Here, Weichert Relocation Resources examines the important basics that need to be considered when writing international assignment offer letters.
Our clients often ask us for help drafting offer letters, or letters of assignment, which address the terms and conditions of an assignment so there is a clear understanding between the employer and employee.
To gain a better perspective, we reached out to Laura Levenson, global practice leader in Weichert Relocation Resources’ Consulting group. She said that although on the surface this task may seem simple, there are some important basics to keep in mind:
Base salary and incentive plans
Typically, the first question your employee has will be how he or she is going to be compensated. Be sure to express salary and other components in home country currency and pay delivery method. By addressing as many potential questions as possible before they are raised, you’ll not only help reduce your employees’ stress level, you’ll also help them make informed decisions about the transfer or assignment.
Healthcare benefits and pension plans
Right up there with concern for compensation is health coverage and planning for the future. For international moves, even if coverage will be provided in the host country, most employees will want to know about this coverage and whether or not they still have the option to remain on their home country plan.
Your employees and any accompanying family members need to know the critical importance of having the proper travel documents and visas to be permitted to work in another country. Not following the proper visa process could result in deportation of the individual and family, or worse, shut-down of company operations in that country.
Likewise, since some but not all expenses and allowances associated with relocation (domestic and international) are taxable, it is essential that the company provide guidance to ensure that the employee is compliant with tax law in the new location. Even though it is ultimately the employee’s responsibility to pay the correct taxes, the company carries some obligation to provide thorough guidance from professional resources.
Allowances and deductions
It is likely that your policy addresses payment of various allowances, but not necessarily the specific amounts or allowance types, since they may vary from homeowner to renter, short term to long term, and new hire vs. experienced senior executive, to name a few. Therefore, the Offer Letter should contain the specific allowances to be provided and the amounts to be paid. If these are not a fixed amount, then the method of calculation should be detailed. In the case of any deductions (such as housing contribution or negative cost of living adjustment, or COLA), the formulas and thresholds used should also be discussed.
If your policy contains a set of benefits that are not always standard (language instruction, education assistance, car allowance, etc.), the ones to be provided in each specific case should be addressed in the letter, along with any limitations or monetary caps. Even though these benefits will be explained in greater detail by the relocation advisor, it is best practice to set expectations by introducing these benefits and clarifying these services at the onset. Providing such information early on in the process is also very helpful for overall timeline planning purposes.
Repayment agreements and termination policy
If your company intends to implement a repayment agreement, this is the appropriate place to communicate this information. There are many ways to handle repayment agreements, and regardless of your company’s philosophy on them, it is critical that they be reviewed and approved by legal counsel. Likewise, you may have different repayment agreement terms that complement voluntary vs. involuntary terminations. Therefore, your termination policy(ies) must also adhere to labor laws that govern the transfer or international assignment.
Note that while the above is NOT a comprehensive list, but is intended as a guideline to typical basic policy and offer letter components. Above all else, you should be sure that your legal team has a chance to review it to ensure compliance with labor, tax, and immigration laws as well as your company’s own code of conduct and ethics.
By taking the time to ensure that the information provided in your offer letter is clearly articulated, thorough, consistent and unambiguous, you’ll be setting clear and reasonable expectations which ensure highly satisfied employees and set the stage for successful transfers and assignments.