only when the management announces it publicly. Talent functions learn about a planned group move only when the management announces it publicly. In the past, companies have faced situations where their employees learned about the relocation from public media, before the company informed them. This creates an immediate loss of trust by the employees and makes the subsequent management of the relocation much more difficult. Confidentiality is therefore another key consideration in relocations. Professional service firms and relocation companies are often engaged in strictly confidential relocations and this is an

INTERNATIONAL HR ADVISER AUTUMN

added advantage of being able to undertake assured forward planning and minimise potential information leakages.

Compliance Risks

Relocations always require companies to deal with tax, social security, immigration, labour law and duty of care. Relevant questions that need to be dealt with are around recharges of the relocation cost, permanent establishment risks and, in case of a ‘green-field’ move (moving people into a new entity), and the whole set-up of a new organisation. Undertaking a ‘turn-key group relocation’ through the use of a dedicated team to act, operationally, as a single point of co-ordination and provide management information to the company’s management team handling the group relocation. Never under estimate the time and resources required to ensure that all parties are informed with the right data. Updates on progress should be realtime to avoid miscommunications.

Commuters

The UK and some of the potential future EU locations are well connected by air travel, so it is likely that commuting between the UK and the new workplace location will be a point of discussion, both by employees as well as between business leaders and Mobility and Talent Management, as part of the discussion about the relocation strategy. Commuters come with multiple risks that should be considered. The costs involved in financing a commute for the employees are typically underestimated and unsustainable in the long run. Plus, compliance is also getting more complex. Even if employees choose to finance their own commute, this can create tax and compliance obligations for the employer. The possible shrinking working week of when employees fly in on Monday morning and leave Friday afternoon is another consideration, as well as the incentivisation of a family separation and the cultural aspects of living and working between two different locations.

Conclusion

The trend that companies are likely to relocate groups in the wake of the Brexit poses a great opportunity for the Mobility and Talent Management functions to prove themselves to the business leadership. Group relocations require extensive change management that needs strategic planning and consideration of the associated risks and challenges. Companies tend to have little or no experience in relocating groups, and the impact of the multiple risks materialising is far greater. There is only one chance to get it right. It is strongly recommended to properly prepare for a group relocation, ahead of any announcement. Project planning, the right relocation strategy, change management, and possibly the selection of trusted external partner(s) are of paramount importance to ensure that business

continuity is maintained, and key talent is retained post relocation. Organisations need to ensure that before they get too far into the relocation planning process, they have carefully selected an extended (external) team who can provide the necessary support from the planning,through to post relocation stabilisation. Over the next decade, the concept of one-way permanent transfers of employees, rather than long-term three to five year secondments, is likely to become more popular for internationally mobile employees. To some extent a group relocation is a magnified version of this. Educating employees about the need to be internationally mobile as part of their career development should become part of an organisations’ DNA, which in some companies has already happened. It is evident that as a result of Brexit, global mobility functions have been offered an opportunity to demonstrate how they can help shape the future growth of a business. If your global mobility function has yet to been invited to discuss potential talent moves in this crucial business decision, then we recommend a pro-active communication either directly to business leaders or through executive HR leadership. This is a task for all mobility functions in headquarters around the world, as this not only affects UK headquarters, especially if a company has a substantial amount of talent in the UK.

It is evident that as a result of Brexit, global mobility functions have been offered an opportunity to demonstrate how they can help shape the future growth of a business. Key Questions

1. Do you understand who is to be targeted for the move, and who is to remain? 2. Is there a realistic timeline for the relocation? 3. Do you have a project plan that specifies timelines, responsibilities and identifies where external help is needed?

