International HR Adviser Spring 2019 by International HR Adviser

SPRING 2019

ISSUE 76

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International HR Adviser The Leading Magazine For International HR Professionals Worldwide

FEATURES INCLUDE: When To Choose A Country-Specific Or Regional Policy • Employee Benefits In The UK: Pensions Top 7 Global Trends Of 2019 Revealed • Localisation: A Potential Lower Cost Alternative To Expatriate Assignments Duty Of Care Is Not Only A Legal Obligation, But Also An Employer’s Moral And Social Responsibility The Growing Pains Of Flexibility • Exchanging Data: How It Impacts Your Business Travellers And Posted Workers Measuring ROI For Global Mobility

ADVISORY PANEL FOR THIS ISSUE:

CONTENTS

In This Issue 2

The Growing Pains Of Flexibility: Is The Continuing Drive To Replace Long-Term Assignments With Permanent Transfers Taking Its Toll On HR And The Employee? Beth Nielson, CapRelo Global Mobility Management

Global Tax Update Andrew Bailey, BDO LLP

Duty Of Care Is Not Only A Legal Obligation, But Also An Employer’s Moral And Social Responsibility Dr Peter Mills, Cigna Europe

When To Choose A Country-Specific Or Regional Policy Laura Levenson, Weichert Workforce Mobility

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

Employee Benefits In The UK: Pensions Saira Chambers, Mattioli Woods

International HR Strategy: Business Travel Policy Fatima Johnson, Demetra Karacosta & Jessica Smart, Deloitte LLP

The Top 7 Global Trends Of 2019 Revealed Crown World Mobility (CWM)

The Key To Leading A Successful Remote Team Chris Dyer, PeopleG2

Measuring ROI For Global Mobility John Rason, Santa Fe Relocation

Exchanging Data: How It Impacts Your Business Travellers And Posted Workers Jeanette Ryan, GT Global Tracker

Mental Health: The Words Global HR & Corporate Travel Professionals Can't Ignore Piers Brown, CEO of International Hospitality Media

Directory & Diary Dates 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 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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The Growing Pains Of Flexibility: Is The Continuing Drive To Replace Long-Term Assignments With Permanent Transfers Taking Its Toll On HR And The Employee?

The rise in popularity of the permanent transfer looks set to continue. In the Employment Conditions Abroad (ECA) 2018 Permanent Transfers survey, it was reported that the number of international transfers lasting more than one year had nearly doubled to 40% over the past four years. Companiesâ&#x20AC;&#x2122; expectations are that this may persist for at least the next three. Long-term assignments are being replaced by a more agile and flexible approach. A recent survey showed that 45% of companies are using flexible programmes, as opposed to traditional long-term assignments, and that they expect this trend to continue. This is a reaction to the changing realities of the future of work, the evolution of employee expectations, their desire to self-serve, and the availability of remote working technology. It is also important to note that the future of work may pose unforeseen challenges. Along with business-level drivers to deliver cost reductions through technology, the popularity of the permanent transfer is likely to remain. However, the growing business expectation that this policy should be the go-to option for millennial preferences needs to be carefully monitored. The employee-centric approach should not be limited to the initial relocation experience, but should consider current and future interactions-and expectations as well. The initial success of empowering the employee can be later tempered by frustrations and a need for further employee support. With the increased willingness of employees to change careers more frequently, poor experiences will significantly decrease retention rates. The role of the global mobility team therefore, remains vital to ensuring that the business is furnished with the relevant information to recommend an appropriate policy. Currently, evidence is building to suggest that over-reliance on the permanent transfer approach, often with core-flex elements is stretching the employee and support teams in new, unexpected ways. This is taking its toll, negatively impacting employee experience and ultimately distracting from the success of this and any future relocations. Unless

this trend is checked, there is a danger of replacing the one-size-fits-all longterm assignment policy with an equally ineffectual and restrictive alternative.

Long-Term Policy:

A fixed term assignment (usually up to 3 years) where base compensation and taxation are linked to the home location. Typically, the employee will be provided with repatriation assistance. Where possible the assignee is kept in their home pension scheme and social tax system. Generally, this approach offers a rich assignment package with an expectation of higher standard of living whilst on assignment than in the home location, and is therefore reserved for more senior employees.

An Agile Permanent Transfer Policy:

A transfer or an assignment of undefined length where base compensation and taxation are linked to the host location and the responsibility of the individual. Typically, the individual will not be provided with repatriation provisions and will, where possible, be removed from home pension schemes and put into host social security system. Generally, this approach offers a lean relocation package with a selection of benefits for the employee to choose from whilst remaining within a fixed budget. There is usually the expectation of transitioning to a similar standard of living whilst in host location. This approach is therefore best suited to self-motivated individuals irrespective of seniority.

What Is Being Replaced?

The traditional long-term assignment policy has several consistent features and has been the bedrock of the policy portfolio for many years. A core element includes keeping the employee tied to their home location through links to base compensation and home location tax systems on the assumption that the employee will repatriate after a fixed period. Key to this is keeping the assignee in both their home pension scheme and social security system whenever possible. Historically, significant assignment benefits have led to a higher standard of living whilst on assignment than in the home location, despite the concept of tax equality with the home net income. This approach has become increasingly irrelevant for a demographic of assignees with an expectation of mobility who are motivated less by an enhanced standard of living as by the opportunities to travel and grow their international experience.

Known Positive Consequences Of The Agile Permanent Transfer Approach

In contrast to the traditional long-term assignment policy, an agile permanent transfer policy is usually linked to the host compensation model and is best utilised by a population whose ties with the home location can be easily severed. The clear advantage of this approach is the opportunity to reduce and control the actual relocation and associated tax costs of a relocation. The complexity of calculating and estimating the cost of the relocation is also reduced due to the removal of the concept

FLEXIBILITY of tax equalisation, shifting the tax burden from the company to the employee. Due to the choice of benefits provided, often accompanied by an option to ‘cash out’ a percentage of the relocation budget, this approach is designed to significantly reduce the number of exceptions requested as part of the initial policy. With the 2018 US tax reform removing the historical tax benefits for companies covering relocation costs, the previous disadvantages of cash payments is reduced and this approach is even more widely relevant. In a mobility environment where the emphasis is increasingly placed on listening to and empowering the employee, the agile permanent policy approach seems to be an effective solution for talent attraction. The concept that employees are able to determine and select benefits in accordance with their perceived priorities is easy to understand and communicate to both the business and the employees.

Known Negative Consequences Of The Agile Permanent Transfer Approach

The message of simplification and flexibility widens the appeal of relocating to a broader assignee profile. This has expanded the use of the permanent transfer approach beyond filling perceived skills gaps and operations management, to addressing strategic purposes. However, this view can be too simplistic and prone to short termism, leading to a reduction in that talent’s future mobility. Whereas a permanent transfer is more appropriate when there is a straightforward job that needs to be done, an assignment is better suited to instances where a strategic goal or company value needs to be delivered. Despite the belief that all employees are keen to be empowered through self-service technology, this is not always true and comes with an associated administrative burden. The increased reliance on this approach, in addition to the removal of personal relocation support, has significantly increased the time required for the employee to dedicate to planning and researching their relocation. Combined with the reduction in perceived and actual support (which is often limited to the single year of transfer), the employee can divert significant time and resources into the relocation experience and away from actively participating or preparing to participate in their new role. At least in the first period of a relocation, the company is able to maintain their compliance and immigration obligations. However, the limited scope of this control in the first year is quickly lost, leading to a latent exposure as this population expands. Individual compliance concerns also arise when tax support is limited to only the year of transfer. The employee can delay or avoid learning about a tax system, and often fail to

adequately prepare for when that support expires. Where there is a future compliance failure or investigation by the local authorities, the employee expectation is often that the company will provide additional support. This can lead to unexpected costs if approved by the company, or a poor employee experience, and even assignment failure if support is denied. Correlation is often drawn between a tech-savvy population and being more readily mobile and self-sufficient. This is then extrapolated to determine that when these individuals relocate, they do not need the support offered by a traditional fixed-term, benefit-rich package, but are better suited to an agile, one-way relocation of undefined length. In many articles and policy discussions, the diversity within this group is also not considered, and the ageing of the millennial population born closer to 1980 than 1999 is also ignored. On the other extreme, there is evidence that the number of variations of policies, referred to as policy segmentation, is increasingly trying to fill this gap and suit each demographic need. AIRINC, for example, reports an average number of policies per company as 4.4 in 2018, compared with 3.4 in 2011. Is this evidence that flexibility is creating and not reducing complexity? Acknowledgement of the impact of business drivers to reduce costs have long been cited. However, many younger people also took steps to reduce their personal commitments. They controlled costs by delaying the stages of life which would previously have dissuaded them from easily relocating to another country, such as buying a house or having children. Although this mobile-ready population still exists, the older, tech-savvy but less mobile millennial, now also forms part of the workforce. The delay in forming bonds with a home location for many who are considered part of the millennial demographic is over, and the family and financial ties to their home location are now as relevant as for the more traditional expat. The idea of the “readily mobile” millennial appears to be quickly becoming an outdated concept.

The Impact Of The Real World

Capping the budgets associated with permanent transfers is also leaving employees vulnerable to real world variables. A traditional long-term assignment is benefit-driven, defined by the benefit and not the cost, and therefore seasonable variables were not considered. Due to the timing of a business need or immigration realities, the actual start date may be out of the control of the assignee. Relocation necessities such as flights or temporary accommodations may increase in cost, decreasing the budget available for other relocation-related services.

The Uncounted Cost Of Flexibility

Whilst self-managed and self-directed relocations provide choice to the employee, they can be challenging and chaotic for those involved. The associated reduction in ongoing support and initial counseling can also lead to a lack of understanding of the best use of the total costs. This will inevitably result in negative employee experiences where budgets are exceeded, in turn impacting future willingness to relocate with that company. Where the employee is self-directing their budget, the company loses some control and the employee may make decisions that do not reflect company priorities. Low-budget choices can result in unsafe or non-guaranteed accommodations. Likewise, selecting a lowbudget household goods removal company could result in unreliable service. Inevitably there will be a variable employee experience due to these individual employee choices. Consistency in delivery is often a core driver of policy harmonisation, and can suffer as a result of relying on this alternative, flexible approach.

What Else Is Lost?

• Specialist Knowledge: Limiting support to technology without the specialist knowledge from management, HR or global mobility teams risks the loss of benefiting from experience. Without these resources to lean upon, the employee may undervalue and not select services that most contribute to the success of an assignment. Although it is possible to communicate recommendations through a web portal or form, this may not adapt to the employee situation to adequately suggest the appropriate approach • Reporting: Once an employee is transferred to the local population, previous standard tracking of relocated individuals and associated reporting is also lost. Available data points and contacts are less clear and the ability to gain meaningful data is reduced. This can also translate to organisations as a whole losing sight of their expensively obtained internationally experienced workforce • Tracking: The transfer of an employee may also be accompanied by a transition internally of company responsibility away from the expertise of the Global Mobility team to a more central HR function. This increases risk for potential complex future issues e.g. future business travel, visa renewal or sequential moves when the employee is part of the host population.

