Flexpatriate assignments: trends and policy implications

The increasing pace of globalisation has resulted in the business need for a wide variety of assignment types to meet organisational goals, including commuter, rotation and extended business travel. Sue Shortland outlines the nature of these flexible assignment types, recent policy developments, and current issues and problems in managing them.

The increasing pace of globalisation has resulted in the business need for a wide variety of assignment types to meet organisational goals, including commuter, rotation and extended business travel. Sue Shortland outlines the nature of these flexible assignment types, recent policy developments, and current issues and problems in managing them.The days of a standard expatriate assignment, three years or longer, are long gone, and organisations are readily adopting alternative, flexible assignments. Known as flexpatriation, these assignment types include commuter and rotational mobility patterns, and extended business travel. Alongside, and within, these are international business trips and virtual international working. Although short-term assignments have been used by organisations for many years, these, too, can provide a flexpatriate alternative to long-term, traditional expatriation.Distinguishing between business travel, commuting and short-term mobility can be problematic. Defining short-term assignments has always been fraught with difficulty. Generally, short-term assignments are considered to be over three months but under one year long, with business-travel policies being used for mobility requiring less than three months in the host country, and a long-term assignment policy used for assignments of more than a year.However, various other permutations are used &#x; for instance, a one- or two-month minimum threshold can be applied to short-term assignments, which may even extend to 18 months. The majority of employers, however, regard the cut-off point as one year for short-term assignments, and set policy around this.Extended business travel differs from business trips in that it usually involves assignees being based in an international location for around one to two weeks at a time to work on business projects, and, as such, is differentiated from a fly in/fly out business traveller attending meetings and conferences. Business-travel policies, however, address periods of international working below the threshold for short-term assignment policy.Commuter assignments may be used to service short-term and long-term mobility needs. Commuter assignees usually remain on home-country payroll and spend defined periods (weeks or months) abroad, commuting home on a regular basis. Under policy, commuters may be treated as business travellers, but it is becoming increasingly the norm for organisations to set up separate commuter-assignment policies addressing this type of assignment specifically and detailing appropriate treatment of compensation and benefits.However, given the high levels of business travel that are part and parcel of an international assignment, expatriates on long-term (and/or short-term) assignment policies can find themselves playing the role of business travellers and/or commuter assignees, blurring policy boundaries.Rotational assignees have been a feature of the oil and gas and mineral extraction industries for many years, but are beginning to gain wider prominence in other sectors. This type of assignment is usually used in remote or hostile locations, and involves assignees spending a defined period in the host location (for example, four or six weeks, usually working seven days a week), followed by a period off in the home country (four weeks or two weeks) with no work requirements.Weichert&#x;s 2012 Alternative International Assignments Survey notes that 61 per cent of its respondents either already use alternative assignments such as commuter, rotational and extended business travel, or are considering implementing them; 66 per cent believe their use of flexible assignments will increase in the coming year. The report predicts that alternative assignments will comprise 20&#x;40 per cent of all assignments in 2013.Manufacturing, construction, engineering, energy and technology sectors are the most progressive in this respect. The primary driver for using flexible assignments is to respond to business needs (80 per cent report this), although just over half of the survey&#x;s respondents (55 per cent) use them for projects, and 48 per cent to support specific company objectives. Cost control is cited by 47 per cent.Policy trends: commuters, rotational, and extended business travelCommuter assignments are used by 58 per cent of Weichert&#x;s respondents; 61 per cent of those with commuter programmes have a formal policy implemented globally. Typically, commuter policies are designed to extend beyond 12 months. Travel costs are usually reimbursed (72 per cent) although 12 per cent provide a per diem and 3 per cent a lump sum. Housing costs and co-ordination are met by 66 per cent; only 6 per cent do not meet housing costs in the host location. Short-term leased apartments are favoured. Meal costs are covered most usually via a per diem.Weichert records the following benefits as the most frequently provided to commuters: immigration (97 per cent); tax consultation/return preparation (94 per cent); tax equalisation (75 per cent); host transportation allowance (61 per cent); temporary living (61 per cent); and extra baggage (50 per