4. Do you have considered a position versus talent move - is it that the company needs the employee to move, or their job, and can a local hire carry out the same role? 5. Do you plan to offer key talent different package than other (local) employees – employee equity? 6. How does the group relocation strategy fit with company’s global mobility strategy and other policies, such as the culture of the organisation? 7. What terms, and when, will localisation happen (in the case that local packages are not decided from the start)? 8. Have you considered both one-off and ongoing costs, as well as replacement and training costs for non-movers (cost management and control)? 9. What are the barriers and enablers of change and acceptance in the company? 10. Can you maintain a balance between keeping costs down, while providing enough incentive for employees to accept the relocation? 11. Are tax and social security planning, and its related cost, being taken into account when designing relocation compensation and benefits? 12. Does the relocation policy promote tax and legal compliance and mitigate permanent establishment risk? 13. Is a close cooperation ensured between Talent Management and the Mobility function with other work streams of the project? 14. Under what circumstances are ‘commuters’ allowed, if any? 15. Do you have a contingency plan for the quick hiring of replacements (for employees that did not relocate)?

Mark Rising

For more information on Santa Fe Relocation Services please contact Mark Rising, UK Commercial Director, Telephone: +44 (0) 7500 091 708 Email: mark.rising@santaferelo.com. Website: www.santaferelo.com

SERVICED APARTMENTS

Celebrating Milestones, Respecting The Past And Recognising The Future Of The Serviced Apartment Sector GSAIR 2016/17 - The 6th Global Serviced Apartment Industry Report has stolen the summer headlines with the estimation that Serviced Apartments will hit the magical 1 million unit mark by the time the next report is published in 2018/2019. What an incredible milestone for the serviced apartment industry, and what a year for us all to celebrate the continued growth, development and trajectory of this exciting sector as it defines, refines and re-engineers itself across the globe. After a summer of inspiring sport, where personal, world and Olympic records were broken by global athletes who were given centre stage after 4 years (and sometimes a lifetime) of dedication and preparation, the reality of their achievements are recognised

...what a year for us all to celebrate the continued growth, development and trajectory of this exciting sector as it defines, refines and re-engineers itself across the globe.

with medals and celebrations for their outstanding contribution to their fellow team members, their sport and their country. The achievements in the serviced apartment sector are many, but when we record the definitive milestone of 1 million units globally, many of the industry founders will remember just how their journey started in this young sector and just how challenging it has been to get recognition for the product and solution. The journey to 1 million units started slowly, the early operators, the entrepreneurs, the coal face sales people who had to win the hearts and minds of buyers and ask them to recognise the value of putting this alternative extended stay option into their programme, and for serviced apartments to be given the opportunity to run alongside the wellknown and trusted hotels, had a big ask of them. My opinion is that they did a great job. The concept of course didn’t quite take off as fast as the recent sharing community business models – but then the personalities involved were not all ‘system savvy’ – they were property, hospitality and sales people. For the last 20 years at least, these sales people, MD’s, brands and business owners have been endeavouring to show the value proposition to the buying communities in business travel, procurement, relocation, human resources and of course, global mobility of this ‘new kid on the block’ solution. The amount of SWOT analysis that has been completed in every serviced apartment business, I promise you, is astronomical. These founders had the role of encouraging companies to become early adopters of a completely new concept, to take a slightly uneducated risk, but to trust the founders in their belief that this option was not just a blip on the landscape, but a credible sustainable accommodation solution that offered both then and now the absolute unique selling points of space, comfort, cost savings and an immediate immersion into in the local community. The fact that we are now reaching such a critical mass has ensured that the

serviced apartment sector can take its rightful place at the table as an alternative in the accommodation sector and as an experienced, trusted and professional provider in the hospitality world. As you thumb through the 116 pages of conversation, debate, interviews, contributions, information and graphics in GSAIR 2016/17, the report takes you on a global journey across world continents, recognising new entrants, current trends, global brands, local operators and the market forces that support the changes in supply and demand every day. It talks to the leaders, the movers and the shakers that constantly keep the sector moving, that keep the debates alive, that want to legitimise the sector for health and safety, but want to keep the entrepreneurs still engaged. The majority of players want to continue to create a sector that doesn’t become boxed in without personality, but one that creates a healthy diverse community with its own celebrated culture. We are already lucky in our industry that we have created our own eco-system. We have notoriously increased and decreased our units with the use of corporate housing stock, much to the confusion of anyone who tries to ask ‘just how many units do you own/ manage/operate?’ Well known across the buying community as the sector that can ‘ebb and flow’ with increasing new demand or reducing during a down turn, we were the first to the table in the sharing community. We, in serviced apartments, have been using each-others units for 20 years to meet the needs of the clients that we service. This is how corporate housing operators quickly become agents (or hybrids) providing global coverage through the use of the portfolio of other operators. Counting units and understanding the size of an operator became very difficult when you never knew who was the ultimate operator of the units... this challenge still exists today. Enter the agents, who stand alone and only book into operator inventory. Service

