Emily Stewart, head of strategy at Centuro Global, writes about global mobility management with tips on the major challenges to look out for.
The world of Global Mobility is filled with an equal mix of opportunities and challenges. Experienced Global Mobility teams and Relo professionals will be well aware of some of the more frequent considerations related to assignment risk, but others may be reconsidering basic policy, timing, and location-based decisions to ensure safety and security for employees. In this article, Emily Stewart, Community Manager at Centuro Global, writes about global mobility management and provides tips on the major challenges to look out for.
Where should companies start?
The beginning of a global mobility journey frequently starts with immigration. Immigration processes alone are often challenging but can be particularly difficult when the political landscape changes. A recent example concerns residence permit renewals for Russian passport holders in Latvia. Russian passport holders with residence permits for Latvia are currently not able to renew their permits due to the ongoing Ukraine crisis. This has led to an increase in long-term Latvian residents ( with Russian passports) seeking new locations and opportunities.
Changes in legislation, the COVID-19 pandemic, and higher volumes of new arrivals have played a significant part in creating a backlog of immigration applications globally. Companies should consider the political situation of the host location when choosing which talent to send on assignment and should expect longer-than-usual immigration processing times.
In a traditional home-based assignment (Long-Term and Short-Term Assignments), insurance is a key and costly consideration. International medical insurance coverage is not only essential, particularly for those employees arriving in locations without universal medical care, limited medical facilities, or lower-quality medical coverage. A long-term assignment from Vietnam to the U.S. would require international medical coverage due to the privatised healthcare system and federal requirements.
Equally, an assignment from the U.S. to Vietnam would require the same degree of coverage to ensure that employees could receive access to English-speaking hospitals and emergency services. Organisations, therefore, need to consider the risk related to medical insurance requirements, and the supporting costs to ensure a duty of care. On the topic of insurance, teams should also consider other applicable elements such as Insurance that touches many parts of renters or contents insurance in the home and host locations as well as shipping and storage insurance.ce
Many organisations pay a Hardship Allowance to employees arriving in more challenging or dangerous locations. However, it’s important to note that whilst a hardship allowance might incentivize employees to enter a given location, the allowance itself does not ensure their safety and security. Selecting reputable vendors who can search for expat-quality housing, in secure neighbourhoods, or provide car and driver support is as important as undertaking an initial security assessment of the host location and/or selected property.
In recent years, many organisations have moved towards paying a lumpsum direct to the employee to use in place of some or all of the policy benefits. Whilst cash lump sums allow for more employee flexibility, managed lump sums might be a better fit for some benefits.
As a managed lump sum allows the employee to choose what services they might need, but the funds are managed through a relocation company. This in turn helps to ensure that credible and vetted vendors supply the services required.
Where risk gets complicated
In nearly all assignment types, companies should consider providing employees with tax consultation and preparation services. However, it is also important to consider ongoing consultations during an assignment, before triggering repatriation. In the UK, for example, employees will no longer be required to pay capital gains tax or dividends tax on their UK assets once they have become a non-resident of the country.
However, you can live abroad for less than five years and still be a temporary non-resident (TNR). Should a British live in the UAE for 4 years and 11 months before returning back to the UK, they would be held accountable for the tax savings made on UK dividends of capital gains since the start of their assignment. Both the initial sending of employees to a host location and their return should be considered carefully, with the advice of trusted professionals to mitigate risk.
Entering or moving employees across international jurisdictions can hold its risks, however, the rewards are often worth pursuing. Careful planning and assessment are critical. If your organisation requires any assistance concerning global mobility, or help with remote workers, we can help set up a global mobility program to expand and manage your global workforce. Contact us today!