29 January 2024

The Most Expensive Mistakes In International Assignments



CONVINUS is since 2002 the leading specialist in the field of cross-border employment, international employee assignments, and is the only global mobility provider in Switzerland with a comprehensive range of services. Benefit from our unique combination of professionalism and expert know-how as well as the high level of commitment and involvement for clients.
International assignments generally cost a company 2 to 2.5 times as much as when locally employed staff are deployed. In most companies, the focus is still on costs and the "return on investment" ...
Switzerland Corporate/Commercial Law
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International assignments generally cost a company 2 to 2.5 times as much as when locally employed staff are deployed. In most companies, the focus is still on costs and the "return on investment" is not sufficiently at the centre of planning and decision-making yet.

However, there are also a number of mistakes that can make an international assignment even more expensive. We would like to discuss some of these mistakes below.

Lack of assertiveness / insufficient clarification

In some cases, postings are made even though the facts of the case have not been sufficiently clarified yet or not clarified at all. It can happen that people are not aware of the fact that certain clarifications are necessary. For example, it is still often the case that a certificate of posting (A1 / CoC

- Certificate of Coverage) is not obtained before or during a business trip from Switzerland to an EU member state. In addition, depending on the country of assignment, the notification procedure ("Posted worker notification") must also be carried out. This is also an aspect that is not always taken into account by companies. This may be due to ignorance or because they are not fully aware of the fact and therefore do not check this accordingly.

Concrete example from practice:

A Swiss national with an MBA and 20 years of professional experience is recruited for a senior position in the sales force. As he is responsible for the US market, among other things, he regularly travels to the USA.

Even after several contacts from the HR department, he is "not in the mood for all the legalities". The trips take place with the ESTA visa, although he is aware that this is legally incorrect.

On his 6th entry into the USA, he is questioned by U.S. Customs and Border Protection at control about the reasons and purposes of his visits. The questioning makes him so nervous and insecure that he admits to having worked in the USA without a work permit on his last few entries.

In response to this, the US authorities impose a fine and a two-year entry ban on the entire group of companies. During this time, business in the USA collapses on a massive scale, as existing customers cannot be adequately served and hardly any new customers can be acquired.

Another aspect is also that even if the clarifications are made, HR does not always have the necessary assertiveness, and the employee disregards the instructions. In practice, we often see this in connection with obtaining business travel visas or work permits, in which the employee must also cooperate.

These two points can only be counteracted by creating awareness within the company that "compliance" is not just a "buzzword", but a corporate objective that must be adhered to in all areas of the company. Furthermore, everyone within the company must be aware that the actions of individual employees that go beyond the legal regulations can also lead to sometimes serious consequences at company level and that disregarding compliance regulations is not a "trivial offence". A clearly defined escalation process should be set up and implemented if an employee does not comply with the instructions of the HR or Global Mobility department.

Acting for cost reasons and "saving at the wrong end"

An international assignment is cost-intensive, especially when all legal aspects are taken into account.

A concrete example from practice:

A medium-sized company based in Switzerland sets up a process for assignments as part of its international expansion and has the labour, licensing, tax, and social security conditions for the relevant countries of assignment checked.

As part of this, the payroll department has to set up an expat payroll for the first time. In order to save fees of CHF 400, an external review of the first payroll run by experienced payroll experts is waived.

A few years later, when an expatriate employee returns, it transpires that serious errors were made in the payroll system from the outset. For example, the payslips for several years have to be corrected and lead, among other things, to complicated equalisation calculations regarding the employee's taxes. The costs for the corrections and calculations amount to CHF 30,000 and the anger among the employees concerned, but also the uncertainty among the numerous employees currently posted abroad, is enormous.

It is advisable to have experienced payroll experts, who have the necessary expertise and many years of experience in the context of foreign countries, set up a payroll and then have it reviewed at the end of the year.

This ensures that the correct taxes are paid in both countries. External support is often obtained to set up payroll, but a review at the end of the year is not carried out for cost reasons. This can lead to "unsavoury results" or very negative surprises. If too little tax is ultimately paid as a result, this can lead to additional payments and penalties. Particularly in the areas of payroll, taxes, and social security, this can have cost-intensive consequences for the company even years later. Potential damage to the company's image at home and abroad should not be underestimated if these incidents are publicised.

In serious cases and especially in repeated cases, this can also lead to the entire company being sanctioned abroad in tenders for government contracts, as has been the case in the past, particularly in Asian countries.

Not making certain clarifications for cost reasons, or not seeking external professional support, usually leads to far higher costs and, in the worst case, to potentially serious consequences for the entire company, as was also made clear in the previous example.

Lack of sense of responsibility & unclear responsibilities

A clear definition of responsibilities for the various areas is essential for international assignments.

Concrete example from practice

A German employee is assigned to Norway for a Swiss company for several years. In the assignment agreement, he is promised support in declaring his taxes both in his home country and in the country of assignment.

Although the employee requests this support several times, he does not receive it because no one in the company feels responsible for this issue. The consequence is that taxes have neither been paid nor paid correctly in both countries for years.