INTERNATIONAL HR ADVISER AUTUMN

is important to everyone, of course, so is a system – and some agents are only now realising the need to have one, and the biggest realisation is that buying a system is very expensive or time consuming and expensive to build - investing early is a must. But what agents are truly global in their coverage, in their office locations, in their understanding of currency, tax, global data, single systems and security. Is it all about how fast the options come to the table, how great your reservations agent is, or do you need to lift the bonnet, and kick the tyres – GSAIR helps you to do this. GSAIR talks to the individuals, the companies and the brands that are not concerned that sharing their ideas freely educates the competition, they are already ahead of the game and moving freely into new territories and service offerings without holding onto their last USP – they are busy creating their next. They are ready to share their thoughts and aspirations and are happy to debate and discuss their goals and future direction of their business and their markets. Commissioned by Charlie McCrow, data compiled by Bard Vos, edited by Mark Harris and compiled by the Travel Intelligence Network (TIN) for The Apartment Service, the new 6th edition of GSAIR highlights the continued strong supply growth globally with increasing interest and demand from all buying communities. The report has recognised three key requirements highlighted by the respondents of the survey that will continue this positive growth in the industry: 1) The continued need for product and service definition 2) User friendly technology 3) Business model transparency. This report is the most detailed yet, featuring brand profiles, key statistics and the findings of the global surveys conducted amongst 10,000 serviced apartment operators, associations, buyers and agents. Charlie McCrow, CEO of The Apartment Service advised in the report that 'sector expansion has brought a proliferation of new brands by operators who are personalising their offerings to different niche audiences, though few of these enjoy widespread consumer recognition so far. In addition, there could also be imminent brand consolidation, as Hilton have announced with their extended stay portfolio’. This year’s GSAIR surveys have shown that serviced apartment usage across the globe is continuing to increase. Two years ago, approximately three-quarters of corporates had sampled serviced apartments. Current research for the latest edition showed that 47.37% of corporate buyers have increased usage of apartments for business travel - a very positive growth in adoption across the buying community.

Importantly, creating clarity, transparency and product definition of provider’s service model is paramount to building trust amongst buyers and investors, ensuring a continued interest and development of the sector. Hotel-like services are only a priority for 35.38% of corporates, showing continued demand for corporate housing style serviced apartments as well as aparthotel products – this is an important factor to be considered when discussing future demand requirements for corporate buyers But what about supply – how is it keeping up with demand…? Charlie McCrow explained that ‘supply is expanding across all global regions, driven by rising institutional and private investment and that incremental profits on offer make this investment class very attractive. At the time of the first GSAIR in 2008 there were 401,997 apartments in 6,722 locations. Eight years later supply of apartments has more than doubled to 826,759 apartments worldwide. Supply is up 10.5% year-on-year and has increased in every global region’. Importantly, creating clarity, transparency and product definition of provider’s service model is paramount to building trust amongst buyers and investors, ensuring a continued interest and development of the sector. Having greater transparency around distribution channels will ensure customers know what they are buying, and from who. The need for education about the serviced apartment product, its suppliers and best

practice in deployment is no less important now than it was in 2008, when the first GSAIR was published. Our role as leaders in our industry is to respect our history to enable everyone to fully engage with the future. When young athletes are standing on the podium, accepting their medals and representing their country, who in the audience is looking at the credits to give a ‘pat on the back’ to the dedicated, tenacious, relentless, strategic, courageous, ambitious and trusted coaches who helped these global players to become the best in the world?

