Among employers with overseas employees only 35 percent benchmark their benefits to ensure they comply with local legislation, research has found.
Legal requirements to provide employee benefits vary across countries and jurisdictions, and are subject to change.
But changes around what is required can make it “extremely difficult, if nigh impossible”, for employers to be sure they are complying, according to provider Towergate Employee Benefits, which conducted the research.
“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,” said Sarah Dennis, head of international at the provider.”
In addition to legal compliance, benchmarking can help employers to identify best practices and emerging trends that they can include in their own programme. It also enables the company to remain up to date with evolving regulations.
“For example, 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.”
However, while benchmarking for legal compliance is less prevalent, the research found that 79 percent of employers do benchmark to ensure the benefits they offer are competitive.
But the provider urged employers to be cautious and ensure that this is robust and must also consider which benefits are mandatory.
For example, an increasing number of employers are now employing local nationals, rather than hiring from overseas. Many local recruits will be entitled to some state-funded support, so these employees do not have to be included in a benefits package. Understanding the details can bring significant savings, the provider said.
For employers moving into new countries with a small number of employees, or even just one person, benchmarking is still vital, the provider said. Benefits for even one person need to be compliant as the employer has a duty of care to ensure this happens.
The provider urged employers to benchmark by region, country, sector and size, and cautioned that they should be adaptable in their criteria. For example, the USA is vast, so benchmarking needs to take account of industry sector by state, and not just by country.
Dennis added: “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.”