In Germany, the outstanding amounts result in a notice of seizure on the employee's home.

Even after several years, the incident is still very much in the minds of many employees; due to a lack of trust, some employees have already declined offers of assignment from the company and some competent employees have since been headhunted by competitors and left the company.

A "laissez faire" attitude harbours very high risks in all areas, but especially in the tax and social security sector. The consequences of this are usually felt with a time lag.

In a company, the Global Mobility department should always be involved in all decisions concerning the assigned employees so that their expertise can be taken into account before serious mistakes are made.

False expectations & no clear guidelines

Managing expectations in many areas of an assignment is fundamental to its success; it is not just a matter of correctly categorising the needs and wishes of the employees.

Concrete example from practice

An employee from the USA is to be assigned to Lausanne in Switzerland for a year. The responsible HR manager in the USA promises him and his family that the move will not change their living situation.

When looking for accommodation, it turns out that properties similar to the family's property in the USA are not available to rent in Lausanne and the surrounding area, but only to buy. The employee also insists on moving the family's four horses and three dogs.

The employer buys a small villa in Lausanne and bears the cost of transporting the animals.

After just six months, the family decides to return to the USA, as the special feed for the horses cannot be imported due to customs regulations.

The basic rules are often set out in an Expat Policy, but these do not cover every situation and sometimes leave a certain amount of room for interpretation. It is important to communicate the Expat Policy clearly, especially to the employee, so that there are no misunderstandings.

Setting up an escalation process that specifies who has to decide, i.e. approve, or reject, employee requests that go beyond the Expat Policy has proven to be very helpful. The costs of an assignment should always be considered in relation to the benefits of the assignment.

Allowing yourself to be put under pressure or "blackmailed" by the employee

In some cases, you unfortunately find yourself in the uncomfortable situation of having only one employee who is suitable for a certain position / task abroad. As a company, you could then be tempted to fulfil all of the employee's wishes.

Concrete example from practice

A Swiss employee who has been with the company for 10 years is to be sent to China for a specialist position. He would like his current girlfriend to accompany him, but rules out marriage. There is therefore no possibility of obtaining a family reunion visa for her.

The employee therefore makes his assignment conditional on his girlfriend obtaining a locally advertised position as an assistant at the subsidiary in China so that she can obtain a visa and residence permit. He deliberately ignores the fact that her professional qualifications are not suitable for this.

Meanwhile, the Chinese HR manager has already given a local Chinese candidate a verbal commitment for the position and refuses to withdraw it as she would lose face.

As a rule, the worst decision is to let employees determine the conditions. These situations can usually only be resolved by bringing in external expertise to discuss other possible solutions.

In some cases, it is also sufficient to offer the employee an external counselling session in which the employee's unrealistic demands are then examined neutrally and from a legal perspective.

Sending away unpleasant employees

Time and again, there are employees who should be dismissed, but for various reasons this final step is not taken. If the opportunity then arises to deploy them in another country, this option is often utilised.

Concrete example from practice

An employee at the Swiss head office is "feared" by everyone due to his aggressive and unpleasant manner. When no suitable candidate can be found for a vacant position at the subsidiary in Mexico, it is decided to send this employee there.

The employee's behaviour also caused a lot of resentment in Mexico. He was also able to negotiate an expatriate salary and a number of allowances that were far outside the applicable expat policy. Not least because of the many special requests and countless enquiries to the HR department, the assignment not only caused considerable unrest in the company, but also considerable additional costs and a great deal of extra work at various levels of the company.

After almost 2 years, the employee in Mexico is dismissed.

From the outside, it is apparent that you should have separated from the employee before their assignment. Creating physical distance does not usually solve the problem, but rather proves to be a very expensive measure, especially if, for example, the labour law regulations and possible consequences in the country of assignment were not observed at all or were not taken into account in advance.

Neglect of the family & cultural differences

The literature and numerous surveys have repeatedly shown that the accompanying family of the expatriate can contribute greatly to both the success and failure of an international assignment. Assignments are often cancelled precisely because of the family.

Concrete example from practice

A Swiss employee is to be sent to Singapore for two years to support an important project. His wife accompanies him.

As intercultural training for the accompanying wife was not part of the assignment agreement, she did not complete such training. On site, it turned out that the wife was unable to cope with the cultural differences and did not feel comfortable in her new environment from the outset. This led to several relocations within the first six months of the assignment, which placed an additional burden on the employee in addition to the demanding project in his free time. The fact that the employer finances costly further training for the partner does not improve the situation either.

Ultimately, the costs for the assignment accumulated that it would have been more cost-effective to fly the employee in several times for a limited period of time.

It has therefore proven to be very helpful, especially in the case of long assignments abroad, to integrate the partner into the contract or at least the counselling sessions. The offer of intercultural training and "spousal support" have also proven to be positive factors for the success of a foreign assignment.

Concluding remarks

Avoiding these mistakes is useful and advisable for the realisation of successful foreign assignments. Not all mistakes can always be avoided, and it is not always possible to fully comply with all legal regulations at all times. However, this should not prevent the company and the responsible employees from at least endeavouring to do so.

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.

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