Those who have relocated globally can attest to the life-changing nature of an overseas assignment—often requiring that the employee sell a home in addition to moving their family to a new country and changing many of their typical routines. Your employee letter of understanding must cover a number of important topics sensitively but clearly—without increasing already high stress levels.

A letter of understanding outlines the details and benefits of an international assignment. This legally binding document, which all parties must sign, serves as an addendum to the employee’s regular employment contract and lays out any differing terms that apply. In addition to the assignment start and end date, job title, and location, the letter of assignment must specify all contractual agreements, a code of conduct, compensation, assignment-specific benefits such as moving expenses, and any repatriation allowance or tax equalization provided.

The letter of understanding should specify all pertinent details without leaving any room for interpretation. Lack of clarity can lead to misunderstandings and costly mistakes which drain resources and distract the employee, impacting the success of the assignment.

The key to drafting effective letters of understanding begins with knowing your employees and focusing on their needs and their families’ needs. You may find sample templates online to help you draft a letter of understanding, but unfortunately, many of them begin like this:

Dear Mr. Jones,

This letter is to inform you that you will be transferred effective [date] to our location in…

Considering the upheaval a relocation will cause in your employee’s life, this approach may come across as overly abrupt. Here are some best practices to help you write an effective letter of understanding.

Discuss the Global Relocation or Assignment First

Your company has made the decision to relocate or send an employee on assignment to benefit the organization in some way. The company may need to add talent to a business unit in another city, or to reduce it at the employee’s current location. You may want to move a manager to provide new leadership in another territory. You may even want to give a high-potential employee broader experience as part of a career development plan. No matter the reason, make sure you or the appropriate manager(s) discuss those reasons with the employee before you write the letter.

Having a detailed discussion provides an opportunity to create enthusiasm about a new role by:

• Providing a platform to discuss your global mobility policy and company-provided financial assistance
• Clarifying the specific skill-building and learning opportunities available in the new role
• Showing that the company values the employee and wants to make an investment in his or her future
• Demonstrating that the employee is important to the growth of the business

Holding a preliminary discussion shows respect for the employee and allows you to craft a letter tailored to that individual. In turn, this will likely increase loyalty and productivity and reduce the chance of a declined relocation offer.

Outline the New Role

Your employee’s job title and responsibilities may remain the same in the new location. If so, make sure the letter of understanding includes the name of the person to whom the employee will report and the duration of the transfer or assignment. For employees taking on new responsibilities, you’ll also want to include the following:

• The employee’s new job title or position
• A description of any increased benefits, salary or bonuses

Similar in some ways to an employment offer letter, this portion of the letter of understanding focuses on the specifics of the new role. It documents the job title, salary, and related benefits to eliminate misunderstandings. The appropriate manager should sign and date the letter, and it should include the:

• Employee’s full name and current home address.
• Department names — both the current department and the new destination department.
• Effective date the employee should report to the new location.
• Anticipated end date in the case of an assignment.
• Name of the employee’s new manager.
• Expiration date for the individual’s relocation and assignment benefits.

After you provide this information, you can delve into the specifics of your company’s global mobility policy and explain the benefits the employee will receive. If you’re looking for additional resources on transfer notices, check out our page on 12 Employee Transfer Letter Tips.