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Chapter 2: Assignment guidelines: Key aspects and challenges for companies
In the first part of this series, we discussed the benefits of a clear assignment guideline. In this second part, we look at the fundamental aspects and associated challenges of developing such policies. After all, for companies that have to deal with international assignments, a structured and well-founded assignment guideline is essential in order to meet the diverse requirements.
1. Principles of assignment guidelines
The basis of an effective assignment policy is to create clearly defined guidelines for all employees involved (i.e. for both the expatriates and the specialist departments involved). The following key elements should be carefully considered:
- Target groups: The definition of target groups is crucial in order to meet the specific needs of different categories of expatriates. For example, young graduates sent abroad for professional development will require different services and support compared to experienced professionals in key positions who have already worked abroad regularly. The policy should aim to take these differences into account to ensure appropriate support. Depending on the size and variety of international assignments, separate guidelines can be issued for commuter assignments or "career development assignments", for example, in addition to the usual distinctions between short-term and long-term assignments.
- Benefits and compensation: When determining benefits, it is crucial to conduct a sound benchmark analysis to design competitive packages and adequately compensate employees for their overseas assignments. Therefore, companies should not only rely on their internal salary structures but also consider the remuneration and benefits packages that are standard for expatriates. It is also advisable to define precisely which benefits are generally covered. Is the company prepared to pay the entire housing costs abroad? Is only a rent allowance granted? Or is there even a salary deduction if the housing costs abroad are cheaper than at the previous place of residence? In practice, we still see here a wide range among companies. It is, therefore, all the more important that the assignment guideline takes into account the company's own corporate philosophy and is not just a "copy & paste" of a sample template.
- Entitlements and obligations: The transparent presentation of employees' entitlements and obligations is essential to avoid legal uncertainties. In the case of the assignment policy, this also applies in particular to the general handling of income tax issues (tax equalization or tax protection) and the key provisions on social security coverage.
The expatriation policy can also contain general information on labor law provisions, notice periods and repayment obligations. Clear communication in this area protects both the expatriates and the company from potential conflicts and misunderstandings.
2. Implementation challenges
Implementing an effective assignment policy comes with specific challenges that companies should address proactively:
- Legal framework: The complexity of international assignments requires a sound understanding of the relevant legal framework. However, only the basic principles (tax equalization, work permits, social insurance, labour law, etc.) and responsibilities should be set out in the assignment policy, as otherwise the complexity becomes too overwhelming. Depending on the specific foreign assignment, it is then advisable to consult specialized legal advisors or tax experts who can provide support in the context of the specific assignment.
- Cost management: A precise cost analysis is essential when drawing up the expat policy in order to realistically assess the financial implications of assignments for the company. This is particularly important when determining remuneration and benefits.
- Cultural differences: If the expat policy is to apply to the group of companies worldwide, it is particularly important to take cultural differences into account. This starts with seemingly simple questions such as who belongs to the family that is entitled to accompany the expat during the international assignment.
Conclusion
SERIES: The Interaction of assignment guideline and assignment contract
Chapter 2: Assignment guidelines: Key aspects and challenges for companies
Chapter 3: Options for structuring the assignment agreement
Chapter 4: Differentiation between assignment guideline and assignment agreement
Chapter 5: Development of a new assignment guidelines in the company
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
