The Complexities of Expatriate Compensation

American ExpatriatesTelecommunication has made it much easier to perform a variety of different jobs from literally anywhere on the planet. But some jobs (like teaching, specialized trades, and certain supervisory positions) still require being there. But when “being there” means sending workers to another country, the situation can get tricky, especially for whomever is doing the sending. Here are just a few of the financial wrinkles involved with expatriate compensation.

Relocation. Expatriates generally spend anywhere from a few months to a few years abroad, so relocation packages are a must. Finding schools and employment for spouses can also be negotiated into an expatriate compensation package, as well as whether or not the employee will need a vehicle during their time abroad. Employers can also elect to pay for any language training necessary for the employee to properly do their job.

Cost of Living. Of course the employee will be paid during their time in the country in question, but the exchange rates may not quite match up, and so neither will the expected costs of living. Either the new country will be ahead of the dollar, in which case the expatriate compensation package will need to include a “raise” in order to maintain living costs, or the country will lag behind the dollar, in which case the employee will not need as much money to maintain costs.

Injury. In the United States, workers’ compensation laws vary by state, but for expatriates working abroad, there is a whole different section of code that applies. For example, the Longshore and Harbor Workers Compensation Act (also called the Longshore Act or LHWCA) deals with maritime claims for injuries sustained by anyone working under a U.S. contract. Within that law is the Defense Base Act, which is an extension that covers anyone employed on an overseas military base. Every expatriate should determine under which statute they are covered, and familiarize themselves with the process well before they need to file a claim.

The chance to work overseas can have great appeal for many employees, but working out the details can be an intimidating process for an employer. If the benefits of sending an employee abroad outweigh the costs and difficulties, make sure all the i’s are dotted and t’s are crossed.