The area of expatriate assignments has drastically changed in the past 10 years because of an increase in different types of assignments, a global payroll director said Sept. 21.
“Twenty years ago it was common to have one or two assignment types: long-term assignments and career expats,” said Mary Brumm, director of global payroll training and development at the American Payroll Association’s Global Payroll Management Institute. “Today, you have rotational assignments, commuter assignments, long-term assignments, project assignments and more.”
There are numerous reasons to have expats, Brumm said at the APA’s annual fall forum in Las Vegas. For example, millennial employees are eager to sign up for expatriate assignments and are submitting more requests to human resources and payroll departments to work on overseas assignments. Other reasons include a lack of key talent in a country, global leadership development and starting new facilities, she said.
The increase of types of expatriate assignments makes global payroll a more relevant job function. Regardless of the reason for an expatriate assignment, Brumm said, there are several questions that should be asked:
--How many expats do you have now?
--What is the length of the assignment?
--What type of package does your company want to offer?
--What is the business reason for the assignment?
--Can the objectives be modified to accommodate a different type of assignment?
The benefit of answering these questions is to save companies money and make sure risks are minimized. “Expat policies are not one size fits all,” Brumm said. More cash does not necessarily mean more assignee satisfaction, she said.
Payroll professionals should follow six steps to develop effective expat policies, Brumm said:
Discovery: Determine what types of assignments are offered, track employee locations and identify compliance risks; analyze issues and determine resources.
Company strategy: Define policies the company needs for the organization and determine benefits offered to each policy type. Decide how the company wants to handle tax service.
Governance model: Identify a governance committee. Determine who makes final decisions about whom to put on assignment. Define the core team and its role and set up a communications plan.
Building policies: Document the policies and review them by team. Identify expats for grandfathering. Determine a communications plan.
Communicating policies: Communicate the plan operations, managers, employees and key stakeholders. Develop a plan to explain business requirements.
Ongoing: Provide monthly reporting and track exceptions to policies. Document issues and concerns. Perform an annual policy review.
Payroll departments also should set up quarterly or semiannual reviews with the governance committee, core team and tax advisers, Brumm said. Meeting with tax advisers to discuss company risks is important because global tax enforcement is becoming more sophisticated. Tax and immigration authorities are collaborating to share information, especially in countries such as Japan and Singapore, she said.
There also are risks from not providing tax-support services for employers and employees, Brumm said. Other risks include immigration fines, imprisonment, damaging the company’s reputation, employee talent, audits and assignee dissatisfaction.
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