Re-Evaluating If The Perm Transfer Approach Should Be The Way Forward

In essence, the time it has taken to introduce and popularise the agile permanent transfer approach has narrowed the population to which it will appeal. With a rise in the first-time buyer mortgages evident in 2019 (in several major

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labour markets, including the UK), the increased use of the lean permanent transfer policy may inadvertently reduce, rather than expand the pool of potentially mobile employees. The appearance of flexibility and the increase in use of this approach will inevitability need to adapt to growing and changing expectations. This leads to the potential for multiple varieties on a theme which is difficult to track and monitor. The move away from the traditional assignment model also works to break the relationship with the home country, including the move-out of the home social tax and home pension scheme. The consequences are unlikely to emerge until much later in the individual’s career.

Conclusion: What Does Growing Up Look Like? Steps To End The Growing Pains

• Recognise that the trend to move towards the permanent transfer approach is choicedriven and not inevitable. Continue to question the use of all policy types to ensure that the most appropriate policy is used • Periodically review and analyse policies and relocation success using long-term measurables such as post-relocation retention to ensure that the true value and cost of a relocation is tracked • Ensure that the value of the role of counselling the employee is measured, and that it is clear that it can not be replaced in its entirety by technology. Recognise the value

of internal company expertise to support appropriate employee choices and to help to avoid expensive compliance failures • Educate new business stakeholders on the importance of total cost considerations when selecting policies. Highlight the cost, safety, and employee impacts where technology becomes the only solution considered • Continue to respond to and embrace new challenges of the changing employee demographic, expectations, and requirements • Finally, identify new reporting and tracking required to better identify future policy needs. Collate new relevant metrics that can help to understand the impact of using more permanent policies. Ensure that you are not overly reliant on the permanent transfer approach and ensure that your company is looking at new ways to support attracting, relocation and retaining employees.

Steps To Mitigate Unintended Consequences

• Recognise limitations of self-service technology and how investment in hands-on support can improve employee experience • Expand policy documentation to define scope of support in all areas including post relocation duty of care obligations • Expand mandatory/core benefits to include elements important to company to result • Educate relevant stakeholders on policy suite rather than automatically accepting use of permanent transfer approach as default

• Prepare for increased post relocation planning and tracking • Define and deliver analysis of meaningful feedback to further refine approach.

Top Trends To Track To Identify If Your Policies Are Having Unintended Negative Consequences

• Rise in repatriation requests • Lack of career progression for relocated individuals • Relocated individuals leaving the company • Increase in exception requests • Poor employee feedback • Decrease in overall mobile population diversity (age, sex, family status) • Increased need for ongoing, out of scope support for in country individuals • Tax compliance issues raised due to number of trips home to maintain links with home location. References: 1 www.relocatemagazine.com/articles/ international-assignments-millennialson-the-move-au18-shortland 2 www.assets.kpmg/content/dam/kpmg/xx/ pdf/2018/10/2018-gapp-survey-report.pdf 3 www.eca-international.com/insights/ articles/april-2018/is-this-the-end-of-thelong-term-assignment 4 www.internationalhradviser.com/storage/ downloads/Back%20To%20The%20 Future%20International%20HR%20 Strategy%20winter%202018%202019.pdf

BETH NEILSON

Director of Client Services at CapRelo Global Mobility Management. Beth is responsible for leading the delivery of global mobility services to all non US based clients, advising on processes, policy and programme design. Beth has a strong track record in supporting clients through transformation projects to provide efficiencies within global mobility service delivery. CapRelo is a renowned Global Relocation Management Company delivering bespoke end to end assignment management solutions. For further information about CapRelo Global Mobility Management email info@caprelo.com or visit www.caprelo.com

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Global Tax Update AUDIT CONFLICTS IN A GLOBAL MOBILITY CONTEXT

BDO Comment - Review of the audit market by regulatory authorities and the potential knock-on effect on choice of global mobility advisers. Our last article highlighted the numerous current reviews into the UK audit market and the potential for conflicts of interests to arise where the auditor also advises clients on non-audit issues. Deliberations are ongoing and the likelihood of changes to the current rules remains. We will advise further on such changes once known. If working in global mobility, do you know your auditor? Do you know about all potential conflicts of interest? Are you aware of the restrictions that may apply to certain companies regarding the provision or limitation of non-audit services? You may have to move quickly in the event of rule changes, so take the opportunity now to learn about potential alternative advisers.

IRELAND

Real-time reporting in Ireland The PAYE system in Ireland is being reformed and modernised with the introduction of real-time reporting (RTR). This change to how employers and employees interact with the Revenue Commissioners (Revenue) represents the most significant change to the PAYE system since it was originally introduced. Employers are now required to calculate and report employees’ pay and deductions in real time. This is intended to ensure that every time employers run their payroll the correct amount of deductions are being made at source from the employees, reported to Revenue and paid over by the employer. The new system effective from 1 January 2019, applies to all employers, regardless of size. From this date the Revenue will issue a statement after the end of each calendar month, based on submissions received by the employer, which sets out the tax due for the period. The statement is deemed a statutory return by the 14th day after month end. However, there is scope to amend this statement prior to the above date. Payroll taxes are then remitted to the Revenue by the 23rd day of the following month. The year-end P35 filing will no longer be required as the reporting process must be correct for each pay period. Penalties of €4,000 per breach can apply, so it is essential that employers comply. GLOBAL MOBILITY Inbound Assignees The Revenue have advised that where a shadow payroll is being operated in Ireland

then the payroll submission can be aligned with the Irish employer’s next pay date for equivalent Irish employees. For example, if a US individual is assigned to Ireland and the US employer operates a payroll on the 14th and 28th of the month but the Irish entity pays their local employees on the 25th of the month then the assignee’s pay details for 28 March and 14 April should be included in the Irish entity’s payroll submission on 25 April. If an employee of a foreign entity does not have a set number of working days in Ireland each month then a best estimate of the number of days an individual works in Ireland should be used if actual details are not available when the payroll process is run. If there are more (or less) days than originally estimated the pay details should be amended in the following payroll submission. When filing the payroll submission with the Revenue, the employer will need to flag any employees on a shadow payroll by ticking the relevant box on Revenue Online Service (ROS)/payroll software. Outbound Assignees Employers may have obtained a release from the obligation to operate payroll taxes on outbound expatriates who continue to be paid by the Irish employer during an assignment. However, the employee may remain on the Irish PRSI system with contributions being collected through the monthly payroll process. In these cases, the Revenue have indicated that a “best estimate” of benefits, allowances, and expenses should be included in each payroll submission and then corrected in the following payroll submission, where required. Benefit in Kind/Notional Payments Employees are taxable through payroll on all Benefits in Kind (BIKs) they receive. While most BIKs are for a fixed amount, e.g. medical insurance, the BIK calculations on company vehicles can vary (due to variances in mileage) each month, which may result in under-declaration of BIK. It is strongly recommended that employers require employees to submit their mileage sheets in a timely manner. The Revenue has indicated that employers, at a minimum, should carry out quarterly checks on mileage and adjust the payroll records where necessary. A key area of concern continues to be the application of RTR to share plans, such as RSUs. There can be a significant amount of administration involved in determining the number of shares to be awarded to an

employee, the value of the shares for tax purposes and the relevant date for taxation of the shares. In addition, the scheme may allow for the sale of a portion of the shares to cover taxes payable by the employee. All of this information needs to be compiled, assessed and provided to the payroll team to enable them to capture the data and accurately report it to Revenue. It is difficult to envisage how these rewards can be processed on a real time basis or how ‘best estimates’ could be applied. The PAYE Guidance Manual should be checked for latest updates.

SINGAPORE

Compliance Requirements of Frequent Business Travellers Businesses and companies now operate in an increasingly global environment where employees work across borders with greater ease. Consequently, ensuring that you remain compliant with regard to immigration, social security, taxes, etc. is more important than ever. Over the years, Singapore’s various government agencies, including the Inland Revenue Authority of Singapore (IRAS), have reviewed and revised the requirements and employer’s obligations in respect of frequent business travellers (FBT). A FBT is defined as an employee who is based outside of Singapore who makes frequent business trips into Singapore. Although Singapore does not have monthly withholding requirements, companies still face risk in the other areas relating to FBTs travelling into Singapore for business purposes. Immigration An employment pass (EP) has to be obtained before an individual is able to carry out work in Singapore regardless of the duration of the stay. Generally, an FBT cannot carry out any employment activities in Singapore without an EP. The only exceptions are where the intended work is the following:• Company meetings, corporate retreats or meetings with business partners • Study tours or visits as a participant • Company training courses/workshops/ team building events as a participant • Seminars and conferences as a participant • Exhibitions as a trade visitor. Tax Reporting And Filing Obligations An annual review of all FBT’s business days into Singapore is required by 31 January of the following year by the employer. The individuals would therefore fall into the following categories depending on their number of business days:-

GLOBAL TAXATION Individuals with not more than 60 business days in a calendar year in Singapore Under the Singapore Income Tax Act, employment income is exempt from Singapore tax if the individual is a non-resident for tax purposes and does not exercise employment for more than 60 days in a calendar year. This does not apply to a nontax resident director or public entertainer. If the employee does not hold an EP, as an administrative concession, there is no employer’s reporting requirement to the IRAS. By 1 March of the following year, an employing entity has to submit travel dates into Singapore to the IRAS for all FBTs with valid EP as at 31 January of the following year. Additionally, upon cancellation or expiry of the EP, the employing entity is to notify the IRAS within 2 months of the cancellation/expiration to prevent any enforcement actions by the IRAS. Individuals with more than 60 days but less than 183 days in Singapore Where an individual has more than 60 business days in Singapore but less than 183 days, they are liable to tax on their employment income earned in respect of their business days in Singapore. They will be taxed on this income at the non-resident tax rate. A tax exemption could be possible to the extent that the employee qualifies under the criteria of a relevant Double Taxation Agreement (DTA) that Singapore has with the relevant country. This is typically the country where the individual is tax resident and where their employment is based. Where a treaty exemption is available, the employer must make an application on the employee’s behalf to the IRAS before the filing deadline of 15 April. All employees with this level of travel will very likely be engaging in activities that requires an EP. In respect of the filing requirement, filing of the FBT’s Return of Employee's Remuneration (Form IR8A) is required by 1 March unless a Form IR21 is applicable in the case of an EP cancellation or expiry. As part of the tax clearance process, a Form IR21 (Notification of a foreign employee’s cessation) should be filed at least 2 months from the date of cancellation or expiry of the EP, unless a request for an extension is obtained. Once it is certain that a FBT will no longer be making business trips into Singapore, the employer should cancel the EP and a Form IR21 needs to be filed within 2 months from the final business day in Singapore. Individuals with more than 183 days in Singapore FBTs who have more than 183 business days in the preceding calendar year and still have a valid EP at the time of the employer filing the employees’ Form IR8E. The filing requirement and deadline will be the same as all regular employees. They will not be able to claim exemption under the Double Tax Treaty; the employment income will be taxed at the resident rate.

