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Expatriate Compensation As a Total Package

Negotiating expatriate compensation is a bit more complicated than figuring local compensation for residents. There are many financial effects which a transferring employee will want to take into consideration and will expect their employer to compensate for one way or another.

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A company that decides to transfer an employee to another company such as Canada must be prepared to propose a compensation package that takes into account a number of elements such as cost of living, housing, education expenses and taxation and not just salary. Expatriation is an expensive option so the decision to use an expatriate requires careful evaluation of the benefits that the expatriate will bring. Though it may seem more expensive on the surface to create an expatriate compensation package, the fact is that it is often necessary from a business point of view because that specific skill is not available locally.

But as currency values change, the cost of compensating employees who are transferred to foreign countries varies also.

Canadian Compensation…Both Ways

The proximity of the USA and Canada to each other has created a situation where labor is often interchanged. US citizens are expatriates in Canada and visa versa. Either way the relocation works, your company employee will want to be kept whole financially. In other words, a Canadian will want to maintain the financial status they had as a citizen working in Canada. The USA citizen working in Canada will have the same goal in mind.

This means the expatriate compensation package must be carefully assembled so that all factors are taken into consideration. Usually a relocation assessment is done which compares the cost of living in one country or city with the cost of living in another.

The relocation assessment will review a number of financial areas. Of course one of the first ones is the salary paid to similar positions in the two countries. An employee does not want to lose buying power as a result of relocating. The cost of living differential between the two countries is evaluated also in conjunction with the salary ranges.

Salary Statistics Canada Style

You can use salary statistics Canada makes available or purchase salary comparison data. Along with the salary review, you will also need to look at the income tax rules and any hardship compensation which should be paid. The hardship reimbursement is additional compensation paid for working in extraordinarily difficult conditions. But it can also be concerned with hardship placed on your family as a result of the move.

When assembling a compensation package for an expatriate, you will want to consider all of the factors which can impact an employee’s financial status as a result of the move. Beginning with an evaluation of salary statistics is just the beginning. The overall purpose is to keep the employee whole while enabling him or her to maintain and equitable lifestyle.

Figuring expatriate compensation requires careful consideration of many important factors related to financial status.

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