Key Findings

• Growth in the supply of serviced apartments is up 10.5% to 826,759 since the launch of GSAIR 2015/2016 and has doubled in the last 8 years • Post-recession corporate re-engineering and re-structuring has encouraged higher adoption rates of serviced apartment solutions – 47.37% of corporate buyers increasing usage of serviced apartments since the last survey • Duty of care remains a high agenda item for global mobility buyers and corporate buyers • Operators are diversifying accommodation products to cater for new buying trends.

Jo Layton

MD Group Commercial Sales, The Apartment Service. Jo Layton has joined The Apartment Service as Managing Director – Group Commercial Sales. She has successfully established The Apartment Service’s new Alliance brand as part of her overall remit to develop the company’s successful agency, network and Roomspace brands. Layton joined from BridgeStreet where she was responsible for sales and marketing throughout EMEA and APAC.

CHARLIE MCCROW

owns The Apartment Service, Roomspace and The TAS Alliance and has been publishing GSAIR in its current format for 10 years.

GLOBAL MOBILITY insight

Does Diversity And Inclusion Play A Part In The Ever Shifting Global Mobility Platform?

When we think about assignments and the stereotypical type of people we move on assignments, why is it we think of male senior executives? Is it because traditionally these were the main bread and butter for organisations? Is it because traditionally we didn’t move people who were not a certain company rank? Is it because traditionally senior executives tended to be male?

The Purpose Of New Assignment Types

Assignment types are changing and developing to include new varieties which encompasses the developing business needs and the rationale behind moving people. Companies are wising up and are moving people for different company needs as well as taking in to account people’s personal needs and criteria. Commuter, early career, local plus, as well as a number of bespoke assignment types are emerging. Traditional short-term, long-term and localisation assignments are still in play, however, the number of strategic long-term assignments are reducing in numbers. Is this due to the changing and developing company needs or is it a cost saving measure? It is most probably due to a mixture of both, companies are keen to continue moving people cross border, however, the talent pool is growing and many companies can source locally talented employees. If a company can find a local resource, then why should a company pay an expat package? Companies can now offer local packages to their mobile population. As competition increases for the roles there is a wider pool for companies to select from. What do these new assignment types mean? Why are companies introducing them? Many companies have mobility on the forefront of their agendas, companies know that a more mobile workforce can increase profitability

especially when linked to the talent agenda. Global Mobility provides a mechanism for knowledge share as well as strong career development and positive cultural awareness. New recruits are often keen to join companies where mobility is a possibility. Companies are keen to do more business cross border due to the ever disappearing border lines and the feeling that the world isn’t quite as big as it once seemed.

The working platform is evolving and the demographics are changing, Global Mobility is changing, companies are recognising that the world is getting smaller and the fact that more and more people are mobile, regardless of rank, race or gender. Family dynamics have changed, the traditional two point four is shifting, and stay at home mothers are no longer the norm. Assignment types with split family arrangements are increasing and the need for companies to be flexible and for mobility to

think outside the box to implement workable solutions is on the increase. Gaining new experiences is considered beneficial to a successful workplace, and with this perspective more companies are looking to send the younger generation of their workforce on cheaper moves that will motivate longevity and provide a vast number of intangible benefits to all parties concerned.

Gender Gap

Many companies are looking to close the gender gap and the stereotypical all male executive teams. It is slowly appearing more and more common for women in business to be in high positions and to be the main bread winner of their families. This however, does not mean the gender gap is closing fast enough. The World Economic Forum believes equality would take anywhere up to a further 79 years to truly happen. Women are an important part of every global organisation and as more steps are taken to promote, retain and develop female talent, it is shocking to see that in a high number of companies’, global mobility and the gender gap in regards to moving women is still very visible. Many women join global companies who have Global Mobility high on their agenda as women want to have these experiences and would like to go on international assignments, however, many women feel that their male counterparts will be given first selection rights. If companies want to reduce the gender gap in Global Mobility, then they must start with a more robust and better aligned working strategy in regards to Diversity and Talent agendas.