An individual is regarded as tax resident in Singapore in the year they are physically present or exercising employment in Singapore for at least 183 days in the preceding calendar year. Taxable Income From 1 January 2016, onwards IRAS revised the tax treatment of compensation provided to a FBT. Currently, the following items are not taxable: • Airfare • Accommodation • Transport and entertainment allowance for business purposes • Per diem within the acceptable rate laid out by the IRAS (the excess per diem is taxable) • Other reimbursements for business expenses. Any other compensation provided to the FBT is taxable in Singapore and is reportable to the IRAS unless the FBT qualifies for tax exemption. Social Security (Central Provident Fund/CPF) The CPF is a mandatory savings scheme for working Singapore citizens and Singapore permanent residents. Foreign individuals are not eligible to participate in this scheme. However, upon becoming a permanent resident of Singapore, participation in the CPF would be compulsory. Should a Singapore citizen or Singapore permanent resident who works for an overseas employer make business trips into Singapore, CPF contributions are not required to be made by the employing entity. However, both the employer and FBT employee can continue with voluntary contributions into the CPF. BDO Comment Due to difficulties in tracking FBTs and a lack of understanding and knowledge of the reporting requirements for FBTs, the risk of non-compliance is high. Such risk may lead to corporate reputational damage, heavy penalties and even prosecution (potentially affecting the right of business). Companies should review the current process to manage these FBTs and to ensure immigration and tax/social security compliance. Some preliminary questions, which the company can ask are:1. How are the business days of travellers being tracked? 2. Is the appropriate work pass being obtained before a FBT travels? 3. What are the compensation items provided to the FBT during the trips? 4. Is the company familiar with the various compliance regulations? 5. Is there any possible corporate tax implications (i.e. Permanent Establishment) in the destination country of the FBT?

Brexit – National Insurance Contributions (NIC or social security) in event of a no-deal Brexit As part of planning to cope with a no-deal Brexit should that occur, the Government recently addressed the amendments that would be needed to UK NIC legislation. The key problem in this area is that the current cross-border social security arrangements are dependent on coordination between EU/EEA Member States – not something that can be assumed in a no-deal Brexit scenario. Therefore, the Government has published four draft Statutory Instruments that amend the UK's EU Regulations on social security coordination. The draft regulations would maintain the current 24 month extension of NIC for employees posted to an EU member state and the 24 month exemption for inbound employees moving from EU member states into the UK. The draft regulations also seek to apply the current rules for multi-state workers. While this may seem a practical approach, there is no guarantee that EU or EEA member states will also seek to preserve the status quo. Interestingly, the draft regulations do not take account of the longstanding bilateral social security agreements that the UK has with some EU Member States: it is assumed that these would revive when EU based agreements end on the UK’s departure from the EU (overriding a new domestic NIC regulations where they apply). As well as leaving a patchwork of social security rules for employers to cope with, where there is no bilateral agreement with an EU member state, there is no guarantee that that state will put new reciprocal rules in place. Therefore, double social security charges could apply, for example, in the first 24 months of a secondment to an EU member state as well as for employees with simultaneous roles in the UK and in an EU country. BDO Comment Employers with internationally mobile workers should be enhancing their monitoring systems to ensure that they are ready for the additional administrative burden that may arise (not to mention the potential additional costs) on a no-deal Brexit. Increase To The Immigration Health Surcharge The Immigration Health Surcharge (IHS) was brought into effect in 2015, and has contributed more than £600 million towards funding for the National Health Service (NHS) since it was introduced. IHS is a surcharge that those who are immigrating to the UK either for work, to study or to join a family member have to pay in order to receive free NHS hospital treatment as if they were a UK resident, if they are staying for 6 months or more.

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IHS provides cover for as long as the visa is in date, from the start date of the visa until the end date. It applies to all non-EEA nationals and dependents. From 8 January 2019, the amount to be paid has increased from £200 to £400 per person per year and the discounted rate for students on the Youth Mobility Scheme also increased from £150 to £300. From this increase, the NHS could receive an estimated £220 million in extra funding. BDO Comment Employers should bear in mind the increased IHS costs when sending assignees to the UK for more than six months.

USA

Complexity in Reporting Virtual Currencies Recent reports indicate that there are currently more than 1,600 known virtual currencies. Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account and/ or a store of value. This may be used to pay for goods or services or held for investment. In some environments, virtual currency operates like real currency but it does not have legal tender status in any jurisdiction. Because transactions in virtual currencies can be difficult to trace and have an inherently anonymous aspect to them, some taxpayers may be tempted not to report these transactions to the Internal Revenue Service (IRS). In November 2017 a federal judge in a Northern California District Court approved a summons requiring the Bitcoin wallet service Coinbase, the world’s largest Bitcoin trading exchange, to hand over records of all transactions that took place from 2013 to 2015. This was part of a larger investigation into possible tax fraud by Coinbase users.

As a result of the summons, for accounts with at least the equivalent of $20,000 in any one transaction type during the 2013 to 2015 period, Coinbase was ordered to produce the following: • Taxpayer ID number • Name • Date of birth • Address • Records of account activity including transaction logs or other records identifying the date, amount, and type of transaction (purchase/sale/exchange) • The post transaction balance • The names of the counterparties to the transaction • All periodic statements of account or invoices (or the equivalent). It is likely that during 2019 the IRS will exhibit cryptocurrency criminal cases spotlighting fraudulent behaviour because of the information obtained from the summons. Taxpayers need to be aware that unlike the IRS Offshore Voluntary Disclosure Programme (OVDP) that encouraged taxpayers to be compliant by minimising penalties, the current Domestic Voluntary Disclosure Programme (DVDP) does not. The current DVDP programme for taxpayers whose omission was wilful requires them to amend the most recent six years’ of tax returns and pay civil penalties for, at a minimum, the one tax year with the highest tax liability. However, the IRS can apply the penalty to multiple years based on the facts and circumstances in each case. This change no longer incentivises taxpayers to correct errors or omissions in past returns. Income Tax Return Reporting The IRS has reminded taxpayers that income from virtual currency transactions is reportable on their income tax returns and provides reporting guidance for transactions involving convertible virtual currencies.

Convertible virtual currency received in payment for goods and services should be included in gross income at the fair market value in US dollars on the date received. Since the IRS categorises convertible virtual currencies as property, gains or losses should be reported when buying and selling the currency. As the use of blockchain becomes more prevalent, taxpayers compensated for mining or leasing their computer resources to validate virtual currency transactions and maintain the public ledger, should report the payment as income. If mining of virtual currency is deemed to be a business then the income will also be subject to selfemployment tax. Report of Foreign Bank Account and Financial Accounts (FinCEN Form 114, FBAR) Taxpayer’s may also have a requirement to disclose their virtual currencies to the US Department of the Treasury. The last guidance issued by the Treasury only addressed regulations regarding the administering, exchanging or use of virtual currencies. With the IRS’ characterisation of virtual currencies as property, it could be argued that foreign property is not required to be reported on the FBAR; however, until more definitive guidance is issued a reasonable approach would be to report virtual currency held in a virtual wallet that is hosted overseas. BDO Comment Regardless of country, the taxation and reporting of virtual currencies needs to be regularly considered in light of greater usage and rapidly changing rules. 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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Monday 14th October 2019 BDO are hosting a Tax Seminar at the next Global HR Conference on Monday 14th October so please put the date in your diary now or to reserve your free place at this conference please email helen@internationalhradviser.com

DUTY OF CARE

Duty Of Care Is Not Only A Legal Obligation, But Also An Employer’s Moral And Social Responsibility Demand for employers to show moral and societal commitment to their workforce is as crucial as ever. Duty of care is not only a legal obligation, but also an important part of a being a responsible and ethical employer; after all a business is nothing without its people. In a global marketplace, businesses increasingly need their employees to be more mobile, taking on both short and longterm assignments in new territories that may be very different to what they are used to at home. The challenges this can bring will vary depending on the employee’s situation and indeed personality, therefore it’s crucial that employers look at the individual needs of staff to ensure they are being thoroughly supported throughout their journey. Globally mobile individuals benefit in many ways from their experience of working abroad, not to mention improved career opportunities and experiences, but this can often come at a cost to their personal and family health and wellbeing. Our recent Cigna 360° Wellbeing Survey shows that eight in ten people are experiencing stress, with one in five saying that they have ‘unmanageable stress’, therefore it is vital employees are provided with opportunities that encourage and enable them to lead healthy lives, and moreover, make choices that support their wellbeing. Transitioning and settling into a new location can be a daunting experience, with language and cultural barriers often making it difficult and overwhelming when looking for local healthcare or medical guidance. We know that workplace wellbeing is one of the most important factors employees look for in a potential company, and this goes without saying for globally mobile employees who face extra emotional and wellbeing challenges in their host country. However, less than half (42%)1 of globally mobile employees feel their employer offers adequate “duty of care” to them.

Meeting The Changing Healthcare Needs Of Globally Mobile Employees

There is real opportunity for employers to adopt a supportive and inclusive network

for their staff when they work abroad. Through appropriate resources and materials, employers can help create a positive environment for their globally mobile workforce and encourage and enable them to make healthy choices that support their health and wellbeing.

In a global marketplace, businesses increasingly need their employees to be more mobile, taking on both short and longterm assignments in new territories that may be very different to what they are used to at home This can range, for example, from providing quick and easy access to counsellors and/or EAPs (employee assistance programmes) to promoting a healthy, balanced lifestyle by signposting employees to resources, advice and support to help them achieve a healthier life. It is important for companies who already offer these programmes, to be encouraging their employees to take full advantage of the health and wellness benefits.

Employee wellbeing doesn’t need to be costly either. Wellness goals such as creating a working environment where breaks are regularly enforced, and where employees feel comfortable leaving the office is a good place to start. Encouraging staff to go outside and participate in exercise can often be compromised by our sedentary work life, but the introduction of flexible working has made the balance between work and family life easier. It is also important that employees get natural light exposure, especially during the colder months when they may suffer from SAD (seasonal affective disorder). Exercise can also help improve an employee’s mood significantly, with outdoor exercise being a costeffective way of motivating the workforce. Working practices are naturally different in each country, however, employers should be responsible for ensuring the ergonomics of space are up to a legal specification to create a comfortable working environment. Most people are unaware that a poorly designed workstation and subsequent poor posture can result in serious health problems. We also hear a lot about stress in the workplace which unfortunately has become common place in the modern-day workforce. Many of the issues suffered by employees working abroad are both predictable and preventable, and early intervention has always been a key focus for us. The earlier employees can receive treatment for their condition, the faster and better their recovery will be. Organisations rely heavily on having a healthy and productive workforce, but with growing demands and longer working hours, two thirds (72%)2 of globally mobile individuals feel unhappy with the amount of time spent with friends or family. It’s important therefore to always remember that it’s not just physical health that needs attention; mental health is equally as important.

