[Solution]Expatriate Compensation

https://www.youtube.com/watch?v=_UEGOv_UAts The amount and type of compensation needed to entice an individual to accept a foreign assignment may vary widely by person and locale. Company…

The amount and type of compensation needed to entice an individual to accept a foreign assignment may vary widely by person and locale. Company practices also vary in terms of compensation for differences. The most common approach to expatriate pay is the balance sheet compensation plan, which aims to develop a salary structure that equalizes purchasing power across countries so expatriates have the same standard of living in their foreign assignment as they had at home. Components of expatriate compensation:
1. Base salary: It usually falls in the same range as the base salary for the comparable job in the home country and is paid in either home-country currency or local currency
2. Foreign service premium: This is an extra pay given to expatriates for working outside the home country. This is to reward expatriates for living far from family/friends, facing a new culture, language, & workplace
3. Fringe benefits: Firms typically provide the same level of medical and retirement benefits abroad as they would at home, and may expand benefits to deal with local contingencies such as transferring ill employees or family members to out-of-country medical facilities
4. Tax differentials: Firms may adjust compensation even higher in high tax rate countries in order to make sure that expatriates have an equivalent after-tax income in the new location. In cases of double taxation, the MNE pays the expatriate’s tax bill in the host country
5. Allowances: MNEs adjust the total compensation package with a variety of allowances that help reduce the difficulties the executive and his family face. These allowances may include:
– Cost-of-living allowances: Companies usually pay for differences in cost-of-living for more expensive locations so that expatriates can enjoy the same living standards abroad as they would at home
– Housing allowances: Housing allowances ensure that expatriates will duplicate their customary quality of housing
– Spouse allowances: A spouse allowance compensates for a spouse to find work and offsets the loss in income due to a spouse forsaking his or her job
– Hardship allowances: A hardship allowance is paid to expatriates assigned to dangerous or especially difficult locations. Companies may also need to purchase ransom insurance, provide safety training, pay for home alarm systems and security guards, and assess their legal liability regarding employee safety for employees working in remote or dangerous areas
– Other allowances: MNEs may also include travel allowances to pay for visits back to the home country, and education allowances pay for the cost of children’s schooling.

Assignment status: Solved by our experts

>>>Click here to get this paper written at the best price. 100% Custom, 0% plagiarism.<<<

Leave a Reply

Your email address will not be published. Required fields are marked *