Diversity And Inclusion, New Issues For Global Mobility

Diversity and inclusion is key to contributing to a motivated workforce. People thrive better in environments where they feel equal regardless of race, gender, sexual preference and religious beliefs. The Global Mobility platform is needing to adapt rapidly to the growing changes and perceptions from both an internal and external perspective. What are the main issues for Global Mobility and the Diversity and Inclusion agenda? Why

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are companies still lagging behind? Women and the want to experience international moves is stampeded by the perception that women who have children donâ&#x20AC;&#x2122;t want to move internationally. This isnâ&#x20AC;&#x2122;t the case anymore, women should be given equal opportunities. When their male counterparts move, they often move with their partners and their children. Why do companies not question whether their male workforce want to move? Even where companies try to embed Diversity and Inclusion into their Global Mobility strategy, it appears that cost does contribute as to who is ultimately selected for the assignments. If companies need to spend more to achieve full diversity and inclusion it appears that the selection process reverses to the traditional norm or the new norm of local hires. If cost was not an obstacle, would embedding the Diversity and Inclusion model into a Global Mobility agenda still have issues? Thus meaning an increase in support for single parents, split families, same sex couples and employees with extended families. This would not be without its own challenges and these could pose different constraints. Immigration for same sex couples can create issues in certain jurisdictions where the relationships are not recognised. This can of course rapidly shift the selection process.

Creative thinking from Global Mobility in regards to potential split family situations can sometimes evert problems, however, often assignments end sooner than anticipated when new fixes are forced on to potential moves. Split family situations seem to be on the increase, however, how long can families realistically be separated for, and how many people want to work abroad whist their family are back home? This can work for shorter assignments, but longer-term it would be challenging and can in fact mean early repatriation. Single parent selections can cause issues as often companies must wait for the courts to grant permission for the child to leave the country. This can often be lengthy, and as such companies prefer to stick to safer options and perhaps the most suitable candidate is thus not selected.

Conclusion

Diversity and Inclusion plays a strong part in Global Mobility and new wave mobility moves, however, there are still certain steps that must be accounted for if companies are going to fully succeed in having a diverse mobility population. Increasingly Global Mobility is creating new policies to embrace the changing dynamics, internal and external constraints do however, play a part in the ultimate execution.

Nicole Milman

Senior Global Mobility Professional with over 12 years experience. Having previously worked with EY in both the UK and the US, building the global cross border function which manages tax and immigration compliance for business travellers. Leading teams and managing strategic projects to achieve objectives and create sustainable mobility functions has helped Nicole achieve a best practice approach. Nicole currently leads the programme development with Philip Morris International, creating and implementing new policies as well as developing the global mobility programmes. Nicole has lived and worked in numerous countries, Hong Kong, Israel, China, USA, UK and currently Poland - this most certainly gives her insight and perspective of different challenges facing the mobility arena.

EMPLOYMENT LAW

Brexit, Employment Law And Global Mobility Juliet Carp of Dorsey & Whitney (Europe) LLP takes a closer look at the employment law implications of the UK’s referendum decision to leave the EU.

UK Employment Law – Business As Usual

The UK’s “Brexit” vote has political weight but, as has been discussed at length, does not bind the UK Parliament or the EU. Even a firm decision by the UK to trigger the formal “Article 50” two year exit process will not immediately affect UK employment or immigration law. Employment law is currently expected to remain relatively static even after the UK leaves the EU. The outcome for immigration law is far more uncertain but, given that immigration has been a key issue in the Brexit debate, it does seem likely that after Brexit free movement between the UK and Europe will be more restricted.

