[Tax Corner] HR: Help from “The Three P's” of global mobility [Tax Corner] HR: Help from “The Three P's” of global mobility

[Tax Corner] HR: Help from “The Three P's” of global mobility
04 Feb 2020

Help, this is complicated!

As anyone involved in global mobility knows, posting employees (Assignees) from one country to another can be a complex undertaking.

Not least because there are many interdependent elements and variables to consider and manage. These can include immigration, payroll, employment law, remuneration planning, employment tax, social security, vendor management, shipping and house hunting (to name but a few).

This complexity can be significantly increased where there are multiple moves to different countries and numerous internal stakeholders to manage (all of whom are likely to have different priorities!).

Of course, in addition, at the heart of any international assignment is an individual, the Assignee (and sometimes their family), who will also have their own business and personal needs.

If you are an organisation who is dealing with global mobility for the first time or don’t have in-house expertise, managing all of these elements in a coordinated and seamless fashion can seem like mission impossible.

Where do you start? Benchmarking exercise? Borrow some template policies? Get tax advice? Phone a friend?!

As an advisor, I am always on the lookout for things which can help me simplify complexity to enable clear thinking and effective decisions.

For organisations who are new to global mobility, this is where the “Three Ps” as I call them - policy, process and people - may come in handy. It can help you too when it comes to thinking about how you put in place the internal infrastructure and support required to manage global mobility, without getting side-tracked or bogged down in the detail too early on.

Policy

The first “P” is for Policy. Why is a policy necessary? Without a policy or adequate policy, you will be forced to come-up with assignment terms ‘on the hoof’ (i.e. without having the time for proper consideration, to iron out any issues or properly cost), you are unlikely to have the time to get the buy-in of all the relevant stakeholders as to the assignment terms and you will be prone to ending-up treating each individual assignment in a different way (guaranteeing a future stream of exceptions, queries and issues).

An international mobility policy sets out the terms of assignments, from the duration of the assignment, through to the relocation package, assignment allowances and tax support that you will provide. You may develop different policies for separate categories of Assignee (e.g. permanent transfers or short-term assignments) and also for specific tax arrangements (e.g. tax equalisation).

Some thoughts on policies:

There are many template policies available from a variety of sources. However, I would exercise some caution before simply copying and pasting a template policy (as tempting as this may be) or, without some initial planning, taking a template policy and adapting it. But why? 

  • Developing an effective policy means getting the right fit for your organisation. In my experience, the best way of doing this is by firstly assessing your own priorities (cost, compliance, competitiveness, talent management, tax risk, Assignee retention, ease of administration etc.), ordering these and then devising skeleton/outline policy terms for each assignment type. Challenge the drafts. What do you really need to support each type of assignment?
  • Consult widely on your proposed outline policy terms with all key stakeholders (which may include finance, others in HR, payroll, senior executives and employees/assignees) to get their views. In my experience, this element is sometimes rushed and/or not all relevant stakeholders are consulted. You may be missing some vital input or alienating people whom the policy affects. It will pay dividends to get people behind your thoughts before you get too far into the detail.
  • After consulting, reviewing and refinements, the output of this is normally an agreed matrix which includes the different assignment categories and outlines the assignment terms for each category. Refer back to your priorities – do your proposals satisfy these? At this point, after developing your own thoughts, you may also want to think about benchmarking your policy via an external agency.
  • Back to my earlier point. If you jump in too early with an ‘off the shelf’ template policy, this can both cloud your thinking and mean you become bogged down in detail too soon before you have really worked out what you need. Once you are happy with your matrix and it has been ‘signed-off’ by the relevant people, this is the time to then search out standard policy terms (if you must) which you can then adapt to suit and/or have specific terms drafted (if possible).
  • If you only have a small number of Assignees, a policy is still very useful for the purposes of consistency, identifying issues up-front and driving a smooth process. Your policy does not necessarily need to be lengthy. Policies are scalable and, as above, the key point is to produce something which is fit for purpose, given your specific circumstances.
  • Cost your policy by running cost estimates, taking into account the elements of your policy, the estimated average cost per assignment type and the volume of assignments that you expect. The true cost of assignments is often underestimated and can sometimes come as a shock.

Process

Once you have a policy (or at least an agreed skeleton policy), you can turn your attention to the second P – Process. This means thinking about all the elements required to get your Assignee from their home country to the host country, to support them whilst they are on assignment and, of course, to get them back again!

This is likely to involve immigration, drafting assignment agreements, sign-off of assignment package, cost projections, set-up on payroll, initiating tax briefings, arranging home leave trips and much more. Making time to think about this up-front and devising a plan is invaluable and can help prevent unnecessary problems further down the line.