Our Duty Of Care Approach Is Not Static And Is Continuously Evolving And Improving As We Learn From Analysis And Customer Experience Stories

Ensuring globally mobile employees’ welfare when working abroad isn’t merely an ethical

INTERNATIONAL HR ADVISER SPRING

DR PETER MILLS consideration, it’s an obligation. Employer’s liability is a reality and breaching this duty of care risks claims of negligence, reputational damage and importantly, employees’ wellbeing. With the globally mobile becoming a major workforce, their preferences and expectations need to be managed carefully. To perform at their best, these employees must feel protected and supported as they adjust to their new roles in unfamiliar surroundings. References: 1. Cigna 360° Well-being Survey - Globally Mobile Individuals 2.. Cigna 360° Well-being Survey - Globally Mobile Individuals Recognising the emotional and wellbeing challenges employees and their families face in a new country, and the duty of care employers need to fulfil for their overseas workforce, we recently launched a new mobile health and wellbeing app which is designed to provide tailored clinical and lifestyle

support to globally mobile employees. Cigna Wellbeing® provides fully integrated ‘real time’ access to care and health coaching, at the touch of a button via a single access point. Not only does it provide direct access to specialist doctors, nurses and counsellors via the Telehealth feature, but with preventative care and behavioural change at the heart of the new app, the innovative lifestyle management programmes educate, inspire, engage and motivate users to become more involved in their own care, and to ultimately live a healthier lifestyle. A key feature for employers includes the ability to provide tailored reports offering insight on staff health and wellbeing, engagement levels and behaviour data such as usage metrics and health assessments. Wellbeing assessment results can also be shared with the employer (whilst protecting the employee’s identity), providing sound business insights and direction.

Associate Medical Director, Cigna Europe Peter trained in medicine at the Royal Free Hospital School of Medicine in London. He is an accredited specialist in respiratory diseases and still practices medicine on a part-time basis at the Whittington Hospital in London. Peter has been at the forefront of the digital health “revolution” over the past 15 years having helped a number of organisations in the UK and US develop their market ready solutions. Associate Medical Director for Cigna Global Health Benefits since 2015, he has recently been appointed Medical Director, Cigna Europe, and is responsible for the medical management of the European corporate book of business as well as the UK and Spanish domestic businesses. Cigna Global Health Benefits® is a premier health services provider for global employers. Cigna delivers an expansive array of seamless global benefit solutions to meet the rapidly evolving needs of organisations with a globally positioned workforce. Dedicated to helping people improve their health, wellbeing and peace of mind, Cigna provides easy, affordable access to quality healthcare around the world. With an unmatched 50 years of global health benefits experience, Cigna's rich expertise and global resources are a testament to why the world’s top employers trust us to deliver quality solutions for their employees and families. With 45 local licenses, Cigna is poised to offer locally relevant and compliant solutions to support employees working and living in more than 200 countries and jurisdictions. And, with access to Cigna's global health care professional network of more than 1.5 million, employees and their families are able to get the quality care they need, wherever an assignment takes them. Visit www.cignaglobalhealth.eu

INTERNATIONAL HR ADVISER SPRING

When To Choose A Country-Specific Or Regional Policy Exploring co u n t r y - s p e c i f i c provisions for international assignees can be challenging for many global organisations. Although many companies agree that the days of a one-size fits all Global LongTerm Assignment policy are gone, and that no two global destinations are alike, they often struggle to maintain consistency and equity among their mobile population. In addition, there is increased pressure on mobility professionals to structure and administer policies and programmes that prioritise cost containment while supporting duty of care. Now more than ever, the industry is recognising that these issues need to be explored through a global lens.

assignment into this location different from other assignment types you deploy? • High Exception Requests – Historically do you see a spike in exception requests in this country, possibly centred on a few select benefits? • Challenges Recruiting/Retaining Talent – Are you struggling to get candidates to accept assignments to this location, or is the acceptance preceded by an extensive negotiation process? • Unique Location Challenges – Is the country a high growth location, where expat housing is limited or infrastructure is underdeveloped? Or is this country a hardship location due to political unrest or safety/security concerns? Answering “yes” to one or more of these questions is a good sign that your existing global policy isn’t cutting it for this location.

Why The Need For A Tailored Policy?

There are a handful of benefits and provisions that ought to be provided and administered differently globally

What Factors Contribute To A Country-Specific Decision?

Country-Specific Doesn’t Always Mean Higher Costs

Whether it be securing housing, choosing schools for dependents or determining appropriate modes of transportation, there are a handful of benefits and provisions that ought to be provided and administered differently globally. The ultimate goal is to strike a well-intentioned balance between maintaining the employee’s home country standards and equity with host country peers. Countries with policies, practices and other unique features that fall outside the midrange, making them both attractive (such as low tax rates, high standard of living, etc.) as well as prohibitive (lack of full or equitable access by foreigners to the property market, or educational system) are great candidates for country-specific policies.

There are many reasons you may be considering a country or region-specific policy. Listed below are just a few of the critical areas that might flag the need for a review and/or implementation of more customised parameters: • Unique Mobility Activity – Do you have a new country location? Has there been a surge in mobility activity (such as opening new operations)? Are your mobile employee demographics into the country different from your broader mobile population? Is the purpose of the

In some countries, your standard global practices may not be necessary or even relevant. As an example, one organisation that typically provides a lump sum housing allowance for a specific number of months discovered that this was not necessary in the new country location. Based on significantly lower housing costs for employees in this country, the organisation implemented a country-specific practice of providing a phased-down housing allowance. It worked well and ultimately saved costs in both the short and long-term.

In another case, an organisation that typically offers allowances for household goods shipment, housing and transportation was able to save significantly on all these components by providing fully furnished corporate housing and shuttle services to and from the work site in this particular destination.

Will A Regional Policy Work Instead?

In some cases, the factors that may contribute to a country-specific decision, such as a unique mobile workforce demographic or high exception requests, may actually apply to a broader region. To support regions with similar salary and band levels, standards of living and lifestyle, regional policies add a certain degree of flexibility as compared to global policies, but they still fall short of aligning to the needs that arise between certain country combinations. One of the challenges companies face with this approach is the diversity that can exist intra-regionally. The costs and complexities surrounding Household Goods Shipments is a great example. In the EMEA region where duties vary greatly from country to country, they can be particularly high in Russia. So, setting a household goods lump sum for an EMEA regional policy might not be sufficient for moves into Russia. Similarly, in Brazil, transit times are much longer than the norm, which in turn affects temporary living. So, a regional provision for temporary living designed for LATAM may be insufficient for Brazil. Likewise, in Australia and China, strict customs regulations prohibit certain items which would otherwise be allowed in other countries in the APAC region. In these instances, country policies or guidelines provide a better solution in two ways: controlling unnecessary employer costs and aligning benefits to the needs of assignees should they vary from location to location.

CASE STUDY India-Specific Guidelines

Weichert’s recent Propelling India Mobility research project (2019), explored the unique and diverse aspects of the country and the resulting impact on global mobility. One key finding was the trend towards the increased need of, and demand for, organisations to have India-specific policies. For India, as an emerging market with rapid growth and more inbound mobility, there are converging challenges experienced by businesses in their efforts to recruit talent as well as employees who are identified for international assignments.

COUNTRY-SPECIFIC OR REGIONAL POLICY

Companies would be well served to carefully consider the benefits of country-specific practices when deploying its workforce Employers are looking to strike the balance between managing costs in a market that is relatively expensive for foreign nationals on assignment, and providing enough incentive to attract the best talent for the roles. At the same time, highly skilled employees recognise the talent shortages and know

they are in high demand. They are concerned with getting compensated not only for the job role, but also for the hardships associated with living and working in India. The approach that companies are taking to India mobility, specifically, can vary as organisations explore their options. From tailored mobility policies to enhanced incentive packages, companies are exploring creative options to meet the circumstances particular to India. One trend is the creation of India-specific flexible programme guidelines with components that vary primarily by city, accompanied status, length of programme, and, to a lesser extent, band level and salary. This delivers an enhanced level of flexibility to mobility managers, enabling them to customise the assignment or transfer based on the demographics of the individual, the nature of assignment, and other related move details. Nowadays, companies grapple with competing priorities when it comes to supporting global mobility. Regardless of whether a company is looking to achieve parity, flexibility, cost savings to drive and sustain business growth, or to better align programme and policy provisions with assigneesâ&#x20AC;&#x2122; needs, companies would be well served to carefully consider the benefits of country-specific practices when deploying its workforce.

LAURA LEVENSON

GPHR, GMS-T Global Practice Lead, Consulting Services, Weichert Workforce Mobility 1625 State Route 10, Morris Plains, NJ 07950 973-397-3968 (direct) 914-483-7079 (mobile) 973-630-3781 (fax) llevenson@weichertwm.com www.weichertworkforcemobility.com

INTERNATIONAL HR ADVISER SPRING

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. 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 clear as to its implications. Straightforward localisation policies do not usually provide premiums related to cost of living adjustments (COLA), tax assistance, and provision of housing and education costs. Local

employment regulations may act to prevent differentiation in pay and these will need to be checked. 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 now - 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 longerterm assignees making either a gradual or an 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. Naturally, it is best to forewarn the assignee right from the outset that assignment related compensation and benefits would be reduced at a future date in event of a change in the assignment terms.

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 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

TAXATION 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 a period of 5 years (see changes to the 30% facility in the Global Tax Update Winter 2018/2019 article). 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 Credits

Tax Equalisation

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.

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 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.

Employers need to think about tax credits and tax refunds generated. 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 be costly and can provide inequitable results.

Summary

ANDREW BAILEY

Andrew Bailey is head of Global Employer Services for BDO. 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

PENSIONS

Employee Benefits In The UK: Pensions The UK employee benefits market has never seen as much change as it has over the last few years. Compulsory employer pensions provision (which began in 2012 under the guise of automatic enrolment) has affected all employers, while taxation changes, legislation targeting higher earners, and new ways of saving are all making the employee rewards space an exciting place to be. Alongside this, there’s an improving nationwide recognition of the importance of wellbeing both in the workplace as well as out of it. For this first article, we are concentrating on pensions, and their role in UK employee benefits.