A firm decision by the UK to trigger the formal “Article 50” two year exit process will not immediately affect UK employment or immigration law. European “Local Hires”

It follows that employers in the UK are likely to be more restricted in their ability to treat Continental European nationals as “local hires”. Assuming “New EU” nationals are no longer able to freely travel to the UK to look for jobs, there will be an increasing need

to offer potential recruits “expatriate terms”. These might include, for example, terms limiting the period of employment, setting immigration conditions and providing for relocation and repatriation support. Employees without an expectation of permanent settlement in the UK may well expect more practical support, e.g. in relation to temporary housing, education, tax assistance etc.

Working Across Europe

Corresponding constraints are likely to apply to UK nationals seeking to move permanently to other parts of the EU. Tempering this is, of course, the huge number of UK nationals who currently hold more than one EU passport, or who could potentially apply for another EU passport. Many would, presumably, remain free to travel and work in “New EU” countries permanently, or temporarily, even after Brexit. Even without the large number of potentially EU-mobile Europeans that will remain in the UK after Brexit, it does seem unlikely that New EU will critically limit the ability of UK nationals to make business trips to Europe, given the flexibility already offered to non-EU nationals. Common sense tells us that the number of short-term business trips and international commuter arrangements is more likely to increase. All this points to more work for global mobility specialists – but this is work that global mobility teams in international businesses are used to managing, and there is plenty of time to build up capacity. Smaller organisations with less in-house expertise will naturally find change more challenging to manage.

Business Relocation

It is accepted that some businesses will be under commercial pressure to relocate to other European locations. Examples might be: • Organisations receiving significant EU funding that is conditional on physical location of certain activities in the EU • A need for financial services activities to be located in the right place to ensure that EU “passporting” rights are retained (or can be obtained in future) • Manufacturers and retailers buying or selling products from/to European markets (and elsewhere) who may need to respond to additional trade tariffs. The extent of this pressure will of course depend on both the nature of the business

and the outcome, or anticipated outcome, of negotiations between the UK and EU (and other trade partners). Any decision to relocate business activities is likely to take account of all the usual commercial balancing factors such as the cost of relocation, appropriate labour supply in the new location; ongoing transport, resource, staffing, tax and other costs etc. Currently, we can only speculate on the likely extent of relocation. If a business, or part of a business, is relocated from the UK to another European jurisdiction, individual UK-based employees are likely to either transfer to a new “host” location (most likely, given the corporate tax context, to be employed by a new employing entity registered in that host location), or to be subject to dismissal in the UK for redundancy. Moving a discrete activity from the UK to another European location will inevitably require consideration of a range of UK employment laws, including transfer of undertakings laws (known here as “TUPE”), redundancy and other dismissal laws. In addition, laws applicable in the new host location will need to be taken into consideration, for example, host country immigration and employment laws and those that might impact on future running and closure costs if the move is not successful. Potential ongoing employer social security costs alone may be sufficient to discourage some businesses from making a move. Timing will be important for legal compliance and to minimise relocation costs. For example, because formal collective consultation obligations may be triggered under both TUPE and redundancy legislation (and potentially equivalent host country laws), a period of consultation may be required before firm decisions related to international relocation are made. As with any complex employment law process, it is good to keep people in mind when planning. The reality, given the challenges presented by changing dual careers, languages, children’s education etc., may be that many employees will choose not to move, and necessary staff may require considerable incentive to do so. Managing redundancies, incentives and “special deals” (such as transitional commuter arrangements) for key individuals in parallel is likely to not only be complex but very expensive. It remains to be seen whether many businesses will attempt large scale international relocation

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and whether, in reality, some UK-based activity will simply be discontinued.

