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Negotiating the expat contract

Information supplied by Linzi Eisemann of Directmoving.com®, the worldwide relocation portal. [Link removed as the site no longer seems to be available.]

One of the most important issues for any expatriate is their contract, especially if it is a first time relocation. This article covers some suggestions as to the issues that should be covered to ensure that both expatriate and employer are fully conversant with what is expected of them.

Location of offices and where duties will be performed:

This should be set out in detail – not just the country but also the location of the offices and geographical area that your activities will cover. Will you be expected to travel to other countries in the course of this assignment? If so, you need to know where, how often and the likely duration of such trips.

Duration of assignment:

Whether you are an unaccompanied expatriate or relocating with your family, you need a firm idea of the contract period – the duration of the assignment. If this is to be determined by the completion of a specified objective, you will need to be given an estimated duration. The contract should also specify whether there is a trial period and, if so, how long that period lasts. You might also want to ask how the trial period is evaluated and whether you will have regular assessments to determine how your performance is being rated.

The job function:

The contract should specify exactly what your duties are and give details of your responsibilities and the goals you will be expected to achieve. How many employees will be reporting to you? Will your duties include preparing evaluation reports on their performance and taking part in appraisal meetings? Or will someone else conduct the actual appraisals? If you are expected to prepare assessment reports, how often will they be required?

Salary:

The contract must specify the gross annual salary that you will receive, any likely or possible bonuses and the salary structure in terms of increases. On what factors are any increases based? Is there a corporate policy of annual salary increases for all employees or are these performance based only? If performance based, it’s always worth knowing who will be making the decision; will it be your immediate superior or a financial officer back at HQ?

Housing and interim living allowance:

You will need full details of exactly what your relocation package includes. Ask whether you will be paying the tax or whether the allowances and payments will be “grossed up” by the company to cover tax. Ask what type of housing will be provided and how long you and your family will be expected to spend in short term housing. Are you responsible for finding the accommodation or will you receive assistance from the company? Bear in mind that you will be expected to become productive as soon as possible after your arrival. This means that time you have available for house hunting etc might well be severely limited, resulting in the responsibility falling on your spouse. Ask how much time you will be given for house hunting if accommodation is not being provided in company owned property. If the destination country is not too far from your own, ask for a home search trip be included in the contract. Will your short term accommodation be paid directly by the company or will you pay it from your interim living allowance? How much will your interim living allowance be and how long a period does it cover? These are all items that you need to have specified in the contract.

Transport:

Will you be provided with a company car for the duration of the assignment? If so, get the details included in your contract. Is there a company car pool or will you be given a vehicle for your own use? Will this also include personal use? If the vehicle breaks down for any reason, will there be a substitute available or will you have to hire one? If so, who pays? Will you be responsible for routine maintenance or for all mechanical problems that the vehicle may develop?

Tuition fees:

Many companies provide assistance with tuition fees for expatriate families, as international schools are definitely not cheap. Your contract should include details of whether this assistance is partial or total reimbursement of fees.

Annual leave and home visits:

You will need to know how much annual leave you will receive and how many paid home visits for you and your family are included during the assignment. How long will you have to be in your destination country before you qualify for a paid home visit? Are the airline tickets for all your accompanying family members paid by the company or will you be expected to contribute towards part of the cost? What national holidays do the company and employees in the destination country observe?

Social insurance:

What provision does the company make for your pension and to protect you and your family in the case of unemployment? What contribution is expected from you? Also it is essential to ascertain what health insurance is provided for you and whether it will automatically cover your family. If you are required to contribute towards health insurance for your family, how much are you expected to pay?

Tax:

You need to know where you will be paying taxes. Will you be a fiscal resident of the host country or still liable for taxes to the government in your home country? You need to know whether you will be paying the tax or whether the allowances and payments will be “grossed up” by the company to cover tax. You will need full details of exactly what your relocation package includes. Be aware that benefits (i.e. car, housing, etc.) may be considered as taxable income.

Moving costs:

The contract must include details of the reimbursement of moving-in costs; the authorised amount for the removal package both outbound and inbound. Will you be expected to pay for your own insurance for the safe transportation of your goods? Will any documentation be required for the importation of goods into your destination country? Is it your responsibility to obtain any such documentation or will the company undertake the task?

What if it goes wrong?

Nobody wants to contemplate such a costly exercise going wrong, but relocations are not always successful. It is only sensible to have details of what constitutes a breach of your contract included in the contract itself. Ask for clarification on what are acceptable reasons for any such breach and what are the likely repercussions or penalties. What is the applicable legislation pertaining to your contract and which courts have jurisdiction for determining any conflict?

And what if it doesn’t?

Supposing all goes to plan and you and your family fall in love with your new country and wish to stay on. Is the contract renewable – and under what terms? You need to know at what stage, renewal can be decided and whether the terms will remain the same.

Get it right from the start! The importance of getting everything agreed and detailed in your contract well in advance cannot be overemphasised. Once the contract is signed, it’s usually too late!

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