Some thoughts on process:

  • Where possible, I think it is a good idea to think through and then document the relevant processes in advance of initiating any assignments under the policy. This can be done by developing a simple process map, taking in all the key elements. The benefit of a documented process map are that:
  1.  you can iron out any issues up-front;
  2. you can get input from the relevant stakeholders (e.g. immigration lawyers, payroll etc.) to make sure your process is robust; and
  3. it is easier to identify and address the cause of any future issues (i.e. because you can more easily see which part of the process did not work).
  • As part of developing a fit for purpose process, I think it is important to clearly set out the roles and responsibilities of each of the stakeholders involved in the process. This may, for example, mean setting out exactly what payroll will do and what HR will do. When I see issues and problems occur in assignments, it is often because individuals or departments were not aware that a certain action was their responsibility and/or assumed that someone else was taking care of it. 
  • The same principle can also apply to any external advisors that you use. That is, clearly set out and communicate your advisors' responsibilities and agree these in advance.
  • Once you have established and documented your basic processes, you can more easily identify where there may be efficiencies. For example, you may want to consider how technology may help (e.g. assignment management software).
  • With regard to technology and process, I would suggest that you establish your policy and processes first and then decide what technology might best support you. Much like policy templates, you may not end up with the right result if you look for technology solutions first, not least as it will be more difficult to discern what is right for you and what you need and you may become unwittingly 'railroaded'.

People

Okay, so now you have a great policy and have fine-tuned and documented your processes! Ready to go? Not quite. We need to think about the last P – People

For me, the ‘people’ bit is the most overlooked. By ‘People’, I mean considering all of the people involved in the management of your assignments (HR, payroll, finance, overseas HR, advisors etc.) and assessing whether they have the right skills and experience to do what they are required to do as part of the process.

For example, does your payroll team understand how to run gross-up calculations for your tax equalised expatriates? Does your HR team know how to set up an inbound expatriate employee? Does your finance director understand the cost projections you are producing?

Some thoughts on people:

  • There will often be knowledge and experience gaps in organisations when it comes to mobility, especially in those organisations who may be new to mobility. Dealing with this can be via a number of means, including training, outsourcing elements that you are unable to do internally or recruiting people with the rights skills.
  • The assessment of your people should also include advisors. This means assessing whether your advisor is a good fit for you. Do they have the right expertise? Does the advisor have the capability to deliver what you need in the UK and overseas? Is your advisor the right size for you (i.e. too large to provide you with an attentive service or too small to deliver what you need)?

So, there we have The Three Ps! All of this is scalable, whether you have one Assignee or many. It is about helping you to think about what needs to be done and enabling you to remain focused on your priorities and the big picture.

Lee McIntrye-Hamilton
Partner, Global Mobility & International Employment Tax
Blick Rothenberg
lee.mcintyre-hamilton@blickrothenberg.com

Help, this is complicated!

As anyone involved in global mobility knows, posting employees (Assignees) from one country to another can be a complex undertaking.

Not least because there are many interdependent elements and variables to consider and manage. These can include immigration, payroll, employment law, remuneration planning, employment tax, social security, vendor management, shipping and house hunting (to name but a few).

This complexity can be significantly increased where there are multiple moves to different countries and numerous internal stakeholders to manage (all of whom are likely to have different priorities!).

Of course, in addition, at the heart of any international assignment is an individual, the Assignee (and sometimes their family), who will also have their own business and personal needs.

If you are an organisation who is dealing with global mobility for the first time or don’t have in-house expertise, managing all of these elements in a coordinated and seamless fashion can seem like mission impossible.

Where do you start? Benchmarking exercise? Borrow some template policies? Get tax advice? Phone a friend?!

As an advisor, I am always on the lookout for things which can help me simplify complexity to enable clear thinking and effective decisions.

For organisations who are new to global mobility, this is where the “Three Ps” as I call them - policy, process and people - may come in handy. It can help you too when it comes to thinking about how you put in place the internal infrastructure and support required to manage global mobility, without getting side-tracked or bogged down in the detail too early on.

Policy

The first “P” is for Policy. Why is a policy necessary? Without a policy or adequate policy, you will be forced to come-up with assignment terms ‘on the hoof’ (i.e. without having the time for proper consideration, to iron out any issues or properly cost), you are unlikely to have the time to get the buy-in of all the relevant stakeholders as to the assignment terms and you will be prone to ending-up treating each individual assignment in a different way (guaranteeing a future stream of exceptions, queries and issues).

An international mobility policy sets out the terms of assignments, from the duration of the assignment, through to the relocation package, assignment allowances and tax support that you will provide. You may develop different policies for separate categories of Assignee (e.g. permanent transfers or short-term assignments) and also for specific tax arrangements (e.g. tax equalisation).

Some thoughts on policies:

There are many template policies available from a variety of sources. However, I would exercise some caution before simply copying and pasting a template policy (as tempting as this may be) or, without some initial planning, taking a template policy and adapting it. But why? 