Commuters, Consultants And Other Quick Fixes

A special mention should be made of international commuter arrangements as these are often cited as a potential “quick fix”. They can, of course, be just that. But, apart from the inevitable impact of frequent travel on individuals (which should not be underestimated), these arrangements are particularly complex for an employer to set up and administer. Working part-time or temporarily in another jurisdiction does not relieve the employer of all the usual compliance that goes with international assignments, from preparing new documents to administering accommodation assistance, expenses and tax and social security compliance properly. Another “quick fix” may be to hire local “consultants” to work temporarily on a selfemployed basis where EU work is needed in the short-term, on the basis that contractor arrangements are easier to administer and terminate. They often are, but businesses should be careful not to inadvertently hire a self-employed “commercial agent” (bringing with it onerous termination penalties and other obligations), or to fail to comply with employment obligations where, in reality,

the individual is not self-employed. Penalties for failing to comply with European payroll tax and social security obligations can be particularly severe. Beware too, the temptation to assume that having employees work remotely could help the business avoid the “people” complexity of an international relocation. Home working employees are still employees and closing down a UK operation and leaving the employees to work at home in the UK is unlikely to help a business successfully argue with tax authorities that the work is carried out somewhere else.

specialists and specialist UK (and host) HR teams as businesses try to mesh together the often conflicting demands of global mobility efficiency with redundancyrelated obligations.

Brexit, Global Mobility And Employment Law

As in other areas, the Brexit vote has had little immediate impact on laws relating to global mobility. It is a fair bet, though, that global mobility specialists will be busier in years to come. Little is technically new here, but the costs of getting things wrong may be considerably higher as the number of affected people rises. And, as always with developing expertise, public authorities will become more adept at managing things too: recent focus on business visitor compliance being a good example. Going forward, getting things “right” is also likely to require much closer collaboration between global mobility

Juliet Carp

An employment law specialist with full service international law firm Dorsey & Whitney. She is author of the leading textbook for lawyers, international HR and global mobility professionals "Drafting Employment Documents for Expatriates”. Email: carp.juliet@dorsey.com

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diary dates

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OCTOBER

Worldwide ERC® Global Workforce Symposium

5-7 October 2016 Marriott Wardman Park Hotel, Washington, D.C., USA The leaders in global workforce mobility will be networking, strategising and sharing ideas for thriving in the global marketplace. Experience new heights in workforce mobility by attending the largest gathering of global mobility professionals in the United States. Boost your personal and professional development with additional options, including the Strategic Talent MobilitySM training on 4 October, or a classroom-style session of Module 3 of the Global Mobility Specialist (GMS)® training programme on 5 October. Learn more and be notified when registration opens at www.WorldwideERC.org/Events

Developing Talent With Rotational Assignments

19 October 2016 Learn how rotational assignments can broaden employees’ skills, encourage them to take measured risks, expand their knowledge and foster leadership qualities, to the benefit of assignees and companies alike. Gain insights into how such assignments can serve as valuable talent recruitment and retention tools. Free webinar, sponsored by Plus Relocation, 19:00 BST. Register at www.WorldwideERC.org/webinars

Global Mobility Specialist (GMS)® Module 3 Training

19 October (Singapore) and 26 October (Hong Kong) 2016 Engage in interactive learning and connecting with mobility peers at the in-person presentation of The Intercultural Challenge: Supporting Successful International Assignments, one of the three-part series in the Worldwide ERC® global accreditation, offered in Singapore and Hong Kong this October. Learn more and register at: www.WorldwideERC.org/GMS

Master Series: Oceania Immigration Updates – Australia and New Zealand in Focus

21 October 2016 Benefit from an in-depth look at employersponsored visa programmes and recent legislative changes impacting immigration in the two countries. Hosted by Worldwide ERC®, in partnership with Berry, Appleman & Leiden (BAL Global) at the Karstens Conference Center in Sydney. Complimentary registration for corporate HR mobility practitioners. See details and register at www.WorldwideERC. org/MasterSeries

HR Tech World - Paris

25-26 October 2016 Palais des Congres, Paris HR Tech World opens in Paris again this year; recognised globally as the leading event on the Future of Work. Our growing community has influence over 40 million employees worldwide.