Auto Enrolment

Introduced in October 2012, initially for larger employers, The Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations (2012), state any employer with one or more employees must enrol their staff into a qualifying workplace pension scheme within three months of them joining. Any new companies established in the UK now need to comply with this regulation as soon as they employ their first employee. All companies, both existing and startups, need to make sure they understand their legal duties and comply with them on an ongoing basis to avoid any financial penalties being imposed from The Pensions Regulator (TPR). However, understanding which employees need to be automatically enrolled into the scheme has caused some confusion for multinational employers since this legislation came into effect. Why? Well, The Pensions Act 2008 defines eligible jobholders as “ordinarily working in the UK”. However, TPR says other factors should also be considered when considering whether an employee falls into the scope of this legislation, such as: • Where the employee begins and ends their work • Where their private residence is, or intended to be • Where the employer’s headquarters are • Whether the employee pays National Insurance tax in the UK • What currency the employee is paid in. These factors are particularly important where employees are not based in the UK, or regularly move between countries.

Tax Reliefs

As this legislation has been phased in, we have also seen legislation introduced limiting some of the traditional pension tax reliefs for ‘high earners’. For example, over the last few years, all individuals paying into a UK pension scheme have been able to claim tax relief on their contributions of up to £40,000 per annum, known as the ‘annual allowance’, subject to their having sufficient UK relevant earnings to do so. However, since April 2016, individuals who have an ‘adjusted income’ (total taxable income plus the value of any employer pension contributions) for a fiscal year of more than £150,000 could have their annual allowance for that year restricted. That means for every £2 of income that exceeds £150,000, £1 of their annual allowance would be lost. Despite this, there is a cap on this reduction – if adjusted income exceeds £210,000, the minimum annual allowance will be no lower than £10,000. Clearly, this complicates things for high earners, especially in assessing how much they can contribute in a tax-efficient manner to their pensions. It’s even harder if their income varies or derives from multiple sources.

many employers, their pension scheme is their largest cost after base pay, yet, arguably, it has always been difficult in the UK to engage staff with it. Further, according to our own 2018 Employee Benefits Insight Report, an overwhelming 83% of employers said financial education was something their employees would value and benefit from, while 43% said they were concerned workers were not making adequate provision for retirement.

Conclusion

We all now have access to a diverse range of financial products, as well as those offered as part of an employee benefits package – but many people simply do not know their options or how best to manage their financial goals. With the increasing freedoms around pension monies and financial choice comes the need for more financial information and education so people can make the right decisions. EB packages need to understand that, too. References: 1 'Pension warning: Thousands 'at grave risk' of running out money in retirement', Daily Express, 5 June 2018 2 FCA, Retirement Outcomes Review, June 2018

Pension Freedoms

Despite the introduction of mandated employer pension schemes, the single biggest change in recent times is the ‘pension freedoms’ legislation. Employees have the option of taking some of their pensions savings as a tax-free sum when they retire, while the rest can be used to create income. These new freedoms mean an individual can take any amount of their pension savings out when they reach the earliest retirement age – currently 55 – subject to relevant tax rules. However, there is concern a lot of individuals do not understand the tax implications and long-term consequences of their actions. The Personal Finance Society, for example, warned in an interview last year that most pension drawdowns are being transacted before consulting a financial adviser, and that consumers are raiding their pension pots prematurely[1]. Further, the Financial Conduct Authority said 72% of pension pots have been accessed by the under 65s, with 55% of them being completely withdrawn[2]. This has resulted in some employers wanting to improve communication and support for the employees affected. For

SAIRA CHAMBERS

Employee Benefits Director at Mattioli Woods Saira joined Mattioli Woods in October 2016 and has over 25 years’ experience in the employee benefits market. Over the last 15 years, her work has focused on helping multinational companies source and manage benefit programmes for their employees. During her career, Saira has worked on both general consulting for domestic and international clients, as well as developing international business. Visit www.mattioliwoods.com for further information.

INTERNATIONAL HR ADVISER SPRING

Business Travel Policy A variety of trends including globalisation, the growth of new markets and the talent shortage has meant that business travel has become a norm for many organisations. As businesses accept and recognise the need to actively facilitate international travel for employees there is a need to develop robust policies that support business travel programmes.

Why Does My Organisation Need A Business Travel Policy?

Tax and immigration authorities around the world are turning their attention to business travellers, creating increased pressure on organisations to evidence robust processes for managing compliance. Although the compliance issues related to business travel have been a ’hot topic‘ for many years, many organisations have not experienced the implications of non-compliance and have thus not been compelled to fully address the issue or to develop policies specifically designed to frame this critical element of business mobility. A recent Deloitte survey asked organisations how they would rate their existing business travel policy and related processes. There were a range of responses varying from “no process” to “comprehensive approach”. The majority of organisations placed themselves firmly in the centreground with a third of respondents accepting that they had taken limited action and needed to do more in this area (Figure 1). The reality for the vast majority of organisations is that there is still much to do in this area. Greater reliance on business travel to support business and talent objectives typically results in more frequent trips and/ or increasing numbers of travellers, which in turn swells the mobile workforce. This organic growth in employee mobility can however, often fall under the corporate compliance radar. Couple this with constantly shifting legislative goalposts, more efficient exchange of information between national authorities and increased corporate reporting requirements (e.g. BEPS), and a very challenging environment is created for organisations. Even though these challenges are not new, the swiftly-evolving global legislative landscape means that organisations need to keep this topic high on the agenda

and approach the problem in a far more deliberate, focused and structured way. An organisation’s ability to manage compliance risk relies on their ability to steer employee behaviour, effectively track business travel and take appropriate action where required. A business travel policy is the starting point for implementing a successful mechanism to tie these elements together.

exist around business travel. The introduction of strong guidelines through a formalised business travel policy will steer employees and the business towards compliance by setting acceptable parameters within which individuals who undertake business travel are expected to operate.

Developing A Business Travel Policy

One of the first points to address is who the policy should apply to – what is the definition of a business traveller in your organisation? It is important that there is a clear scope that captures a variety of travel patterns,

Create the right setting for improved compliance by dealing with some of the common misconceptions (refer to Figure 2) that

Who Should A Business Travel Policy Apply To?

INTERNATIONAL HR STRATEGY prior to a short-term assignment policy being triggered. This may include extended project work, shorter-term commuting arrangements and business travel. Naturally the scope varies from organisation to organisation depending on a number of factors, e.g. risk appetite, maturity of the programme, existing business traveller processes and technology.

Who Should Own And Manage The Policy – Where Does Responsibility Typically Sit?

In the case of mature business travel programmes we are seeing a trend towards the global mobility function taking more responsibility for business travel compliance,

however, in less evolved programmes the responsibility tends to be less well defined, with no natural ’home‘. When designing a business travel policy it is crucial that that a broad stakeholder group is consulted. A cross-functional working party made up of representatives from various corporate areas (which may include HR, Travel, Payroll, Tax and Finance) will deliver a more rounded and representative outcome. It will also ensure that the policy deals holistically with challenges faced by both the individual and the organisation. To ensure that the business travel policy is implemented and managed effectively

it needs to be underpinned by the right governance and structure, supported by senior level sponsorship.

What Should A Business Travel Policy Look Like?

A business travel policy is a great opportunity to clearly set out the organisation’s expectations from its employees, as well as how the organisation will support those employees with any required actions. These may include seeking business lead approval or completing a risk assessment. The policy should not sit in isolation, but reflect and support the processes and key principles of the wider business travel programme.

INTERNATIONAL HR ADVISER SPRING

How Should A Business Travel Policy Be Implemented?

Summary

The approach to creating the right business travel policy needs to be balanced and create a setting that enables compliant travel in

your organisation – an overly draconian approach will impede the business. The policy should be robust enough that it covers all the compliance requirements and clearly

FATIMA JOHNSON

DEMETRA KARACOSTA

Associate Director, Global Workforce, Deloitte LLP, 2 New Street Square, London, EC4A 3BZ D: +44 20 7303 6343 fjohnston@deloitte.co.uk www.deloitte.co.uk/globalworkforce

Associate Director, Global Workforce, Deloitte LLP, 2 New Street Square, London, EC4A 3BZ D: +44 788 0454 082 dkaracosta@deloitte.co.uk www.deloitte.co.uk/globalworkforce

DELOITTE’S GLOBAL WORKFORCE PRACTICE

sets out the responsibilities of the employee and the organisation but at the same time is flexible enough to encourage the right business decision.

JESSICA SMART

Consultant, Global Workforce, Deloitte LLP, 2 New Street Square, London, EC4A 3BZ D: +44 20 7303 4304 jjsmart@deloitte.co.uk www.deloitte.co.uk/globalworkforce

Deloitte’s Global Workforce team partners with organisations to establish future-proof global workforce strategies, tailored to client specific business and talent objectives. We embrace design thinking to help clients reimagine and transform their approach to talent mobility, focusing on areas including policy and process design, strategic and operational transformation, global talent strategies, digital innovation, planning and deployment, and workforce analytics. Find out more here www.deloitte.co.uk/globalworkforce

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INTERNATIONAL HR ADVISER SPRING

Top 7 Global Trends Of 2019 Revealed From Technology To Employee Experience, Workforce Experts, Crown World Mobility, Report On ‘What To Expect’

The New Year offers the chance to reflect on and anticipate how global mobility is responding to worldwide events and what’s impacting the industry at large. Political uncertainty, trade tensions impacting global business and nationalism emerging in a number of countries, are some of the global events affecting the way business is conducted worldwide. That being said, we continue to live and work with incredible optimism and a global commitment toward social and environmental responsibility. We’re all further connected with technology, driving us to innovate ways of working, communicating and inevitable shifts in business models and workforce values. Crown World Mobility (CWM) recently hosted its quarterly Perspectives Live webinar to provide an outlook on what’s impacting the mobility industry and featured our annual list of trends and topics identified as significant shifts in the industry or innovations shaping the future of world mobility. We are firmly entrenched in a digital world, highly connected with technology, driving us to innovate ways of working, communicating, and inevitable shifts in business models and workforce values. We also live with the reality of an increasingly younger workforce. And in the few countries where this isn’t the case, there is an urgent need to find alternative workforce solutions. The “youthquake” of global talent is forcing most companies to shift values, cultures and strategies. To follow are our top 7 trends businesses can consider to stay ahead and gain a competitive edge in today’s fast-paced, evolving digital landscape.

1. The Increasingly Important Employee Experience

Surprisingly, there are few industries that do not have the employee experience on their 2019 trends list. Driven by a growing recognition that employees’ expectations are evolving, there is a greater need to offer an engaging, emotional, human-centred experience in the workplace.

This is especially true at critical, pivotal moments, such as recruiting, onboarding, career planning or exiting the organisation. Companies need to ask themselves what they can do to raise the bar with creative ways to engage and retain talent, and how are they improving the overall employee experience.