  • Developing an effective policy means getting the right fit for your organisation. In my experience, the best way of doing this is by firstly assessing your own priorities (cost, compliance, competitiveness, talent management, tax risk, Assignee retention, ease of administration etc.), ordering these and then devising skeleton/outline policy terms for each assignment type. Challenge the drafts. What do you really need to support each type of assignment?
  • Consult widely on your proposed outline policy terms with all key stakeholders (which may include finance, others in HR, payroll, senior executives and employees/assignees) to get their views. In my experience, this element is sometimes rushed and/or not all relevant stakeholders are consulted. You may be missing some vital input or alienating people whom the policy affects. It will pay dividends to get people behind your thoughts before you get too far into the detail.
  • After consulting, reviewing and refinements, the output of this is normally an agreed matrix which includes the different assignment categories and outlines the assignment terms for each category. Refer back to your priorities – do your proposals satisfy these? At this point, after developing your own thoughts, you may also want to think about benchmarking your policy via an external agency.
  • Back to my earlier point. If you jump in too early with an ‘off the shelf’ template policy, this can both cloud your thinking and mean you become bogged down in detail too soon before you have really worked out what you need. Once you are happy with your matrix and it has been ‘signed-off’ by the relevant people, this is the time to then search out standard policy terms (if you must) which you can then adapt to suit and/or have specific terms drafted (if possible).
  • If you only have a small number of Assignees, a policy is still very useful for the purposes of consistency, identifying issues up-front and driving a smooth process. Your policy does not necessarily need to be lengthy. Policies are scalable and, as above, the key point is to produce something which is fit for purpose, given your specific circumstances.
  • Cost your policy by running cost estimates, taking into account the elements of your policy, the estimated average cost per assignment type and the volume of assignments that you expect. The true cost of assignments is often underestimated and can sometimes come as a shock.

Process

Once you have a policy (or at least an agreed skeleton policy), you can turn your attention to the second P – Process. This means thinking about all the elements required to get your Assignee from their home country to the host country, to support them whilst they are on assignment and, of course, to get them back again!

This is likely to involve immigration, drafting assignment agreements, sign-off of assignment package, cost projections, set-up on payroll, initiating tax briefings, arranging home leave trips and much more. Making time to think about this up-front and devising a plan is invaluable and can help prevent unnecessary problems further down the line.

Some thoughts on process:

  • Where possible, I think it is a good idea to think through and then document the relevant processes in advance of initiating any assignments under the policy. This can be done by developing a simple process map, taking in all the key elements. The benefit of a documented process map are that:
  1.  you can iron out any issues up-front;
  2. you can get input from the relevant stakeholders (e.g. immigration lawyers, payroll etc.) to make sure your process is robust; and
  3. it is easier to identify and address the cause of any future issues (i.e. because you can more easily see which part of the process did not work).
  • As part of developing a fit for purpose process, I think it is important to clearly set out the roles and responsibilities of each of the stakeholders involved in the process. This may, for example, mean setting out exactly what payroll will do and what HR will do. When I see issues and problems occur in assignments, it is often because individuals or departments were not aware that a certain action was their responsibility and/or assumed that someone else was taking care of it. 
  • The same principle can also apply to any external advisors that you use. That is, clearly set out and communicate your advisors' responsibilities and agree these in advance.
  • Once you have established and documented your basic processes, you can more easily identify where there may be efficiencies. For example, you may want to consider how technology may help (e.g. assignment management software).
  • With regard to technology and process, I would suggest that you establish your policy and processes first and then decide what technology might best support you. Much like policy templates, you may not end up with the right result if you look for technology solutions first, not least as it will be more difficult to discern what is right for you and what you need and you may become unwittingly 'railroaded'.

People

Okay, so now you have a great policy and have fine-tuned and documented your processes! Ready to go? Not quite. We need to think about the last P – People

For me, the ‘people’ bit is the most overlooked. By ‘People’, I mean considering all of the people involved in the management of your assignments (HR, payroll, finance, overseas HR, advisors etc.) and assessing whether they have the right skills and experience to do what they are required to do as part of the process.

For example, does your payroll team understand how to run gross-up calculations for your tax equalised expatriates? Does your HR team know how to set up an inbound expatriate employee? Does your finance director understand the cost projections you are producing?

Some thoughts on people:

  • There will often be knowledge and experience gaps in organisations when it comes to mobility, especially in those organisations who may be new to mobility. Dealing with this can be via a number of means, including training, outsourcing elements that you are unable to do internally or recruiting people with the rights skills.
  • The assessment of your people should also include advisors. This means assessing whether your advisor is a good fit for you. Do they have the right expertise? Does the advisor have the capability to deliver what you need in the UK and overseas? Is your advisor the right size for you (i.e. too large to provide you with an attentive service or too small to deliver what you need)?

So, there we have The Three Ps! All of this is scalable, whether you have one Assignee or many. It is about helping you to think about what needs to be done and enabling you to remain focused on your priorities and the big picture.

Lee McIntrye-Hamilton
Partner, Global Mobility & International Employment Tax
Blick Rothenberg
lee.mcintyre-hamilton@blickrothenberg.com