Thinking Of Taking A Job Assignment Overseas? What You Should Know Before Accepting the Offer

(RIVERWOODS, ILL., May 5, 1999) – As more U.S. companies invest in overseas operations, more U.S. managers and executives are being asked to take assignments abroad. Many factors go into determining whether you should accept the offer, including whether it's a good career move and the social and cultural challenges you’re likely to encounter. Often, less understood are the compensation issues that surround relocating, according to Arthur H. Kroll, author of Compensating Executives: Drafting and Managing Tax-Advantaged Arrangements, published by CCH INCORPORATED.

Here are some of the issues you need to consider before changing your address.

Financial Packages

Base salary. Because U.S. salaries are often higher than salaries overseas, some companies will slow the rate of salary increases for relocating employees. If your company does this, Kroll advises finding out if they also compute a "shadow salary" used to make sure your pension is not reduced by a slower salary increase and that your salary comes back in line with salaries paid in the U.S. when you return home.

Living cost allowance adjustment. This is designed to equalize the cost of living in the new country by taking into account the difference in the cost of such things as food, clothing and transportation so that you can maintain the same standard of living overseas as you have in the U.S.

Other allowances and premiums. Some employers offer a relocation allowance to help defray costs of establishing a new residency, or a foreign assignment premium, which can amount to as much as three months of your salary. If you’re assigned to a country with extremely difficult living conditions, your employer may offer a hardship allowance to entice you to make the move. The amount varies, but it can be 35 percent of salary or higher.

Tax equalization. These payments/deductions are designed to avoid penalizing employees for taking overseas assignments where foreign taxes are higher, or for rewarding them for taking assignments where foreign taxes are lower.

Evaluating Benefit Packages

Medical expenses and benefits. Kroll advises finding out about the quality of health care in your new location. If it’s not adequate, employers often contract for 24-hour emergency medical care, or identify where the nearest medical expertise is available and pay for the employee’s expenses in obtaining that care.

Education. If education is not free or is inadequate in the area you’re relocating to, find out if your employer will reimburse you for the cost of sending your children to private schools.

Extra time off. In addition to vacation time, many companies offer expense-paid furloughs so employees can return home for visits. Rest and relaxation plans are often extended to employees relocating to countries with harsh living conditions. These programs typically offer 7-14 days of additional time off and extra compensation to defray travel expenses.

Preparing To Leave

Selling and renting U.S. properties. Employers often will guarantee that an employee will get at least the fair market rent should their property rent for less. If you prefer to sell your house, find out if your employer will assist with closing costs or provide other support in getting your home sold.

Overseas housing allowance. This is a major consideration in international relocations as it may be one of the employee’s largest expenses, according to Kroll. For example, an employee relocating to Japan would want to ensure an adequate housing allowance since the cost of renting there is considerably more than in the U.S.

Selling and buying a car. If you have to sell your auto in the U.S. below fair market value, find out if your employer will reimburse you for the difference. Also, if the purchase price of a car overseas is more expensive than in the U.S., find out if your employer will cover the difference.

Making the Move

Travel and shipping expenses. Your employer should pay the travel costs for relocating you and your family as well as transportation costs for your household goods. Also, as you may not want to take everything you own along, find out if your firm will cover the cost of storing these goods while you’re overseas.

Transporting Fifi and Fido. If you’re planning to take your pets, typically your employer will pay their transportation costs. Often employers also provide assistance in determining quarantine periods or restrictions on moving a pet to a foreign country.

Handling Emergencies

Return home for family emergencies. When there is a death or serious illness in the employee’s family at home, the employer generally will pay the round-trip airfare for the employee and his/her immediate family to return to the U.S.

Evacuation policy. According to Kroll, your employer should have a formal evacuation policy assuring you will be evacuated promptly at the employer’s expense should trouble arise. You also should be reimbursed for goods that have to be left behind.

Returning Home

Moving back home. Once your overseas assignment is completed, your employer should pay to move you, your family and your household goods back to the U.S. If you sold your home to move abroad, also find out what type of housing assistance your employer will provide upon your return.

About The Book Compensating Executives

CCH Compensating Executives: Drafting and Managing Tax-Advantaged Arrangements, published by CCH INCORPORATED, provides an insider’s guide to the latest thought and practices in high-level compensation programs. The author, Arthur H. Kroll, is an attorney and consultant specializing in compensation and CEO of KST Consulting Group. A nationally recognized expert on executive compensation, he is an adjunct professor at New York University, teaching on executive compensation. He also is a frequent lecturer on this subject.

About CCH INCORPORATED

CCH INCORPORATED, Riverwoods, Ill., is a leading provider of employment law information for human resources professionals. CCH also provides tax and business law information in print and electronic form for tax, legal, securities, human resources, healthcare and small business markets. CCH is a wholly owned subsidiary of Wolters Kluwer U.S. The CCH website can be accessed at www.cch.com.

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EDITORS NOTE: An editorial review copy of Compensating Executives: Drafting and Managing Tax-Advantaged Arrangements is available by contacting Leslie Bonacum at 847-267-7153 or bonacuml@cch.com.

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