cent).Rotational assignments are used by 42 per cent of Weichert&#x;s respondents; 71 per cent of these have developed a formal policy implemented globally. Travel costs are typically reimbursed (67 per cent), although 10 per cent give a lump sum and 5 per cent provide a per diem. Housing costs and co-ordination are met by 74 per cent; 11 per cent meet housing costs in the host location but do not co-ordinate provision. Short-term leased apartments are used, but, most usually, accommodation is in camps and compounds, reflecting the remote and harsh locations where such assignment types are based. Meal costs are covered most usually via a per diem.Weichert records the following benefits as the most frequently provided to rotators: immigration (95 per cent); tax consultation/return preparation (90 per cent); host transportation allowance (80 per cent); home/host travel (70 per cent); tax equalisation (70 per cent); temporary living in the host location (65 per cent); extra baggage (65 per cent); housing allowance (50 per cent); and a hardship/location premium (50 per cent).Extended business travel is used by 72 per cent of Weichert&#x;s respondents, although only 32 per cent have a formal policy. Travel costs are typically reimbursed (83 per cent), though 8 per cent provide a per diem to meet these. Housing costs and co-ordination are met by 64 per cent; 17 per cent require employees to secure their own housing, but do meet the costs. Hotels/motels with cooking facilities are encouraged. Any other additional costs are usually directly reimbursed, but meal costs are often covered by a per diem.Weichert records the following benefits as the most frequently provided to extended business travellers: immigration (97 per cent); home/host travel (69 per cent); temporary living (66 per cent); and tax consultation/return preparation (51 per cent).Issues and problemsbusinessman.jpgWhat constitutes a business trip is, in effect, governed by visa rules and compliance issues depending upon jurisdiction. Employers must ensure that assignees have the correct entry paperwork, and, as such, it is important to ensure that compliance is split from policy. In essence, this means that assignees may receive compensation and benefits under a short-term or commuter-assignment policy, but be treated as a business traveller for visa purposes, or receive business-travel expenses under organisational policy, but be required to hold a full work authorisation visa (particularly in the case of extended business travel).All assignees &#x; whether they are deemed commuter assignees, short-term or business travellers must be visa compliant.Tracking mobile assignees is notoriously difficult. Suggested solutions include linking requirements for immigration and tax compliance to travel booking paid for by the company (nonetheless, flight changes and cancellations create ambiguous reports), requiring assignees to complete travel-authorisation forms, and using local support staff to track assignee movements via accommodation/travel bookings. Tracking, however, remains onerous and raises the spectre of stealth expatriation and consequent tax and immigration non-compliance and penalties. It remains a thorn in the side of relocation professionals.Although short-term assignments (particularly those of between three and six months&#x; duration) have traditionally been unaccompanied, delegates at the 2012 Expatriate Management and Global Mobility Forum raised concerns that single status is increasingly presenting a barrier to mobility. This potentially affects commuter and rotational assignees and extended business travellers as well.While it is clearly disruptive to families to move for short periods (and costly for employers to support this financially), it was agreed by delegates that assignment lengths should not be extended simply so that individuals can gain accompanied status. The business need must drive the assignment type used.However, a flexible policy approach can be applied, balancing the costs of trips home to visit family members while on short-term assignments against the cost of family relocation or trips out to the assignment location. Assignees might also be allowed to take their families if they contributed to the cost. In essence, if there are numerous requests for accompanied status, then a short-term unaccompanied policy is not fit for purpose. It is notable that in Weichert&#x;s survey 94 per cent of employers do not allow commuters to be accompanied (suggesting that 6 per cent do allow some flexibility on this issue).The complexities of managing alternative assignment types, and the range of deployment patterns, are likely to grow. Blurring of assignment types is inevitable, as business objectives are dynamic and organisations cannot necessarily pigeonhole when, where, and for how long assignees will be required in any particular location.Flexibility of deployment is critical to meeting business needs and achieving success. While policy provision sets boundaries around defining what comprises a short-term, long-term, commuter or rotational assignment, and what is extended versus other forms of business travel, assignees will be required to come and go in line with work requirements, not relocation policy documents.The future lies not only in flexpatriate mobility but also in flexible mobility policies that ensure legal compliance at their heart while delivering appropriate rewards and benefits to mobilise assignees to deliver business goals in any way deemed best suited to achieve this end.