Relocating internationally is a major life event, in fact one of the most stressful ones an employee might face in their lifetime. Yet, it is a career move that continues to attract employees seeking personal and professional development. In fact, a recent KPMG survey predicts that over the coming year, we can expect to see a 33% increase in mobility policies for extended international business travel, and a 27% increase in policies for international remote work.

The rising costs of international relocations and the pressure to keep mobility programs cost effective while meeting talent needs demand that companies develop international relocation policies that are both adaptable and affordable. Here’s what every HR leader should know to develop an international relocation policy that truly works.

What is an international relocation policy?

An international relocation policy is a guidebook of sorts to help ease the transition for relocating employees. Documenting and clarifying the benefits and support they can expect through their relocation ensures that transferees and assignees have a better experience. As importantly, a written policy ensures compliance and maintains equity across your organization.

International relocation policies vary based on the type of employee relocation. A permanent international relocation policy applies to employees who are moving permanently from their home country to a new destination country. As permanent transferees, those employees become subject to the destination country’s payroll and benefits, with the intent that they are staying there indefinitely.

In contrast, a global assignment policy applies to assignees relocating temporarily to a new host location, most of whom remain on their home country’s payroll.  “Many times, temporary assignments are used for training, skill sharing, personal development, or simply to fill a need in a certain location where the skills can’t be found locally,” said Tracy Langlois, CapRelo VP, global client services. “From a trend perspective, however, as many clients prioritize cost containment, we are seeing an increase in permanent global moves over temporary assignments, as they tend to be a more economical option.”

What are some key elements of an international relocation policy?

While specifics can vary based on the individual employee and the company’s situation, international relocation policies generally cover several topics:

1. Administrative details.

This includes things like the length of assignment, timeframe within which the relocation must be completed, who is considered part of the relocation from a family perspective, and the roles and responsibilities of the people involved in the process such as the relocation management company and HR partner.

2. Immigration assistance.

Navigating VISA and immigration requirements is complex. Your policy should provide assistance in completing the paperwork required to work in-country in accordance with the country’s immigration laws.

3. Tax guidance.

Use your policy to explain any tax implications of the employee’s relocation and specify what tax assistance the employee can expect from the company over the course of the relocation.

4. Healthcare and insurance.

Depending on the destination country and the type of relocation – permanent or temporary assignment – your employee may anticipate potential changes in how they access healthcare and health insurance. The policy should explain what health insurance coverage they will be eligible for during their relocation, and estimated costs.

5. Compensation-related items.

No one likes to be surprised by unexpected changes in compensation, so be sure your policy provides everything your employee needs to know about compensation under their assignment or transfer. This spans everything from salary and taxes, to cost of living allowance, housing or transportation allowances and/or hardship or location premium.

6. Relocation allowance.

If the company is offering a one-time payment in relocation allowance, specify the amount of the benefit, when and how it will be paid.

7. Actual relocation benefits.

Make sure the relocation policy details specifically what will be covered for things like household goods shipments, travel, temporary living, destination services, cultural/language training, dependent education, home finding trips, and housing.

8. Repayment clause.

Most policies include a section that specifies repayment policies in the event the employee leaves voluntarily or for cause within a certain time period.

How do you develop an international relocation policy?

Start by looking at the needs of your organization, and then do your homework to benchmark typical benefits for the types of relocations and destination countries most critical to the business.

Assess the costs of moving people to the global locations you’ve identified. Understand what you can and cannot afford to offer based on tax costs and other related costs for each move and destination.

Understand the culture of the organization and what’s important to it from a talent acquisition perspective. Does your organization want to be known as a bellwether of leading-edge policies? Is offering average, mid-range policies acceptable? Do you have an exceptionally strong brand that is a natural draw for top talent without the need to provide even average relocation benefits?

And, lastly, once you have put your policy in place, develop letters of understanding for the employee which summarizes the benefits they are receiving.

The experts in international relocation policies

Crafting an international relocation policy is the foundation for a cost-effective and adaptable program that attracts top talent and fulfills organizational needs. CapRelo’s relocation management consultants and our immigration and tax partners have decades of experience helping clients navigate global markets. Let us help you create an international relocation policy that truly works for your business needs.