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Revising Your Benefits And Compensation Programs in View of COVID-19

Whether it’s healthcare, paid maternity/paternity leave, or simple workplace perks, every company has some type of compensation/benefits provided. This can get a bit more complicated for international companies, since standards of what workers are entitled to differ from country to country. Generally, businesses base their company benefits on local legislation, adding additional benefits on top… Read more Revising Your Benefits And Compensation Programs in View of COVID-19

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Whether it’s healthcare, paid maternity/paternity leave, or simple workplace perks, every company has some type of compensation/benefits provided. This can get a bit more complicated for international companies, since standards of what workers are entitled to differ from country to country. Generally, businesses base their company benefits on local legislation, adding additional benefits on top to attract and retain top talent. However, with the COVID-19 pandemic, we are seeing attitudes shift across the board. Here’s what you need to know.

Starting Points on Benefits

Let’s start by comparing typical employee benefits in the U.S. vs. internationally. In the U.S., by law, all benefits schemes for full-time employees include:

  • Health insurance
  • Worker’s compensation
  • Unemployment insurance
  • Family and medical leave.

Note, that these do not apply to part-time workers or independent contractors. This is the approach favored over by many companies: build their workforce employing independent workers.

While international workers get most of the benefits provided by the law, they can also expect additional benefits like:

  • Housing allowances
  • Foreign service premiums
  • Cost of living adjustments based on where you live
  • Tax payment support
  • Spousal employment support
  • Traveling allowance (assuming they are working abroad).

It’s worth pointing out, benefits are not always necessary. For instance: health insurance in a country with universal healthcare. If a company is looking to employ globally distributed personnel, it’s important to keep workers’ expectations in mind. What will their benefits package look like based on their past work experience?

Generally, there are two main reasons why companies provide benefits:

  • Complying with local labor legislation
  • Trying to retain top global talent via compensation schemes.

These are crucial aspects for companies that are striving for global expansion and staff their international teams, serve clients overseas, provide tech support, or bring their sales to international markets. For the sales teams, there’s an added point that deserves mentioning here. As opposed to commission-based compensation, going with a proper employment benefits package means more security for the employee. It also provides less risk of losing the corporate client base for the company if the local agent ends up leaving. Providing benefits may mean a steeper upfront cost, but at the end of the day, it’s a win-win for both, employee and employer. You get employee loyalty, fewer compliance risks, and a better chance of retaining top talent.

Benefits In The Age of COVID-19

So, how does the COVID-19 pandemic impact healthcare benefits for global teams? Part of it depends on the industry. For example, medical companies have a growing need to hire doctors/scientists to meet major needs in certain countries. Pharmacological businesses are recruiting sales managers to present new lines of products.

This labor market shift requires a specific fix like Global PEO/EOR solution. It is now possible to stay compliant while urgently deploying people to meet pandemic-related demands and provide benefits, whether it’s a matter of law or is voluntary. This also allows you to handle international workforce onboarding and benefits provision all at once.

In quiet times, companies were able to prepare for international growth, but things turned a lot more urgent these days. The globally distributed teams are also facing challenges operating remotely, as the base country may be changing rules rapidly when it comes to employee payments and benefits. Acumen’s Express Global Employment solution helps you adjust to rapidly changing in-country regulations, with the various shifts of employee pay and benefits that emerge today.

For example, perks like the ability to use a workout program in the workplace or a travel package don’t really provide many benefits in the current climate. However, an expanded health insurance program may be more appealing, if not imperative.

How are some companies going about this? In the U.S., student loan debt is a major burden on the finances of young professionals. The government has recently issued additional perks for companies that offer support to their employees in debt payment. With this said, because the student loan crisis is a uniquely American phenomenon, this may not be a perk that matters much if you are recruiting mostly international talent.

Even companies that are suffering financially are trying to extend benefits to protect their teams. This can mean providing healthcare benefits for global teams that have been recently furloughed or providing larger final paychecks. Expect to see perks like performance pay or bonuses to be revised as time goes on.

Ultimately, while companies are trying to employ their own approaches to tackle this issue, the safest way to protect your interests, finances, and overseas employees is having a single partner with global expertise. When you’re looking for a company to provide your remote teams with the benefits and perks they need, at any time, Acumen International is the way you want to take.