Many provide managers with selection guides to identify more qualified candidates, and self-assessments for employees and family members Before the start of a move, some companies recognise the importance of an informed decision-making process. Many provide managers with selection guides to identify more qualified candidates, and self-assessments for employees and family members. They are also developing formal and informal ways to get to know the destination, financial implications of a move, quality of life in the new location and relocation services that will be made available to the employee. There are also many onboarding ideas that offer a “soft landing” to the employee and family at the start of an assignment or relocation, including policy orientations, new location welcome packs, cross-cultural training or destination services. However, we are seeing more creative ways to supplement the traditional approaches. When developing new ways to support assignee onboarding, it is important to provide guidelines and get buy-in to ensure you

have a consistent global platform – even if local nuances are adapted for cultural fit. Though location and other factors influence what approaches apply, a few general examples include: • Developing a basic guide for the receiving manager and host location (new destination) team to ensure consistent and thorough onboarding. Include what needs to be ready for the employee’s arrival and any hosting activities that should be scheduled to ensure the employee meets people quickly, gets up and running and is productive on the job • Providing points of contact for the employee and accompanying partner. Be creative. For example, one company recently used Polaroids to introduce key team members in their welcome kit • Exploring low-cost ways to help the employee/ family get to know the new location and feel welcome. Set up popular local apps, download maps, use scavenger hunts similar to those designed to help travelling students get to know the historical downtown of cities, or schedule a bike or foodie tour to celebrate the employee’s first 30 days, etc. One long-standing best practice, that is also becoming more standard, is to give employees access to some level of ongoing support during the life of the assignment or after the initial move. Minimally this can consist of providing information – perhaps on the company’s intranet, in a text or an email reminder – career planning, updating assignment objectives, repatriation preparation, or to capture new competencies and skills related to the experience that will become part of their annual performance review. Often a simple “how is it going?” could make a difference to the employee and solicit valuable feedback for the programme. Additionally, best practices are to provide employees access to ongoing support during the life of the assignment or after the move. This can be through the company’s intranet, mobile texts or email communication.

2. Technology To Supplement, Simplify And Enhance

Technology solutions come in many shapes and sizes. Across our industry every company has some level of technology supporting its business model. No matter where you work,

GLOBAL TRENDS you find yourself a part of your organisation’s digital journey. Opting out is not possible. Employees, especially early-career millennials and emerging Gen Z’s, continue to influence expectations. But, employees across almost all generations have similar expectations when it comes to wanting the convenience and simplicity of having information at their fingertips – and available on any of their devices. Technology designed to help manage an employee’s move continues to evolve. Even companies with fewer than 25 assignments per year will look to move away from paper processes for forms and policy. There are several technology solutions that are clearly making a huge difference in enhancing the employee’s experience and simplifying the process.

3. Global Mobility In The Advisor Role

The evolution of the global mobility professional is a continual process. The increased use of flexible mobility policy, along with growing business and employee demands for choices, requires those in the function to advise and support decisionmakers in new ways. Interestingly, this is a trend that reflects similar shifts across HR. In our recent survey of more than 125 global mobility professionals, 56 percent of companies use flexible policies today and another 10 percent are planning to use the approach in the next 12 months. Core-flex is the most popular flexible policy option available. Driven by the business manager or HR, the “flex” element can also be an instrument for employee choice. Flexibility offers companies a way to address differing business line, location and assignee needs via a consistent platform. Yet this very benefit requires that someone take the role of advisor to the decisionmakers, and that role is typically filled by global mobility. Employees looking for choices in policy are finding it in the use of lump sum and flexible allowances; particularly popular in policies targeted to early-career employees, often moving for the first time. While these employees may need fewer services, they typically need more guidance. This paradox leads directly to the desks of global mobility professionals. Flexibility and choice of any kind add complexity and require new skills and practices. Throughout 2019, we will see global mobility teams re-writing job descriptions, upskilling team members and hiring new talent with more consultative and strategic experience.

4. Flexibility And Choices

This topic continues to evolve in terms of what it means and is becoming a perennial

trend. Today’s consumers want choices, convenience and the opportunity to customise, and this reality is making it into all types of corporate strategy, including global mobility. Business and HR partners want options to meet their needs, whether it is the budget, region or employee population. Similarly, corporate global mobility programmes increasingly expect flexibility and choice from their external partners: concierge services, lump sum management, global or local billing, face-to-face or virtual consultations.

5. Dual-Career Couples

Dual-career couples is not a new phenomenon in global mobility, nor is this the first time featured in annual trends. So why is it reappearing in 2019? Because more companies are struggling with the challenges that the dual couple demographic brings and are in search of creative solutions. There are two ways that we see companies defining the dual-career employee. Most frequently the term applies to an employee whose spouse or partner has a career in another organisation and perhaps a different field. For some companies the employee population includes several employees who are married, and therefore, “dual career” may also mean an employee whose spouse or partner is working in the same organisation. This topic has continued to increase in importance because it is far more common for both partners to contribute significantly to a family income. This means that when an employee is asked to go on an international assignment or transfer locations, the economic and family impact of the decision is greater than in the past. We are seeing dual-career challenges to mobility in all industries and all regions. The dual-career factor is a significant barrier to getting the right people to accept an assignment or a move. This is a trend that reflects a shift in relevance and is a topic gaining urgency. In the past, it was discussed because it was impacting a small number of accompanied employees and needed to be addressed as a new challenge. Today it impacts almost every employee eligible for accompanied status.

6. Employee Well-Being And Duty Of Care

This is the second year in a row that this topic appears on our trends to watch list. The reasons that employee well-being and duty of care appear again stem from two notable shifts in workforce dynamics. First, today’s employees increasingly expect to work in an environment that enable them to establish a work-life balance. The concept of “worklife balance” is no longer limited to benefits, like flexible hours and maternity leave. It

has broadened to incorporate mental and physical well-being and having benefits that support a wide range of priorities, such as: • Access to healthy food options • Encouragement of physical activity • Corporate social responsibility and community outreach activities • Mindfulness • Updated technology and availability of devices • Flexible healthcare • Personal development opportunities • Green and updated workplace environments. Today, companies focused on recruiting and retaining high-performing talent prioritise employee well-being. The good news is that many mobility programmes and policies already address well-being issues, but so far, they are not being communicated across our industry. 2019 would be a good year to rebrand some of the benefits that support employee and family well-being and come up with new options to promote and provide.

7. Making Global Careers More Accessible

This is our fifth year of tracking and supporting the industry’s discussion around diversity mobility. Global companies require international experience as part of future leader development and therefore it becomes increasingly clear that when the assignee population of a company does not have diversity, the company’s future leaders will be limited to those with access to international opportunities. Inclusion and reducing barriers to global mobility are central to this concept. Fortunately, as some of our 2019 trends demonstrate, flexible policies and focusing on the employee experience and assignee well-being represent strategies that will enhance diversity. This year we see companies assessing the gaps and taking steps to become more inclusive. Increasing the number of female assignees, supporting LGBT employees, dualcareer couples, creating low-cost and agile opportunities for millennials and employees from business-critical emerging markets, and adding flexibility to policy to support nontraditional family dynamics, are all becoming commonplace. Creating international work opportunities for employees with disabilities is the latest area being addressed in some leading-edge organisations.

CROWN WORLD MOBILITY Our presence is in almost 46 countries gives our mobility team a unique perspective on the realities of managing talent worldwide. For further information visit www.crownworldmobility.com

REMOTE WORK

The Key To Leading A Successful Remote Team Remote work is on the rise but putting together a virtual-office framework is still new to most business leaders. How can you get there if your organisation is still set in bricks-and-mortar? The answer will depend on the size of your workforce and nature of your enterprise. But three elements of company culture can help you lead a far-flung team with members based around the world. I discovered two of these - Uniqueness and Transparency - during research for my book. I discovered the third, which I’ll call Setting Boundaries, from actually leading a 100-percent remote business, which forced me to learn the ropes on the fly. Necessity can be a great teacher! To align your processes with a staff working from home, you might want to engage a consultant who specialises in those things. But, once you have your workflows and protocols laid out, you’ll want to focus on how the virtual environment is set up. To be successful as a leader when working at a distance, add a bit more emphasis to your company’s culture. Help your people set boundaries to keep themselves, and your business, moving forward.

Put A Unique Spin On Culture

Whether you’ve got headquarters in several countries or no headquarters at all, you can group your employees geographically to construct virtual HQs. This will lend a sense of identity to workers who report from different areas of the world while uniting them under the larger umbrella of your company. Start with what you all have in common, and then celebrate your differences. Ground your team by educating every member about your company’s mission, vision, and values. Philosophies on business goals and impacts, and the ethics employed in achieving them, should be universal. For example, a dedication to novel solutions can be exercised in any location. How your distinct teams innovate, though, may set them apart. In this example, you might query your workers about what helps them brainstorm. The answer might be meditation, nature

walks, or a good game of golf. Anything that sets the mind free might work. Now, each member of the company or group of employees who have similar habits can become known for their favoured brainstorming activities. Publicise these unique behaviours internally and encourage discussion about them. How do they relate to the company’s overall mission and values? How do they reflect individual personalities? How do they factor into work outcomes? Recognising and celebrating each others’ differences actually brings people together. Unique traits also add to your overall company brand. As you all work remotely, pay attention to the unique qualities that allow you to share in personal moments.

Insist On Transparent Exchanges

Without the benefit of face-to-face meetings and the necessity to chat via video monitors, communicating well is a skill that your whole remote team must master. Language and idiom barriers can be overcome if we understand people’s different communication styles. But first, make a commitment to the open exchange of information - whatever it is that will help people do their jobs well. Having a central database of facts and figures available to authorised employees will save time and misunderstanding. If the same class of worker in Europe, Latin America, and Asia all need to serve customers with basic account information, gather it in one accessible place, translating as needed. It’s one thing to hunt for details in a single office; it’s quite another to have to scour the globe! Survey your staff for their preferred methods of contact - telephone, email, instant message, etc. Then post those preferences along with links to each person on the company network. Avoiding frustrating calls and missed messages will make your remote team more cohesive and productive.

Use Boundaries As Virtual Walls

If your business can be transacted via computer and telephone, locations are not finite. But leaders should narrow them down. Cafés and other public spaces are not conducive to uninterrupted concentration. Neither is a living room table in front of the television. Let your team know what

your remote requirements are. At many companies, for instance, they include a dedicated office space in the home or a rental office that may be shared by other virtual workers. Finally, when leading a team that can, theoretically, work day and night, draw some walls around work time. Your business may demand that staff be on call during traditional office or store hours in a given time zone. Or, the nature of the work may mean timing is not critical. Create and discuss your guidelines so that your virtual team is all on the same page. At my remote company, where employee engagement and enthusiasm are high, my biggest problem is getting them to stop working. Time off is mandatory, and I counsel the team not to answer work-related calls or messages while on leave. Enforcing “me” time is one of the keys to preventing burn-out. When they return to work, they’ll be glad to have it all waiting for them.

