How To Provide International Employees With Benefits
The value exchange between employer and employee is one of the fundamental bedrocks of business. Employers provide financial compensation to employees in exchange for their time, effort, and services. However, in some cases, employees require additional compensation. This is where benefits come in, a set of perks and compensation that can be the difference between drawing in top talent and being forced to assemble a piecemeal team. In the international sphere, things can get even more complicated. Here’s what you need to understand about benefits internationally.
Why Provide Employees With Benefits and Perks?
What exactly makes benefits and perks so important for your employees? You can boil this down to three main points.
Employee confidence and protection: Part of that value exchange we mentioned earlier is a sense of safety and comfort between both groups. Employers don’t want to constantly look over their shoulders to make sure their teams are working, but employees need that added confidence also. Along with this comes the guarantee of protection the government provides the workforce. Mandatory benefit standards help establish that trust.
Employee retention and reducing turnover: All employers across all niches note the struggle for retaining and attracting talent. In fact, it’s become more of a standard now that professionals “job-hop” faster than in the past. One way to avoid this happening to you is by providing a comprehensive benefits package. Some people will leave a job with a higher salary to a job with a better benefits package, based on the needs of them and their families. With turnover meaning a loss of money both on the employee and training a replacement, you want to make sure you have everything you need.
Advantage over competitors: Even if you don’t have benefits at the front of your mind, your competitors might. We mentioned before how benefits can be a motivator for people to change their careers. Having a strong set of benefits can give you a leg up to attract top talent for your company.
Basic Employee Benefits Requirements
When it comes to providing benefits to your employees, it’s essential that you keep to the standard of benefits required by law. Failing to do so can lead to financial penalties to varying degrees. For example, failure to comply with local labor regulation in Alberta, Canada extends from $500 to $6000. The amount depends on the number of cases and repeat offenses. However, this doesn’t include civil suits and the higher amounts you may have to pay there.
One of the most prominent historical examples of this was the case against Microsoft in 2000. Having failed to properly provide benefits for temporary employees, Microsoft eventually agreed to pay almost $100 million at the conclusion of an eight-year class-action lawsuit.
So, with this in mind, what exactly are the benefits that you need to provide? This will ultimately depend on local regulations (key for international business) but there are a few general benefits you can expect to provide. Here are some of the most common ones:
- Medical insurance: Ideally, you want packages for single people and families, to provide top coverage.
- Life insurance: This is a major draw if you are looking to retain family/senior employees. Companies like Prudential or Northwestern mutual are popular.
- Disability insurance: This is particularly important for jobs that have a physical component or element of risk (oil workers, construction).
- Retirement plans: IRAs, 401ks, etc.
- Holidays, vacations, and sick leave: This helps lower burnout and allow time for employees to spend with family.
- Unemployment insurance: This helps insulate your employee confidence if you are in a shaky market.
- Other benefits: this may vary based on niche. For example, if you know you are going to get a lot of young applicants pursuing graduate degrees, a tuition reimbursement program may make sense. If you are expanding your search across the country, relocation compensation may be a good fit.
Compensating Benefits To International Employees
International companies need to pay an even greater focus to benefits due to the high risk of talent withdrawal. Benefits can be one of the strongest options you have to avoid a rotating door of potential talent. But how exactly do you put this into practice?
Following the global standards in employee benefits, there are four ways to compensate overseas workers:
- Get local taxpayer ID by registering an in-country corporate presence and putting the employee on a local payroll. This works but it also takes a lot of time.
- Keep the person on the home-country payroll. This is only applicable for short-term projects. Along with this, the employee requires a visa and pays income tax aside from payroll in a host country.
- Compensating employees as independent contractors. This can be quite a risk, causing a contractor/employee misclassification);
- Through a third-party provider or local business partner.
Working with a global PEO solution is the best option to minimize a lot of these issues internationally.
Employee Benefit Trends in 2020
So, keeping this in mind, what are employees interested in in terms of benefits off the beaten path? Here’s a rapid-fire look at some of the new trending benefits:
Financial literacy programs: As the cost of living goes up, people want to get more out of their paychecks.
Remote work: Commute frustration and desires for flexibility are driving interest here.
Office pets/pet policies: Pets are playing more and more of a role in the lives of millennial workers. Consider bending this to your benefit.
Wellness programs: Modern work life has many people stressed. Office yoga or meditation sessions can help a lot.
Partnerships with local businesses: Consider working with a popular business near your office to provide discounts for employees.
If you are looking for a PEO to try and act on some of these employee benefit trends internationally, Acumen International is your ideal partner and resource. We operate globally, with a presence in more than 190 countries. We will handle paying benefits as well as withholding payroll tax, staying in full compliance with local laws and regulations.