Only 35% of companies with employees working overseas benchmark their benefits to ensure they comply with legislation, according to new research.

Legislation regarding what benefits must be provided differs in virtually every nation around the world. Given that each individual country’s legislation may also change regularly, it can be extremely difficult, if nigh impossible, for employers to be sure they are complying. With, for example, some working visas only being granted if the right healthcare cover is in place, it is vital that employers benchmark to ensure that benefits are in line with legislation.

Sarah Dennis, head of international at Towergate Employee Benefits, says: “In the context of ensuring benefits compliance, benchmarking helps ensure that a company’s benefits packages for employees working overseas align with relevant legal and regulatory requirements in each country.

“Benchmarking can help identify gaps between current practices and industry standards or regulatory requirements, by country. By identifying and addressing any gaps, employers can mitigate the risks associated with non-compliance.”

Benchmark to avoid over- as well as under-compensating

The good news is that 79% of employers with overseas employees benchmark to ensure the benefits they offer are competitive. However, employers should be cautious to ensure that this is robust. Benchmarking of benefits in different countries needs to look at what benefits should be offered to make the company competitive, but must also consider what benefits are mandatory. And clearly these must be included in the package too.

Likewise, some benefits do not need to be included – as an increasing number of employers are now employing local nationals, as opposed to recruiting from overseas, many of them will be entitled to some state-funded support, so these do not have to be included in a benefits package. Understanding the detail of this can mean significant savings for many.

Emerging trends

Benchmarking can help employers to identify best practices and emerging trends to incorporate into their own programme. It will enable the company to remain up to date with evolving regulations.

“For example,” says Sarah Dennis, “in Italy, many benefits were traditionally covered by the state system, but with more companies relocating employees there, local companies are now expected to implement benefits to match the offerings of the multi-national employers. This can create a domino effect of ever-increasing benefits packages, and overseas employers should make sure they are not over-compensating and offering benefits that are already in place through government schemes.”

Growing needs

Many companies will expand into new countries with a very small number of employees, or even just one person. However, conducting benchmarking is still vital, as the support for even one person needs to be compliant, and the employer will have a duty of care to ensure this is the case. It is also common for overseas assignments to quickly expand in terms of the numbers of employees, so employers should look to have the basics in place as soon as possible.

Employers are encouraged to benchmark by region, country, sector and size. They must also remain adaptable in their criteria. The USA, for example, is vast, and so benchmarking needs to take place looking at industry sector by state, and not just by country. Employers cannot be experts in every scenario, so working with trusted advisers with specialist local knowledge is key.

Sarah Dennis concludes: “International benefits packages are increasingly complex, and this reflects the changing trends in recruiting, such as employing local nationals. Benchmarking should be an ongoing process and will then allow for continuous improvement and unbroken compliance. Benchmarking can be an incredibly useful exercise, but it must incorporate the right components to be of genuine use.”

*Research from Towergate Employee Benefits