CHRIS DYER

Chris Dyer is a performance expert, speaker and consultant. He is Founder and CEO of PeopleG2, a background check company, and author of The Power of Company Culture (Kogan Page, 2018).

INTERNATIONAL HR ADVISER SPRING

Measuring ROI For Global Mobility Highlights From Santa Fe Relocation’s White Paper ‘Global Mobility ROI - The Bridge of Credibility’

Global Mobility as a function is on the verge of a new wave of development and change, as organisations transform the Global Mobility function’s purpose, structure and roles. The Global Mobility industry has been talking about the Return on Investment (ROI) of international assignments for at least 20 years. And discussions about how and why Global Mobility should have a seat at the strategic table, has always been a popular topic over the years. We think there is a connection - that these two key themes in the Global Mobility industry are, in fact, intrinsically linked - how ROI is the ‘bridge of credibility’ and a key enabler towards Global Mobility transforming to become a strategic influencer. As part of our research, we undertook a series of interviews with Global Mobility specialists from diverse international businesses, headquartered in different countries and operating in sectors ranging from health, technology to automotive.

How Do We Measure ROI?

The ROI for International Assignees (IAs) is identified as both an umbrella term for a range of measures as well as a singular term (Doherty and Dickmann, 2012; McNulty, Hutchings and De Cieri, 2011; McNulty and De Cieri, 2013). Finance professionals would likely provide different definitions of ROI when asked, so in combination this could well be confusing the debate to the detriment of GM (Renshaw, Dickmann and Parry, 2017). Surveys ask participants to identify whether they calculate ROI alongside other measures such as retention or performance, thereby implying that ROI means something unique and yet undefined. McNulty and Inkson (2013) argue strongly for having an ROI philosophy, i.e. an over-arching belief which cuts across a business, that IAs are competitively important and should be linked with the strategic intent of the business. The first critical point we are making, is the need to determine the most appropriate terminology for your own business – what makes sense in your organisation? Return on Expectations might be a more appropriate term (Wang, Dou and Li, 2002), or, more simply, the Business Case. We continue to use the term ROI here, but if that is not the right language for your business – change it. It will take time to determine the best

ROI measures (Doherty and Dickmann, 2012) yet this uncertainty must not be allowed to slow down the process. We suggest creating a template of the measures you would recommend in demonstrating value and why – ask business colleagues for their input. Create a business case for your business case!

Whilst most organisations are a long way from using predictive analytics to enable their IA decisions, the role of analytics is growing and there’s an opportunity to work with this trend One of our interviewees with significant IA numbers said that whilst the goal might be in sight, there was a need to take ‘baby steps’ to get there and that influencing skills are critical. He noted, wryly, how the business is demanding that GM provide ROI data even though GM does not have access to that data without the support of the business. ‘The Business does not want to hear we don’t have the data…it’s a question of influencing [skills]’. We know GM is having positive business impacts through its analysis of data. As one interviewee said, through ‘increasing clarity on the costs [for the business] we have seen a reduction in long-term assignments’. We can presume from this that some form of limited ROI calculation is occurring as operations

compare these costs with the business need they had previously identified. GM should claim credit for these wins–even if they are at the potential risk of putting themselves out of a job if they do that too often! There’s a need to uncover what is or is not known in your organisation, and hence to design your own ROI or business case solutions – start by using the language and existing measures in your business.

The Importance Of Data Analytics

The call to take advantage of Big Data and the significance of data analytics capabilities in HR are continuing to grow. All the major management consultancies have been advocating these issues as game-changers for the future role of HR. Importantly, as Deloitte says, this is an opportunity to leverage the strengths of GM with those of HR to support the business (2017). Santa Fe Relocation’s 2018 Global Mobility Survey entitled ‘React: Transformation in the age of uncertainty’, supports this with business leaders acknowledging that investment in technology provides better cost estimates, increases the ability to prove the ROI of IAs and directly improves the ROI itself. According to PwC, these digital and ultimately artificial intelligence dynamics will have profound implications on the HR functions in the future, depending upon how these factors interact with other key global forces shaping the world of work (2017). So much so, that HR and hence GM have to drive their own agendas to avoid an outcome dictated by others. This will depend heavily upon the business context within which you sit, e.g. a hi-tech business will implicitly be moving faster than others. And yet, as one of our interviewees said, ‘We [GM] are not analytically strong people’ – so we need to take active steps. Whilst most organisations are a long way from using predictive analytics to enable their IA decisions, the role of analytics is growing, and there’s an opportunity to work with this trend.

Recommendations For Measuring ROI - From The Assignment

For clarity, we do not suggest a case of ‘soft versus hard metrics’ approach, where the only measurement is a financial metric. As indicated in the Business Investment Audit trail in Fig. 2, there may be desired outcomes that are weighted by the context of the assignment objectives, and the critical aspect

GLOBAL MOBILITY

ROI from the assignment and ROI post-assignment Fig. 1: Optimising ROI from international assignments

Fig. 2: Examples of the business investment audit trail

INTERNATIONAL HR ADVISER SPRING

is to ensure that there is significant granularity to measure and calibrate throughout the assignment process, and importantly at the end of the assignment. Whether the variables are qualitative or quantitative, the value proposition shifts from being a cost-based to a value-based investment decision. For a long-term assignee, whose total assignment costs over three years may be in excess of $1 Million, the ROI may be more than hard metrics and could involve broader organisational or even societal value drivers. The scientist who invents new medicines to cure diseases, or the CEO who embeds corporate values and establishes a growth platform in a newly acquired host business, will create ROI which could ultimately lead to substantial financial payback, but there are other value outcomes. This is why Global Mobility teams need to seize the opportunity to be the focal point for co-ordinating data analytics on performance, talent assessment and their own contribution: international mobility costs. We are not suggesting they be the owners, instead they become the enablers to business heads and HR leaders to take a more objective, granular and holistic view of what has been achieved from the investment. There are many organisations who are already extremely proficient at managing this process and truly own the Talent Mobility transformation and not only adopt the hackneyed title of Talent.

Recommendations For Measuring ROI - Post Assignment

The longitudinal assessment of the ROI is likely to be even more challenging for those organisations to track the on-going ROI contribution of an employee with internationally mobile assignment experience. Some organisations do proactively leverage their data analytics to formally assess this, for example, by tracking employees’ career progression, performance and talent potential. At a tactical level, this could also be the employees’ post assignment application of technical/ functional practices and cultural experience acquired during their previous assignment, to create value in problem solving or organisation development. For many organisations though, the commercial and people interest in an employee returning from an international assignment dissipates as they transfer to another cost centre or business division. The realities are likely to be that the HR and Talent teams and line management in the new business unit may have limited interest in investing time on identifying how to leverage or indeed measure continuous ROI in a form that enables the organisation to effectively measure their investment in their Global Mobility programmes. They may also lack the skills or depth of technical knowledge to fully

identify the best use of the acquired skills. Rather than it being an exceptional process for those high-flyers destined for accelerated leadership roles, shouldn’t this be the norm? This is where Global Mobility and HR leadership have an opportunity to have a more strategic contribution that provides a focal point for such long-term assessment. Equally, if this can be linked to the demonstration of tangible commercial outcomes that enhances external competitive advantage, the organisation then normalises this process at the outset and sees the benefit of taking the time and effort to build ‘SMART’ People Investment Plans. Where in industry would you spend $100 million (on 200 or 300 full package international assignees) without the Board having a detailed investment review process on the progress with the investment? Achieving influence at the strategic table remains an extraordinary challenge in many cases. One GM manager reported their conversation with a Talent Management colleague saying, ‘You’re a very small operational team so I don’t see us working together’. And yet the requirement for HR and GM to work more closely together for success in the future digital age is widely recognised (Deloitte, 2017). We think that crossing the ‘Bridge of Credibility’ through the ROI conversation will help to move GM forward although there will be people trying to put barriers in the way. One interviewee (Senior GM professional in health technology reassured us: ‘We are not that far away. It’s a matter of getting started’. The ability to lead ROI (business case?) discussions based on data analytics will improve the place of GM within HR and the wider business. GM needs to take baby steps to improve its data capabilities, to understand what is already out there in its business and to define the ROI construct as befits its own commercial circumstances. There is support from a wide group of external experts to help with this. John Rason, Group Head of Consulting at Santa Fe Relocation shares some recommendations: • Be wary of ‘easy to collect’ quantitative data driving the decisions because it is harder to gather informal/opinion-based data. Remember who the expert is! • What is already being measured in your organisation? Talent retention, project success? This may be your route to claiming you are calculating ROI already! • Find terminology that works in your organisation. Meet with your finance and business colleagues, seek their advice and input, and find the terms your finance colleagues’ respect! • Find out who your internal stakeholders are and/or should be and/or who you want - find out how they measure success. Enjoy the journey!

Read and download the full white paper ‘Global Mobility ROI - The Bridge of Credibility’ for more recommendations and insights. Visit: https://www. santaferelo.com/en/mobility-insights/ white-papers/global-mobility-roi-thebridge-of-credibility/ Extract References: 1. Doherty, N.T. and Dickmann, M. (2012) Measuring the ROI in international assignments: an action research approach, The international journal of human resource management, 23(16), pp. 3434-3454. 2. McNulty, Y.M., Hutchings, K. and De Cieri, H. (2011) How expatriate employees view expatriate ROI’, Academy of international business conference. Nagoya, Japan, pp. 1-29. 3. McNulty, Y.M. and De Cieri, H. (2013) Measuring expatriate ROI with an evaluation framework, Global business and organisational excellence, 32(6), pp. 18-26. 4. Renshaw, P.St.J., Dickmann, M. and Parry, E. (2017) ‘The organisational value of international assignments: a systematic literature review’, EURAM conference proceedings (Glasgow). 663-673. 5. Wang, G.G., Dou, Z. and Li, N. (2002) A systems approach to measuring ROI for HRD interventions, Human resource development quarterly, 13(2), pp. 203-224. 6. Deloitte (2017) The impact of the digital age on Global Mobility 2017 global workforce trends. 7. Santa Fe Relocation’s Global Mobility Survey report: ‘REACT: Transformation in the age of uncertainty’. 8. PwC (2017) Workforce of the future. The competing forces shaping 2030.

