To help ensure global assignment success, employers should prepare an effective global assignment letter of understanding that outlines the pertinent details and benefits of the assignment in a way that leaves no room for misinterpretation.
Once the letter of understanding addresses specific information regarding the scope of the assignment, it can delve into the specifics of the employer’s global mobility policy and explain the benefits the employee will receive.
Explain Your Global Mobility Policy
Your letter should summarize the portions of your global mobility policy that apply to the employee. Among the issues your policy addresses, it should include information on relocation expenses, moving household goods, tax implications and assistance, immigration, and housing and settling-in assistance. Often the most costly components of an assignment or transfer these may also cause stress to the employee.
When writing the letter, review your policies to determine relevance to the employee. While you should not copy your policy verbatim, you should summarize:
- Specific expenses and the amounts the company pays for directly
- Types of expenses eligible for reimbursement, along with any limits. Note whether the employee will need to document each expense, submit a consolidated summary, or receive a lump sum amount for miscellaneous expenses
- Ongoing allowances for specific benefits
- Expenses the employee bears responsibility for paying
- Repayment agreement terms
Moving Household Goods
Household goods shipments can constitute a significant portion of your overall global relocation expense. Moving costs can vary widely depending upon whether the employee relocates permanently or will remain on assignment for a set length of time, the distance between the current and destination locations, and family size.
Global movement of household goods will typically include sea and air shipments and long-term storage. The letter of understanding should clearly outline coverage. Typical benefits include a 20-foot or 40-foot container and 500 pounds for an air shipment. Typically, employers provide long-term storage only for employees on assignment for the duration of the assignment.
Employers should also consider the cost of storage and valuation coverage for household goods. Your letter should specify the amount your company will pay for household goods transport, storage, and valuation along with any limitations or restrictions.
Tax Implications and Assistance
Global assignments and relocation often have significant tax implications. The letter of understanding should outline any assistance provided, which may include a pre-assignment/relocation orientation with a third-party tax provider, tax return preparation assistance, and tax equalization. It should also include details on the employee’s and the company’s responsibilities. The company’s tax provider may also suggest including a tax equalization addendum that outlines the company’s policy for the employee to sign.
The letter of understanding should emphasize the importance of compliance with global immigration laws and should outline the assistance provided by the immigration partner or department. Employers should clearly document employees’ responsibilities to provide accurate and timely information and to follow all instructions regarding host country travel limitations. The assignment or relocation cannot begin until the employee has obtained all required immigration documents.
Housing and Settling In Assistance
Getting your employee and their family settled into a new residence helps them return to full productivity quickly. Each employee is unique. Some may need temporary housing while they search for a new residence and your letter should reflect the level of assistance your company provides.
- Temporary Housing: Summarize what provisions the company makes for temporary living and for how long
- Home Finding Travel: Summarize the assistance the company provides, such as home finding trips. Include the number of trips allowed, the expenses covered and the family members approved
- Destination Services: Summarize the services the company provides, which might include home finding assistance, area orientation, contacts with local schools, colleges, medical facilities, etc.
- Long-Term Housing (Assignments Only): Summarize the housing assistance provided, including monthly housing allowance based on family size and location, method of payment, utilities included, and employee responsibilities for maintenance and upkeep
Ideally, your letter of understanding should focus on the employee and the benefits of the new role while building enthusiasm for the new opportunity. Make sure to outline expectations and the employee’s responsibilities in the new role to avoid any possible misunderstandings. Explain and summarize the relevant points from your global mobility policy, paying particular attention to the five topics discussed.