Managing the expats

Scott
Beagrie finds out how one organisation manages its expatriate workforce

Although
currently a separate company, Pair Limited, which has been in existence for
some 17 years, works exclusively for industrial group Atlas Copco, dealing with
its expatriation issues. It will shortly become incorporated into the Swedish
multinational, whose brands include AEG, Milwaukee Tools and Kango.

Atlas
Copco has a global workforce of 26,000 staff and currently has 250 expatriates,
comprising 40 nationalities. David Edwards is the international HR adviser of Pair,
which, he says, deals with policy rather than the physical movement of
employees.

Having
the correct relocation policy is vital in such a decentralised organisation to
enforce common standards and control costs. “The onus is very much on the host
company to carry a lot of the costs,” says Edwards. “In effect, they are hiring
the expat, and the expat effectively severs employment with their home country
when they take up an expat position elsewhere within the group. Therefore all
the costs are pretty much borne by the host company. There is no central
organisation that sucks up these costs.”

Employees
are also expected to carry out some of the organisational leg-work themselves,
which also cuts down on administration costs.

The
group’s home-based expatriate policy is broken down into several parts: travel,
temporary accommodation, transport of effects, custom duties and transfer
allowance. The main points are outlined below.

Travel

Atlas
suggests this is by air, economy class and by the most direct route. Business
class is not permitted, “and we don’t allow them to go swanning off”, says
Edwards. “We also say if it is feasible to travel overland by car then, if it’s
mutually agreed, the host company will pay the actual cost of fuel used, hotel
and reasonable meal expenses on route.”

Temporary
accommodation

If
this is necessary, this is provided for the worker and their accompanying
family before departure or after arrival, at the host company’s expense.

Transport
of effects

All
costs are met by the host company, and staff are asked to get three separate
quotes from removal companies. Goods are covered by an agreed insurance
company. The host company meets the cost of transporting an agreed quantity of
household and personal effects and this includes packing and unpacking,
insurance and transit.

All
arrangements are set up by the employee, unless the company deals with the
removers – which Edwards says is “very, very, very unlikely”.

The
company draws the line, however, at the transportation of animals. “You’d be
surprised, we have all sorts of requests for horses, dogs and unusual or
exceptionally bulky items,” he says. “If the employee wishes to take a pet it’s
at their own expense – basically we want nothing to do with pets.”

Custom
duties

These
are normally charged to the employee, although household and personal effects
are generally not liable for duty. These may be regarded as one of the items
covered by the organisation’s transfer allowance (see below).

Transfer
allowance

This
is the basic allowance paid at the start of an expat’s assignment. Pair has a
defined mathematical calculation for setting the amount: it takes the
employee’s gross salary in the host location, divides it by 12 months and
allocates 70 per cent of that amount to the expatriate. An additional 25 per
cent of that amount is allocated to the spouse, and 15 per cent to each child.

If
electrical modifications are required on any equipment – for example, if the
frequency of the host nation is different from home – Pair will pay an additional
10 per cent for the worker and 5 per cent each for spouse and children (subject
to an £8,000 ceiling).

Pair/Atlas
Copco has a robust relocation policy in place, but it is still important to
regularly review strategies.

“We
are looking at ways to be more cost-efficient, especially when looking at tax
and social security. So one method we are looking into now is secondment,”
explains Edwards. “I personally envisage the future holding a mix and match of
various different policies depending on where you are coming from and going to.”

For
example, you wouldn’t want to second Belgians, because the tax and social
security is high in their country, says Edwards. But you may want to second
people to the country.

“If
you have a Brit whose tax and social security payments are low, you’d be quite
happy to second them somewhere like Belgium,” he says. “You’d retain their
salary level and everything else, but avoid Belgium tax and social security.

“These
are all things we’re looking into at the moment, but we are still quite a way
from finalising them.”

For
more on relocation strategies, go to Cutting the cost of relocation on page 18
of this week’s Personnel Today

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