JOHN RASON

Group Head of Consulting, Santa Fe Relocation Recognised as a thought leader and speaker on strategic international HR, talent management and Global Mobility and author of Santa Fe Relocation’s award winning annual Global Mobility Survey. John works with global organisations to transform their Global Mobility programmes; focusing on aligning strategic objectives with operational delivery. John has been an FCIPD for 20 years and holds an MA in Managing Human Resources. To contact John Rason email: john.rason@santaferelo.com

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BUSINESS TRAVELLER MANAGEMENT

Exchanging Data How It Impacts Your Business Travellers And Posted Workers… I recently returned from a business trip to London and immigration controls in Ireland scanned my passport card. This isn’t the first time this happened, but got me thinking who is accessing it and why. Technology can play a key role in improving and reinforcing external borders. Over the past years, the EU has been developing large-scale IT systems for collecting, processing and sharing information relevant to external border management. We are also observing the effects of exchange of information regimes between different government departments, such as tax, social security and immigration.

Europe Exchange Systems

The Visa Information System, which supports the implementation of the common EU visa policy, is one of the EU tools. The Visa Information System (VIS) allows Schengen States to exchange visa data. It consists of a central IT system and a communication infrastructure that links this central system to national systems. VIS connects consulates in non-EU countries and all external border crossing points of Schengen States. It processes data and decisions relating to applications for shortstay visas to visit, or to transit through, the Schengen Area. The system can perform biometric matching, primarily of fingerprints, for identification and verification purposes. Working in tandem with the Visa Information System is the Schengen Information System (SIS). This is the most widely used and largest information sharing system for security and border management in Europe. SIS enables competent national authorities, police and border guards, to enter and consult alerts on persons or objects. An SIS alert does not only contain information about a particular person or object but also instructions for the authorities on what to do when the person or object has been found. Specialised

national SIRENE Bureaux located in each Member State serve as single points of contact for the exchange of supplementary information and coordination of activities related to SIS alerts. At the end of 2017, SIS contained approximately 76.5 million records, it was accessed 5.2 billion times and secured 243,818 hits (when a search leads to an alert and the authorities confirm it). The main purpose of SIS is to make Europe safer. The system assists the competent authorities in Europe to preserve internal security in the absence of internal border checks. SIS is in operation in 30 European countries, including 26 EU Member States (only Ireland and Cyprus are not yet connected to SIS) and 4 Schengen Associated Countries (Switzerland, Norway, Liechtenstein and Iceland).

SIS is in operation in 30 European countries, including 26 EU Member States (only Ireland and Cyprus are not yet connected to SIS) and 4 Schengen Associated Countries (Switzerland, Norway, Liechtenstein and Iceland)

• Bulgaria, Romania and Croatia are not yet part of the area without internal border checks (the 'Schengen area'). Since August 2018, Bulgaria and Romania started using fully SIS. A Council Decision is still required for the lifting of checks at the internal borders of these two Member States. In the case of Croatia, there are still some restrictions regarding its use of Schengen-wide SIS alerts for the purposes of refusing entry into or stay in the Schengen area. Those restrictions will be lifted as soon as Croatia has become a part of the area without internal border checks • The United Kingdom operates SIS but, as it has chosen not to join the Schengen area, it cannot issue or access Schengenwide alerts for refusing entry and stay into the Schengen area • Ireland and Cyprus are not yet connected to SIS. Ireland is carrying out preparatory activities to connect to SIS, but, as is the case for the UK, it will not be able to issue or access Schengen-wide alerts for refusing entry or stay. Cyprus has a temporary derogation from joining the Schengen area and is not yet connected to SIS. So how does this effect my business travellers/posted workers? It illustrates that data is being collected and shared either when applying for a visa and/or entering Europe in any capacity. If the government departments have this data, shouldn’t you also have this data? Are you ready for a HRMC audit of your Appendix IV waiver, or a Labour authority inspection to produce the required documents for your Posted Workers?

We All Know What A Business Traveller Is, But What Is A Posted Worker?

A Posted Worker as defined by the Posted Worker Directive is “a worker who, for a limited period, carries out his work in the territory of a Member State other than the State in which he normally works.” Thus, a “posting” occurs whenever a worker employed by a company in one EU country, is assigned to temporarily work at a location in another EU country such as an intra-company transfer assignment. While the definition in the Directives is limited to workers posted from other EU nations, some countries such as Belgium, Spain, Italy and

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Poland have decided to implement provisions not only to posting of workers between Member States but also to workers coming from non-EU countries. There is no de minimis threshold. This means as little as one day can trigger a Posted worker notification. This notification also needs to be done in advance of the employee’s arrival. (Failure on the part of either the sending company or host company to comply with any aspect of the host nation’s Posted Worker Rules (including notification and document retention) can result in significant financial penalties and debarment from future postings).

Companies are also required to retain specific records regarding their posted workers

being exchanged between authorities. You should have a system in place to collect data and analyse it to ensure compliance. Being compliant with the Posted Worker Directive and submitting your notification and having the documentation available will not defend you against a tax/immigration inspection. It is therefore prudent you also share your information with your colleagues and have the posting assessed for payroll withholding tax obligations. A further risk to be analysed is if a permanent establishment is building and there is an economic employer in the host country. Consider the situation where on the same business trip or posting there are multiple government departments looking at the same travel event – for different outcomes. The Labour authorities are looking at administrative regulations while the Revenue authorities have different thresholds for withholding and social security obligations.

Records To Retain

Companies are also required to retain specific records regarding their posted workers. While details may differ by individual country, the documents must be retained – either in paper or electronic form – and be produced if requested by authorities for at least one year after the end of the posting. The documents that are generally required to be retained include: • Employment Contracts and Assignment Letters • Time Sheets – of actual hours worked • Salary Slips – must show wages paid and deductions • Proof of Actual Payment of Wages; and • Proof of Social Security and Health Insurance Coverage. While the Posted Workers Directives do not change the existing social security laws and requirements applicable to temporary assignments in the EU, the increased emphasis on the conditions of employment of posted workers and the communication of such conditions (including social security coverage) to labour authorities makes compliance with social security laws even more imperative – including obtaining proper A1 Certificates confirming the employee’s enrolment in a national social security system. As mentioned above, information is

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Head of GT Global Tracker’s Research department. Jeanette has been working in the Tax and Immigration field for 20 years. Her experience crosses multiple jurisdictions and includes immigration and tax application processing and the provision of technical and compliance advise to large multinational corporations to small indigenous companies and private individuals. Before joining GT Global Tracker, Jeanette worked for a ‘Big Four’ tax firm for 9 years and spent 5.5 years working in two global immigration firms in London. Her time was spent providing immigration advice to large multinational companies and leading a team of immigration advisors dedicated to these accounts. Jeanette is an AITI Chartered Tax Adviser (CTA). GT Global Tracker is an award-winning solution for tracking business travellers for tax, immigration, social security and duty of care compliance. Email: Jeanette@gtglobaltracker.com Website: www.gtglobaltracker.com

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MENTAL HEALTH

Mental Health: The Words Global HR & Corporate Travel Professionals Can't Ignore The 'always on' society, economic and job uncertainty, social media and the influence of the media, and rising expectations of employers of what life should be like are all contributing to the growth in mental health issues. On the rise since the early 1990's, undoubtedly some of it is because people are more willing to report and admit mental health problems.

Mental Health: The Numbers

Mental health issues, such as stress, depression and anxiety, account for almost 70 million days off sick per year - more than any other health condition - costing the UK economy alone £70-£100 billion per year. 49% of work absences occur due to stress-related illnesses, and the annual cost of people underperforming at work because of poor mental health is estimated at £15.1 billion, or £605 per employee in the UK. In addition, 12.5 million working days were lost to workrelated stress in 2016-17, and almost onethird (31%) of UK employees said they would consider leaving their current role within the next 12 months if stress levels in their organisation did not improve. The UK Government is committing a £2 billion GBP funding boost to tackle mental health, and forward thinking businesses like Lloyds Bank's recent #GetTheInsideOut media campaign should very much be applauded for placing a spotlight more from a help-others perspective. Many employers are taking more steps to address mental health issues in the workplace, but there is some way to go.

The Mobile Workforce

Mattthew Holman, founder of Simpila Healthy Solutions, a consultancy that addresses mental health issues in the workplace says UK industry needs to pay more attention to its mobile workforce. Stress impacts an employee's wellbeing and has considerable financial implications for businesses. It pays to keep tabs on business travellers' wellbeing. Holman has devised a straightforward, anonymous, ten-question

Business Travel & Mental Health Survey that explores the mental health of business travellers. So far, its respondents have flagged up some worrying issues, most notably: • 49% of respondents have either been diagnosed with, or have shown symptoms of, mental illness • Of those who have/had a mental illness, 63% suffered with depression, 44% with an anxiety disorder and 29% with stress • 80% of those who have/had mental health problems have not told their employer • 74% of the companies represented do not have a travel policy that includes supporting mental health. Source: Buying Business Travel There are many business travellers who feel they are constantly 'on duty' answering the telephone and emails at all times in their day, working long hours with no definitive 'work-timed' existence. This coupled with limited human interaction and lonely nights in serviced apartments can have a major impact not only on their mental wellbeing but those of their family, friends and other people around them. On the move, they are regularly concerned about rush-hour traffic on the way to the airport, check-in times at both the airport and their destination accommodation. They can also experience long periods of inertia on the flight, drinking and eating to excess (because it's often free on the flight, in the lounges and at the conferences they attend), jetlag, poor sleep patterns, feelings of isolation and loneliness, and the numerous issues of dealing with clients and colleagues in different time zones.

What Are The Indicators For Identifying Mental Health Issues And Depression In An Employee?

Not hitting deadlines, missing meetings, poor concentration, emotional outbursts and heightened irritability, restlessness, sleep issues, social withdrawal, excessive alcohol consumption and loss of interest in tasks are all signs.

What Can Corporate Travel Managers Do To Address The Issue Of Burn Out And Facilitate A More Productive

Mindset, In Addition To The Duty Of Care And Where The Employee Is?

The image of the 'road warrior stiff upper lip' attitude needs disseminating within organisations and more attention paid to employees' wellbeing. More corporate travel managers are introducing wellbeing programmes within their travel policy and encouraging their employees to take ownership for how to go about doing their job without feeling they will be judged or reprimanded. To connect with their loved ones more and to resist the temptation to go on a conference call straight after a business trip. Taking the afternoon off and taking the time in lieu for 'bleisure' activities and 'non-work experiences' are also being introduced to 'break up' trips abroad. Companies should be able to identify those who are living with stress or mental health conditions with accredited Mental Health First Aiders who are equipped to support HR and their responsibility with employees, which offers a more holistic insight into their wellbeing, allowing HR to collaborate better with corporate travel managers.

PIERS BROWN IHM

CEO of International Hospitality Media - the premier specialist in online publishing; conference, exhibition and events, and advisory services for niche growth sectors of the hospitality industry. He plays an active role with the expansion of BoutiqueHotelNews.com and ServicedApartmentNews.com and hosts the largest gathering of high level industry professionals at annual awards and conferences. Piers holds an MBA, ISMM and IDM Diplomas. Visit www.servicedapartmentnews.com

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