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Foreign assignments can be hazardous to your financial health. This is especially true if your employer is new to, apathetic about, or ill-informed of the ins and outs of sending employees overseas. |
Some companies say that getting ahead requires at least one significant foreign assignment. Most expats know that international moves are important to their career, and that they can earn business skills that are increasingly in demand. "People work overseas for many reasons. It is difficult to believe anyone who says that money is not one of the major incentives," observes Godfrey Golzen, author of "Guide to Working Abroad." One expat says, "I wouldn't have accepted an overseas assignment if it wasn't financially attractive." Whatever your motivation, the quality of your next assignment is influenced by the quality of the work contract. Armed with information, you can negotiate the "Perfect Package" that will protect you financially. Otherwise, you might spend more than you bargained for......Tom Miller, an expat negotiating his fourth contract, has learned, "You can negotiate a better deal if you're informed. My boss gave me a blind choice: The company would pay for either my overseas rent or for stateside storage of household goods. I made the wrong choice because I didn't know how expensive rent was going to be." Since then Miller has done his homework and uses the "U.S. Department of State Indexes of Living Costs Abroad, Quarters Allowances, and Hardship Differentials" as a guideline. (To order, call 002-1-202-512-1800 or 002-1-703-875-7900. Or, visit:
The Indexes of Living Costs Abroad table compares the cost in dollars of goods and services purchased at the foreign location to similar goods and services purchased in the Washington, D.C. area. With D.C as the benchmark at 100, the cost index for Taipei as of January 2000 was 134 whereas it was 94 for Manila, Philippines. The index number is plugged into a simple formula to calculate the cost-of-living allowance for the expat employee and family. A separate Quarters Allowances table shows the maximum allowances payable to U.S. government employees for foreign housing costs. The Hardship Differentials table can be used for calculating a special monetary consideration if you are asked to visit, say, Beirut for an extended business trip, even though you still live in the UK. Additional "danger pay" rates are paid for hot spots like Bosnia-Herzegovina.Besides special foreign assignment compensation, work contracts cover salary, bonuses, stock agreements, perquisites, supervisory relationships, main duties, and duration of the contract. Don't accept unsigned contracts or oral contracts. Work contracts signed by both parties protect the employee's interests in case of mergers, management changes and selective amnesia.
Before signing, recall the past year. What unexpected problems and expenses arose which would not have occurred but for your expat status? One individual had to pay for hotel accommodations every time he and his family visited home. Another was overlooked during performance evaluations and, consequently, received minimum salary raises even though it's likely he would have received significant recognition had he not been, "out of sight, out of mind."
Compare notes with other expats - if they're willing to share information. By comparing proposed contracts from their employer, several employees were able to unite and negotiate as a group. So, instead of only one employee getting a company car, they all got company cars. This group of employees was armed with a copy of the Employee Relocation Council's most recent survey. (Call 002-1-202-857-0857.) The survey results show the percent of companies providing various types of assistance to U.S. employees on international assignments.
Some of the most frequently provided contract items are household goods shipment (100%), immigration/visa assistance (98%) and home leave (97%). Over half provide automobile purchase assistance, while only four percent of the surveyed companies replaces a trailing spouse's lost income. Be flexible when negotiating your work contract. If your employer refuses to provide a furniture allowance, think of a counter-proposal. Will they consider reimbursing your phone bill, or paying your mileage, or paying rent for a computer/fax modem in your home? Appeal to upper-executives only if an impasse is reached. Some expats mistakenly forget to factor their return home. Persons who've sold their homes, cars, lawnmowers, etc. to embark overseas will face similar relocation costs as do new employees to whom the employer offers relocation benefits upon internal moves. Shouldn't expats returning from thousands of miles away receive similar - if not greater - consideration than new hires?
Mark S. White, Jr. of The Hay Group in Pennsylvania says, "The length of a foreign service assignment is at least 18 months, but usually continues to three years." For contractual purposes, 18 months is recommended because unforeseen contingencies can be negotiated into the next contract. For adaptation purposes, a three-year stint gives expats time to appreciate and gain better understanding of the foreign culture