International assignments are highly complex — more so than employers and their assignees often realize — and there are numerous factors that can undermine their success. While some can’t be avoided, others can, particularly if the company clearly spells out the assignment’s terms and conditions ahead of time in a letter of assignment (LOA).
An LOA, also one of the documents typically required to obtain visas and work/residence permits, is agreed to and signed by the company and assignee before deployment. It benefits and protects both parties by outlining not only the assignment’s key provisions (housing, compensation, benefits, etc.), but any other applicable details as well. In doing so, and articulating what the company will and will not pay for, an LOA can also minimize exception requests and contain assignment costs.
Although most LOAs have certain components in common, such as employment and assignment status and sponsorship of visa and work/residence permits, other components depend upon the assignment type.
For example, commuter, rotator, and short-term assignment LOAs generally do not include provisions for dependents and may also treat expenses differently, with a per diem allowance as opposed to the submission of expenses for reimbursement. In addition, there is generally no shipment of household goods.
A long-term assignment LOA, on the other hand, is usually a far more extensive document, with provisions for accompanying dependents (educational and spouse/partner assistance, for example), auto lease/purchase assistance, household goods shipping, property maintenance for the home residence, orientation/home finding trips, etc. These assignments can also include destination services such as settling-in and tenancy management.
Below are the most common LOA elements for all assignment types combined.
Terms and conditions This varies; one of the most common is that the assignment offer is contingent upon obtaining a resident/work visa in the host location
Authorized dependents: Names those who will accompany the assignee
Pre-assignment processes and arrangements: Can include language and intercultural training, home-finding trip, tax briefing, etc.
Visa and work/residence permits: Typically states that the company will sponsor the applicable visa and work/residence permits for the assignee and any accompanying dependents
Mobilization and demobilization: Provides details on point of origin, airfare, etc. for both the beginning and the end of the assignment
Duration: Specifies assignment length
Employment details: Generally includes assignee’s title, job description and scope, job location, individual that he/she reports to, company (division) employed by, and performance reviews
Working hours, PTO, and holidays: Paid time off eligibility, PTO accrual rate, company paid holidays, etc.
Secondment status: This is the temporary transfer of a worker to another position or employment in another country
Home leave: This usually depends on the assignment type and can include the length of the leave, when it may be taken, whether it is accompanied or unaccompanied (as applicable), what the company will pay for
Compensation: This area will include base pay, incentives/bonuses, salary reviews, cost of living adjustments/allowances, hardship and danger pay, and currency the employee is to be paid in
Expenses: Describes the process for reimbursement and/or coverage of assignment expenses (for instance, lump sum, per-diem, etc.)
Tax: Areas covered include tax policies, the tax equalization process, home or host country record keeping requirements, filing dates, and requirements for tax planning implementation
Benefits: Medical and dental insurance (including coverage for dependents), life and accidental death insurance, retirement plans, profit sharing, etc.
Temporary living: Number of days allocated for temporary housing, what is covered, exceptions, etc.
Settling-in Services: Details the assistance that will be provided to establish day-to-day life in the host country (for instance, help with driver’s licenses, banking, utility hook ups, etc.).
Household goods shipping and storage: Will specify the to/from location for HHG shipments, weight limit, storage and insurance details, and excluded items
Housing: Can include provisions for home search as well as the type of accommodations to be provided, utilities, etc.
Transportation: This can range from per-diem amount for public transit to a car and driver for work-related travel, and/or a transportation allowance
Educational assistance: Reimbursement or direct payment of costs incurred for schooling and associated expenses
Spouse/partner assistance: This can vary, ranging from include tuition reimbursement to guidance on career options, strategies, and local resources
Property management: For assignees planning to maintain a primary residence in the home country, this provision covers professional property management services
Emergency assistance: This section gives instructions for obtaining assistance from organizations such as International SOS for medical emergencies or security issues
Termination: Termination practices vary, depending upon several factors: country-specific regulations around notice periods, etc., and whether the termination is voluntary or not.
Repatriation: These benefits can also vary considerably, depending upon the company, although repatriation provisions are typically among the core elements of the LOA
This blog is a synopsis of a whitepaper written for Bloomberg BNA.
Jason Exley, MSI Regional Vice President, Western Region