With tracks on HR technology, smart data, recruitment, payroll, leadership and adoption, HR Tech World features speakers from around the world including keynote Professor Gary Hamel and organisations such as L'Oreal, BlaBlaCar, Microsoft, Google and Airbnb. Find out more at www.hrtechcongress.com

Understanding your Corporate Liability for Securing the Safety of Travelling Employees and Expats Overseas

26-27 October 2016 New York, NY, United States Ensuring the safety of your expatriate workforce and travelling employees involves both workplace and domestic management. The traditional HR and corporate security functions extend far beyond the workplace in order to identify and analyse the foreseeable risks which an expat assignee or business traveller may be exposed to while on assignment. Without a robust crisis management plan in place, the impact of such incidents can be exacerbated and if duty of care is not robustly demonstrated by employer or institution, then the repercussions can be colossal, resulting in law suits and loss of reputation. Yet workplace health and safety laws offer little guidance on the practical steps employers should take to protect staff travelling and living abroad so what should employers do to limit and contain their liability? For more information, a copy of the programme and details of how to register, visit www. contegoevents.com, email caroline@ contegoevents.com or call Caroline Fuller on +44 (0)7974 406673.

NOVEMBER

FEM Summit & EMMAs EMEA

10-11 November 2016 Intercontinental O2, London, UK From talent recruitment, retention, to how to measure ROI and manage your costs, this year’s plenary sessions will give you the opportunity to debate the biggest shifts taking place in global mobility. Hear from successful companies across a wide range of industries and understand how global mobility can become more strategic, increase its value and influence across HR and the wider business. Find out more information at www.emea.forumexpat-management.com

So Your Work Involves Immigration…How Not to Go Crazy

15 November 2016 Make your life a bit easier by gaining tips for improving the immigration process, understanding your options, managing internal policies and contacts and prioritising the must-have elements for your programme. Complimentary webinar, sponsored by Xerox Relocation & Assignment Services LLC. 19:00 GMT. Register at www.WorldwideERC.org/webinars

Annual EMEA HR Summit

17–18 November 2016 Bentley Hotel, London, UK Aimed at global HR leaders, the Europe, Middle-

East and Africa HR Summit will cover hot topics; Talent & Capability Development, Performance & Rewards, Talent Mobility in EMEA, HR Transformation & Change Management and much more. The three-day conference will focus on new trends in various markets, explore some of the unconventional ways of managing a diverse workforce and recent developments in the continually evolving role of a global HR. Delegates are invited to take part in the practical and highly interactive masterclass on Talent 2025, by Gyan Nagpal. Engage in a diverse range of sessions with HR professionals from leading, global brands. Find out more and register at www.boc-uk.com/ conferences/emerging-markets-hr-summit

São Paulo Summit

30 November 2016 A half-day of cutting-edge content including roundtable discussions on the key talent mobility challenges and opportunities in Latin America, and a Global Thought Leaders Dialogue panel, with Worldwide ERC® President & CEO, Peggy Smith, SCRP, SGMS-T presiding as moderator. Renaissance São Paulo, Brazil. Obtain further details and register at www.WorldwideERC.org/Events

The Engaging Employees Conference – Optimising Performance

30th November 2016 De Vere Venues Canary Wharf, London Join 32 senior speakers from BBC, O2, Lloyds Banking, GSK, The Body Shop, ITV, TSB and more as they share innovative, value-adding employee engagement channels and strategies to boost organisational performance, productivity and retention. Learn the secret to creating engaged and productive workforces with the latest communications tools, social media channels and technologies in just one compact day. For more information visit www. engagingemployeesconference.com or quote ‘HRADVISER’ under ‘ID Code’ to save £150 when booking online at www.etouches.com/ employeeengagement

FEBRUARY 2017

FEM Global Mobility Conference – Houston

February 28 2017 Hyatt Regency, Houston, USA Don’t miss the opportunity to attend the FEM Global Mobility Conference in Houston and hear from leading global mobility professionals from across America. Join us to share best practice and network with your peers while coming away with valuable insights and ideas for your own programme. Find out more information at www.houston.forum-expat-management.com

If you would like to advertise a conference or exhibition on our Diary Dates and on www.internationalhradviser.com please email damian@internationalhradviser.com