International Remuneration

The continuing development of emerging markets, the consolidation within many industry sectors to produce a smaller number of larger, international companies and improved global communications have made it essential for UK companies to compete within an international market in order to survive. This internationalization of the market place has prompted a number of situations where remuneration must be considered on an international basis:

§  UK-based organizations will find it necessary to send some staff abroad to further the development of their overseas interests or as part of the career development of the employee.

§  Non-UK-based international companies will send staff to the UK to address specific business requirements or for them to gain international experience as part of their management development programme. While some organizations will choose to treat staff covered by either of these two situations on an expatriate basis, some may consider that the duration or the developmental purpose of any such assignment makes an expatriate assignment inappropriate and would look to some other basis for remuneration.

§  There will be those UK companies that recognize that a proportion of their staff could be recruited from outside the UK and/or that such staff could be lost to companies based outside the UK. In this instance, it would be necessary for the organization to consider remuneration for such roles on an international basis in order to judge and manage the competitiveness of their remuneration.

§  The employee may be required to work across a number of other countries (any of which may serve as his or her base), which may or may not include the UK. Maybe such roles are truly pan-European, with the job holders able to reside anywhere, within reason, across Europe. As such, the remuneration of the individual could be driven by practice/policy of the home or host country or some 'basket' of countries. The latter may be particularly appropriate if a team of staff is engaged in such work and some level of equity of treatment is desirable.

Thus, while the subject of international remuneration meant expatriate remuneration in the past, today it can mean a range of situations that needs to be addressed and managed in a variety of ways. Indeed, it is becoming increasingly apparent that the 'one size fits all' approach to expatriate remuneration is not necessarily the most effective. In recent years the rapid growth of emerging markets and the need to develop employees for management roles across 'global' organizations has highlighted many of the shortcomings of adhering to remuneration methods with colonial roots. In short, managing an increasing number of nationalities, from both developed and less developed countries, at different stages of their careers, highlights the difficulty of imposing a single remuneration system across the 'overseas' workforce.

This chapter deals with expatriate pay under the following headings:

§  types of overseas employment;

§  expatriate remuneration;

§  main benefits associated with expatriate assignments;

§  less common benefits associated with expatriate assignments;

§  taxation;

§  employees coming into the UK;

§  international job market;

§  pan-European roles.