As a registered legal employer for your international employees, our Global PEO company provides benefits to them in any of your target countries out of over 190 ones we cover. This leaves time for you as an original employer to handle all performance management issues, maintain substantive work relationships and make informed decisions on your current compensation and benefits programs and their revision.

Reach out to us today for more information.

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New AB5 Law In California To Change The Way Employers Classify Their Workers and How Coronavirus Factors In

In autumn of 2019, the California AB-5 (Assembly Bill 5) law was passed, and it came into effect on January 1st, 2020. For companies based in California or doing business in California, this set off a cascade of changes regarding worker status and the steps companies have had to make to avoid misclassification. In addition,… Read more New AB5 Law In California To Change The Way Employers Classify Their Workers and How Coronavirus Factors In

In autumn of 2019, the California AB-5 (Assembly Bill 5) law was passed, and it came into effect on January 1st, 2020. For companies based in California or doing business in California, this set off a cascade of changes regarding worker status and the steps companies have had to make to avoid misclassification.

In addition, there’s the chance that this law may be a precursor to other legislation on the subject down the line. However, at the same time that companies have begun to adapt to this law, there’s also another universal business change: adapting to the COVID-19 pandemic. As a result, any companies dealing with global hiring/HR managers should be watching how these two trends intertwine.

The Details on AB-5

Another law that was designed to have a similar impact to AB-5 was IR-35 in the U.K. While the coronavirus resulted in a delay of this implementation (originally April of 2020), it was primarily concerned with the UK employers’ staying compliant when hiring independent contractors, and making sure that workers classification is handled appropriately for income taxes. AB-5 has some similar focuses, but let’s take a closer look at the main details of the law.

AB-5 requires workers to be classified as proper employees unless they can prove they fall into three specific categories:

  • A worker free from control/direction of the hirer related to work performance, both under contract and in fact.
  • A worker doing jobs outside of the hiring entity’s normal business.
  • A worker engaged in an independently established business/trade that’s the same as those involved in performed work.

If all three of these criteria aren’t met, the worker is classified as an employee, giving them full rights including employee benefits, employee protections, and other applicable items. Other states, like New Jersey and Massachusetts, also have their version of these laws on the books.

The first companies to see major consequences from this were app-based ones like Uber and Lyft, which hired independent contractors as the body of their workforce. These were some of the first companies to have trouble with the bill, as paying for all these benefits per the new law made their models go from cost-effective to troublesome. Depending on which side of the debate you are on, the ability to have off-payroll working rules was either a benefit or a major issue.

Many people who were truly independent contractors were worried they would lose all of their clients due to them no longer being able to afford them. This was a major reason why the bill had so many opponents at its inception, and still does today.

This is a smaller part of a greater debate that’s going on globally with regard to worker reclassification. This essentially entails the idea of treating contract workers as full-on employees. The main argument here is that it opens up the possibility for basic benefits, such as minimum wage and unemployment insurance. This bill and the ripple changes for employment law and labor codes have reshaped the “gig economy,” and have a lot of companies rethinking how they bring on professional support.

How Does Coronavirus Factor In?

In many ways, the coronavirus has created a sea of changes across the world of employment. You see businesses struggling with lack of clients, the shifts to a remote workforce, but in California, the debate over AB-5 has boiled hotter, with new arguments on both sides. Advocates for the law say that it’s important now more than ever that all workers have the ability to get healthcare coverage, sick leave, and other protections in a pandemic climate. Opposition for the law notes that the U.S. is already headed towards a recession, possibly a historic one, and there’s no reason for additional red tape taking valuable workers off the table.

With all this said, if businesses had to only consider compliant measures before in the past, today, it’s absolutely necessary. Different governments are providing temporary protections for gig workers, but that’s still a band-aid solution for the greater question of worker classification. When the dust settles from this pandemic, employers will ultimately be responsible for classifying workers correctly to avoid potential fines or lawsuits.

While AB5 may just be relevant to California in the U.S., it could serve as a bellwether for greater employment classification changes around the world. It’s always best for global companies with staff in several countries and multi-site projects to be ahead of the curve. This is where an international PEO and payroll solution company comes in, such as Acumen International. We take the time to learn about rapidly-changing in-country labor laws and regulations so you don’t have to keep track.

Always know that you’ll have HR and legal compliance with our help. No need to add on extra concerns while the business world grapples with the coronavirus.

Or Reach out to us today for more information.