Localization & Local PlusINTERNATIONAL MOBILITY ASSIGNMENT
Localization & Local Plus
Localization of an expatriate is the transition to local employment status immediately following an international assignment. Typically, Localization Policies consist of a few paragraphs at the end of a Long-term International Assignment Policy which describes how the assignment allowances and benefits will be phased out or cease and information regarding other services that may be authorized since the employee is not returning to their home country. Localization approaches vary and some challenges must be thought through, so the localization process can be successful.
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.
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A Local Plus is another method for Companies to localize employees with flexibility. Packages typically includes additional assistance such as COLA, cash-in-kind benefits such as leased housing or education tuition payments. In some countries, there are tax optimization opportunities allowing employers to reimburse certain expenses. This type of policy seeks to provide a competitive compensation package that is not typically offered to local hires to secure the sought-after talent needed. A Local Plus policy can be used for localization or instead of a standard cross-border relocation package. It allows for the flexibility needed to highly personalize a package for the individual and location.
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