Many organisations will have already made decisions to relocate their expatriates, business travellers, short-term assignees or international hires. Others, may not have that choice and so are doing everything they can to ensure their safety and wellbeing while they remain in their host country. As the situation evolves, it’s imperative to keep a strong focus on these employees to ensure their packages, and employment, remain compliant.
Watch our webinar to hear Mercer's talent mobility experts unpack some key learnings throughout this period, and below you’ll find some of the topics we are actively discussing with our clients:
1) Talent Mobility – Looking Ahead
We recently published an article on some of the challenges and opportunities mobility teams are currently facing. In it we noted that HR will face fundamental questions about the future of talent mobility as organisations finally overcome the crisis. Will the number of international assignees decrease? Will some governments be tempted to restrict movements and further complicate compliance issues? How to manage mobility costs in the context of a potential recession?
These considerations are important and will have an impact on HR activities. But the crisis also offers an opportunity to reflect deeper on the talent mobility model itself and question how we manage and perceive talent mobility, its overall effectiveness, and its contribution to the resilience and success of the business over the long term.
2) Evacuation in Case of Emergencies
The current COVID-19 crisis reminds us that sending employees on international assignments can be a huge responsibility and a difficult task to manage. During such a crisis, assignees might need to be evacuated at short notice. Others may try to stay in their assignment locations where information and practical support are available.
HR teams are on the front line when dealing with some of these dramatic events and have to address a host of questions related to duty of care, relocation, reward, risk management, and compliance. It can certainly feel overwhelming as we learn how to navigate this period – ie. who to evacuate in the case of an emergency? How to deal with the logistical challenges of having to repatriate a large number of assignees? Should you revise the assignment packages?
To support you, we have collated a summary of the key mobility issues when dealing with emergencies.
3) Allowances and Hardship Payments
Depending on your decision to repatriate your expats or not, their compensation packages may suffer temporary changes. For example, if you decided to repatriate an Australian expat and their family to Sydney, they may not necessarily have accommodation to go back to and temporary accommodation support might be required. On the other hand, depending on the compensation approach adopted by your organisation, payment of allowances such as Cost of Living could be frozen whilst back at the home location.
You may also have decided that for other assignees, it is safe for them to stay at the host location, however, due to the crisis, temporary additional allowances such as Hardship may be required.
The pandemic is also a shared quality of living crisis – in order to slow down or stop the transmission of the coronavirus, countries around the globe have implemented many measures that limit travel, public gathering, availability of certain goods and services, personal mobility, and many other aspects of routine life. Many companies are having to review their policies to accommodate all of these different scenarios. At Mercer, we recommend temporary adjustments in quality-of-living premiums in locations heavily affected by the viral outbreak. As the situation evolves, so will our guidance for clients.
You can find further recommendations here.
4) A Dynamic Compensation Situation - Exchange Rates Impact
Concerns about the economic impact of the virus have also led to significant exchange rate volatility in recent weeks, as well as uncertainty about inflation and availability of goods and services - with cost-of-living allowance (COLA) figures affected as a result.
Thanks to our international network of correspondents, we are monitoring changes in cost-of-living globally and are committed to delivering accurate information throughout the crisis. The next edition of our cost-of-living surveys will be released on schedule in early May.
At Mercer, we recommend reviewing the home/host combinations of your assignees and your pay delivery approach to assess the potential impact and determine an appropriate way forward on COLA updates.
You can find further recommendations here.
5) Immigration & Tax (plus other) Impacts and Compliance
For all temporary visa holders into Australia, the government has recently shared some news on how this crisis may impact these employees.
We strongly recommend you keep up to date on these changes through official websites or by speaking with your immigration and tax providers to ensure these employees will be supported and comply with the new regulations.
For New Zealand, up-to-date information can be found here.
6) Annual/Semi-Annual Expat Package Review
In normal circumstances, companies review their COLAs once or twice a year. The objective is to protect the purchasing power of assignees while avoiding a sense of uncertainty that would result from more frequent updates.
During a crisis, mobile employees do not want to have financial worries on top of health and safety concerns. Their perceptions of subjective purchase power are driven by the headlines in the news and what they see in a few shops. They often need reassurance, even if there is little change in cost-of-living in their locations.
This expectation should not automatically lead to changes in assignment packages, but it may justify additional communication efforts. A fluctuation threshold can be used to assess the need for an update or at least for a new communication – some companies trigger a review when there is a fluctuation of more than 6-8% in the exchange rate or inflation differential. This review might lead to a change in the COLA, or if the fluctuation is judged temporary and the situation still unstable, a change might be deferred until the next Mercer Cost of Living data release or the next planned COLA adjustment.
You can read more on how to revise assignees packages and find the right logic here.
7) Rise of Virtual Assignments
As we embrace “working from home” and a new way of living, we know the effects of the COVID-19 outbreak will likely transform many aspects of "business as usual" – and talent mobility will be among them.
For years, companies have been struggling with the complexities and costs of traditional employee mobility and been have looking for new ways to attract and leverage new talent. Yet, the debates about allowing employees to work remotely and do “virtual assignments” have not been settled.
The COVID-19 crisis is changing all of this. Never before have so many employees worked remotely – not just by choice but because organisations need to maintain essential business continuity. As many assignees have been evacuated or forced to work from home, the concept of the virtual assignee is becoming a business imperative.
You can learn more about virtual assignments here.
8) Mental Health and Ongoing Support and Communication
It is important to maintain an open dialogue with all employees through this period, while being mindful of the ways in which international employees are impacted; a clear and effective communication process is crucial.
We strongly recommend you keep track of where your employees are and look out for any changes to their wellbeing and safety, or that of their family.
For those who have been relocated to their home country, their packages may have suffered temporary changes, which also need to be clearly communicated and explained to avoid any unnecessary or additional stress.
For all your mobility needs and questions, we are here to support you!
Please contact us below discuss any of these topics further, and participate in our global spot poll to find out more.
Principal, Global Mobility
Karla leads Mercer’s Mobility Practice for Pacific region. She has over ten years’ experience in rewards, global mobility operations and consultancy.
Karla is responsible for managing client relationships, serves as a mobility thought leader and subject matter expert of mobility solutions through participation at various global forums and client-driven consulting and also regularly contributes to conferences, articles and media interviews. She holds a graduate diploma in Business Administration from Federal University of Itajuba and is a Certified Global Mobility Professional member of Worldwide ERC.
Karla began her career with Mercer in 2011 based in Sao Paulo (Brazil) office where she had the opportunity to work in several projects related to compensation, job evaluation, LTI (profit sharing), sales incentives programs, salary structure and salary polices design. Before moving to Australia in 2016, Karla was also responsible for the strengthening of the Mobility Practice in Brazil and Latin America.
Prior to joining Mercer, she has worked at Johnson & Johnson and Cardif BNP Pariba.
Learn how we work with organisations to plan and develop workforces and assist in organisation design.
Mercer combines education, consulting, software data and online tools to offer your organisation the full breadth of mobility services.
Select from our range of industry based salary and benefits benchmarking reports and participate in our annual surveys.
To learn how Mercer can assist with your organisations Wealth and Investments complete the form below and a Mercer Consultant will be in contact with you.