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.
If an employee works overseas, their employer is still required to provide them with mandatory and voluntary benefits. However, the employer can suspend any benefits that are not legally required.
Mandatory Benefits for Employees
Mandatory benefits are the base benefits that must be provided to employees by law. They may include the following.
- Health Insurance
- Life Insurance
- Long-Term Disability Insurance
Voluntary Benefits
Voluntary benefits are additional benefits that can be provided as an incentive for employees to stay with your company but are not currently required by law. Some examples of voluntary benefits that companies offer include
- Dental Insurance
- Vision Insurance
- Accidental Death and Dismemberment Insurance
- Company cars and car allowances
Healthcare and Risk Benefits
Employee benefits are a vital part of any business, large or small. By providing benefits, businesses can ensure that their employees are happy and productive. There are many different types of benefits, but some of the most common include:
- Employee education plans
- Eye care vouchers
- Death in service/life assurance
- Occupational sick pay
- Employee assistance plans
- Free flu vaccinations
- Financial support for employees who must self-isolate
- Programs to encourage physical fitness.
Company Cars and Car Allowances
Different organizations have different approaches to company cars. Some provide them because the employee’s job requires it (e.g., a sales representative). In contrast, others see it as a way to recognize the individual’s status within the organization (e.g., a director).
Employers have a few different options when it comes to paying for employee transportation. Some companies prefer to give a cash allowance to help employees purchase cars or reimburse them via mileage allowances for using their vehicles.
Why Provide Employees With Benefits and Perks?
What exactly makes benefits and perks so crucial 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 ensure their teams are working, but employees also need that added confidence. Along with this comes the guarantee of protection the government provides the workforce. Mandatory benefit standards help establish that trust.
Employee Retention and Reduced Turnover
All employers across all niches note the struggle in retaining and attracting talent. It’s become more of a standard now that professionals “job-hop” faster than in the past. One way to avoid this is by providing a comprehensive benefits package. Some people will leave a job with a higher salary for a job with a better benefits package, based on the needs of them and their families. With turnover meaning a loss of money on the employee and training a replacement, you want to ensure you have everything you need.
Outperforming Competition
Even if you don’t have benefits at the front of your mind, your competitors might. We mentioned before how benefits can motivate people to change their careers. A strong set of benefits can give you a leg up to attract top talent for your company.
Basic Employee Benefits Requirements
When providing benefits to your employees, you must 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 regulations 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.
One of the most prominent historical examples of this was the case against Microsoft in 2000. Having failed to provide benefits for temporary employees properly, Microsoft eventually agreed to pay almost $100 million after an eight-year class-action lawsuit.
So, with this in mind, what are the benefits 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 & Health Insurance
Ideally, you want packages for single people and families to provide top cover.
Life Insurance
This is a major draw if you want to retain family/senior employees. Companies like Prudential or Northwestern mutual are popular.
Disability Insurance
This is particularly important for jobs with a physical component or element of risk (oil workers, construction).
Retirement Plans
IRAs, 401ks, etc.
Holidays, Vacations, Sick Leaves
This helps lower burnout and allows time for employees to spend with family.
Unemployment Insurance
This helps insulate your employees’ confidence if you are in a shaky market.
Other Benefits
Benefits packages vary widely from organization to organization. Some benefits are given to all employees, while others are based on job title, location, or length of service.
Employers often offer a variety of employee benefits to attract and retain top talent. Some expected benefits include unlimited paid time off, conference attendance stipends, holiday parties, concierge services, relaxation apps, and free or discounted meals for staff cafeterias, and nap rooms. By offering these benefits, employers hope to create a positive work environment that employees will enjoy and want to stay with long-term.
This may vary based on niche. For example, a tuition reimbursement program may make sense if you know you will get many young applicants pursuing graduate degrees. Relational compensation may be a good fit if you expand your search nationwide.
As the gig economy grows, policies protecting these workers are more important than ever. This includes those who work for gigs or agencies, as they may be subject to different laws and regulations depending on where they live. Within a country, there may also be remote workers who have different leave and exemption statistics. It is crucial to investigate the appropriate policies for each situation to ensure that all workers are treated fairly.
It’s good to compare your global employment practices with those of other employers in your country or region. This kind of comparison, called employee benefits benchmarking, can help you understand how well you’re implementing global HR best practices and how your organization’s voluntary benefits program stacks up against other employers in the same industry.
Compensating Benefits to International Employees
International companies must pay more attention to benefits due to the high risk of talent withdrawal. Benefits can be one of the most robust options 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. The employee also 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 many of these issues internationally.
Employee Benefits Trends in 2023
So, keeping this in mind, what are employees interested in regarding 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 increases, people want to get more out of their paychecks.
Remote (Work from Anywhere) Policies
Commute frustration and desire for flexibility are driving interest here.
Office 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 employee discounts.
Acumen International is your ideal partner and resource if you are looking for a PEO to try and act on some of these employee benefits trends internationally. We operate globally, with a presence in more than 190 countries. We will handle paying benefits and withholding payroll tax, fully complying with local laws and regulations.
How Global PEO (Professional Employer Organization) Can Help You Administrate Employee Benefits
As an employer, you are responsible for evaluating and understanding the various social security measures available to your employees. By partnering with a global employment solution provider, you can ensure that your employees have access to all the benefits they need, including travel insurance, medical cover, income protection, and more.
Global PEOs are global professional employer organizations. That means they offer comprehensive HR solutions for small businesses across the country. Employers can outsource all their HR needs to an expert who specializes in managing this aspect of their business by paying a single fee per employee. Some services provided by PEOs include
- Payroll processing
- Benefits administration
- Tax reporting
- Workers’ compensation insurance
- Labor and tax law compliance.
Outsourcing some global employment and HR functions to a PERO means that the business owner is not bogged down with processing payroll, benefits, or securing visas ad work permits. Instead, they have more time to concentrate on other company matters, including big-picture issues.
Benefits Of Working With a Global PEO (Professional Employer Organization)
- Global PEOs can provide a broad range of employee benefits that companies that don’t use them may not be able to offer. With the help of a global PEO, you can prevent employee turnover and ensure that your employees are well taken care of while employed with you. Stable employees will be less likely to change companies or leave their jobs altogether.
- Global PEO clients can often offer their employees a more comprehensive benefits package than those who don’t. Such benefits may include healthcare, dental, and vision coverage, or retirement plans PEOs also offer retirement plans and other financial benefits.
- Global PEOs can provide their clients with competitive advantages in the marketplace by pooling resources and sharing global employment risks.
- In addition to managing legal requirements, a Global PEO can help you minimize your tax liability and simplify payroll administration processes. Using a PEO as your single contact for managing payroll and benefits coverage makes things easier because it reduces internal costs—you can focus on doing what you do best. At the same time, the global PEO gets every employee’s need taken care of.
- Suppose you’re like many businesses and have trouble keeping track of each country’s requirement for mandatory employee benefits, unemployment claims, workers’ compensation, and other issues. In that case, you may find that using a global PEO saves you time and money. A global PEO will handle all your business-related social security and insurance needs and ensure that your employees get the coverage they need where they live. Because the Global PEO will be able to handle all of the details with one organization, it also helps cut down on internal costs—your company only has to pay one price for each policy rather than dealing with multiple companies across multiple jurisdictions.
