Scribd Logo
Upload

Welcome to Scribd!

  • 25 views

    7 Key Components of An International Compensation Programme

    Uploaded by

    balablooms
    An international compensation program aims to keep expatriates financially stable during foreign assignments. Key components typically include a base salary plus allowances to account for the foreign premium, cost of living differences, housing and utilities, education for children, relocation expenses, tax equalization, and sometimes spouse assistance. Allowances commonly cover a foreign service premium, higher costs of living abroad, annual home leave travel, housing, and education for children. Tax equalization plans are also common to prevent expatriates from paying more in taxes than if they remained in their home country.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd

    7 Key Components of An International Compensation Programme

    Uploaded by

    balablooms
    25 views2 pages
    An international compensation program aims to keep expatriates financially stable during foreign assignments. Key components typically include a base salary plus allowances to account for the foreign premium, cost of living differences, housing and utilities, education for children, relocation expenses, tax equalization, and sometimes spouse assistance. Allowances commonly cover a foreign service premium, higher costs of living abroad, annual home leave travel, housing, and education for children. Tax equalization plans are also common to prevent expatriates from paying more in taxes than if they remained in their home country.

    Original Description:

    7 Key Components_icm

    Original Title

    7 Key Components_icm

    Copyright

    © © All Rights Reserved

    Available Formats

    DOC, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    An international compensation program aims to keep expatriates financially stable during foreign assignments. Key components typically include a base salary plus allowances to account for the foreign premium, cost of living differences, housing and utilities, education for children, relocation expenses, tax equalization, and sometimes spouse assistance. Allowances commonly cover a foreign service premium, higher costs of living abroad, annual home leave travel, housing, and education for children. Tax equalization plans are also common to prevent expatriates from paying more in taxes than if they remained in their home country.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    25 views2 pages

    7 Key Components of An International Compensation Programme

    Uploaded by

    balablooms
    An international compensation program aims to keep expatriates financially stable during foreign assignments. Key components typically include a base salary plus allowances to account for the foreign premium, cost of living differences, housing and utilities, education for children, relocation expenses, tax equalization, and sometimes spouse assistance. Allowances commonly cover a foreign service premium, higher costs of living abroad, annual home leave travel, housing, and education for children. Tax equalization plans are also common to prevent expatriates from paying more in taxes than if they remained in their home country.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    7 KEY COMPONENTS OF AN INTERNATIONAL COMPENSATION PROGRAMME

    Key components of an international compensation programme are as follows:


    The major focus of most international compensation programme is to keep international
    employees at a sufficient financial level during their international assignments so that they do not
    lose ground economically. Components of an international compensation package, in addition to
    the normal salary and benefits offered in the home country, frequently include the following.
    These components are discussed below:
    Components
    1. Base salary:
    For expatriates, the term base salary means the primary component of a package of allowances
    which are:
    (a) Foreign service premium,
    (b) Cost-of-living allowance,
    (c) Housing and utility allowance,
    (d) Basis for in-service benefits and pension contributions.
    Base salary may be paid in home or local currency or in some hard currency like pound or dollar.
    2. Foreign Service inducement/hardship premium:
    Parent-country nationals often receive a salary premium as an inducement to accept a foreign
    assignment or as compensation for any hardship caused by the transfer. Such payments vary
    depending upon the assignment, actual hardship, tax paid to foreign governments and length of
    the assignment.
    3. Allowances:
    Various allowances are paid to expatriates depending upon the assignment. They include:
    (a) The cost-of-living allowance (COLA): It involves a payment to compensate the differences in
    expenditures between the home country and the foreign country.

    (b) Housing allowance: Implies that employees should be entitled to maintain their home-country
    living standards (or, in some cases, receive accommodations)
    (c) Home leaves and travel allowances: Is given to cover the expense of trips (usually once in a
    year) back home. These trips allow the expatriates the opportunity to renew family and business
    ties, thereby helping them to avoid adjustment problems when they are repatriated.
    4. Education Allowances for Children: Education allowances are given towards fees for the
    education of expatriates children. Education allowances include items such as tuition, language
    class tuition, books, transportation and uniforms.
    5. Relocation Allowances and Moving: Relocation allowances usually cover moving, shipping;
    temporary living expenses, and down payments or lease-related charges.
    6. Tax Equalisation Payments: Many international compensation plans attempt to protect the
    expatriate from negative tax consequences by using a tax equalisation plan. Under this plan, the
    company adjusts an employees base income so that the expatriates will not pay any more or less
    tax than if they had stayed in the home country.
    7. Spouse Assistance: To help guard against or offset income lost by an expatriates spouse as a
    result of relocating abroad. Multinationals generally pay allowances in order to encourage
    employees to take up international assignments.

    You might also like