A question asked by Clients is, “How can we cost-effectively localize our expatriates and still make it a positive experience?” InterLink’s team of global experts works with Companies to answer this question. Compensation packages for international assignees are becoming more complex and challenging due to exchange rate fluctuations, inflation, variable income tax rates along with compensation practices. The localization process takes the employee from an assignee status to a local employment status for pay and benefits; comprised of a compensation package (base salary, incentives, allowances, perks, social security, benefits, and retirement plans) that is comparable to what is offered to locally hired employees. This is an area with the most challenge to overcome any disparity between the expatriate and those working beside them who were locally hired.
One approach is to provide a broad localization policy that describes in a general sense what localization benefit categories can be included if the decision to localize is made and agreed upon. The individual’s benefits would be governed by a local offer letter that describes the specific terms and benefits that will be offered to ease the transition from assignee or local employee status.
Delayed Localization is another approach that is determined at the onset of the assignment. This is where the employee knows that after a specific period of time, 2 years for example, the assignment benefits will be phased out so that they soft-land into the location and ease the transition to a local employment status with local compensation and benefits, relieving the Company from on-going assignment-related expenses and obligation to repatriate the employee to their home country.
InterLink assists in developing the policies that meet the Client’s culture and specific needs. Common benefits covered by a localization policy can include shipment of household goods retained in home country long-term storage, end of tenancy management (host housing), and children education tuition. Most policies will allow for localization home finding assistance, change in status for immigration, end of assignment tax services, and perhaps a return trip to close out anything in their home country.