Keys for understanding the evolving definition of global mobility assignments—and the visa and immigration compliance concerns that accompany these shifts.
By Jennifer Igva
Most companies today are in expansion mode, sharpening their focus on growth inside and outside their home country; they are positioning their workforce to take full advantage of regional opportunities everywhere in the world. It is an exciting time, but also one that brings with it a range of global assignment types and added demands for visa and immigration compliance.
There are some decided shifts in the types and lengths of global assignments, with a continued trend away from “fully loaded” long-term assignments to more shortterm and commuter assignments; international transfers, localisation and intra-regional assignments, as well as a rise in the visibility of extended business travelers (EBTs) and frequent business travelers (FBTs).
Long-term assignments usually last three to five years and are costly, in part because they come with a higher tax commitment, include numerous benefits and allowances, and support accompanying dependents. SIRVA’s 2015 report, “Long Term Assignment Policy: Best Practices Among Global Companies,” reported that 44 per cent of respondents noted a maximum assignment duration of five years, while 42 per cent noted their long-term assignments lasted three years.
Companies have found increasing agility in short-term assignments, which last less than 12 months and are seen as cost-efficient, with a basic assistance level that is usually less substantial compared to long-term assignees, are usually single-status and have fewer tax implications. In SIRVA’s 2015 “Short Term Assignment Policy: Best Practices Among Global Companies,” 89 per cent of the respondents addressed assignment duration and of those; 75 per cent said their short-term assignments lasted a minimum of three months.
The recognised advantages of shorter-term assignments to meet business objectives has led to the industry accommodating alternatives that do not abide by the parameters of traditional global long- and short-term assignments. These alternatives include:
- commuter assignments, where employees work in a foreign country but return home with some frequency;
- localisation, which involves cross-border moves where the employee is either immediately or gradually transitioned to permanent local status;
- local “plus,” whereby employees work under a local package with some limited expatriate benefits; and
- intra-regional assignments, where depending on the regions involved; compensation may be situational and mobility benefits are more limited compared to a traditional long-term assignment.
Gaining more attention – and more scrutiny – is the incidence of EBTs, who do not relocate, but travel outside of their home country to conduct business for extended periods briefer than a short-term assignment, or FBTs, who do not relocate, but travel frequently outside their home country to conduct business.
Not Always a Standard Answer
To this day, EBTs and FBTs are often not clearly defined as belonging under a particular function or department in their companies and most companies are without a formal policy to manage them. When a policy does exist, most will cover work permits, visas and immigration costs, limited to the employee.
As a result of the undefined nature of EBTs and FBTs, they often fly under the radar when it comes to mobility and compliance issues. Tracking these types of employees is a strong concern and consideration, both for compliance and consistency in treatment. When they are tracked, it usually occurs through the tax provider, relocation provider, or travel management company. Without tracking and sometimes even despite it, noncompliance is a significant possibility.
Increasingly, companies are reviewing business travelers who cross into “mobility territory” as a population that should be assessed in that light. There are more global and regional tax and immigration regulations, heightened government and border inspections and a trend toward clients and customers incorporating language in their business agreements to limit their liability when connected to the extended travel of a business partner.
The EBT/FBT scenario is one without a standard answer when it comes to immigration and visas. Requirements often vary from country to country and sometimes regionally within countries. As with more traditional global assignments, it is important to understand the types of initiations that relate to the business traveler —is it a visa-only situation, or does it require other documentation and intervention? Cost and processing times are also critical to consider, making it even more important to apply for the correct visa from the very start of the process. In addition, different countries and locations may define “work” versus “business” in different ways.
Ignoring or failing to educate your company and employees on immigration regulations can lead to additional taxation, and that is just the beginning. In extreme cases there is potential for your employee to be turned away from entering the country, losing the investment in that business trip and the opportunity for revenue and future business relations. The company might also incur other penalties, fines and even legal action from a foreign government – and could also damage its brand in a global setting with unfavorable media coverage. Compliance is a concern for assignees and traveling employees as well, and their comfort and peace of mind is reinforced when they know the company has a well-defined compliance and risk-management process in place.
To minimise risks for your global business travelers, your company should consider the following:
- Secure and follow the recommendations of relocation management advisors, employment and immigration experts for immigration and visa requirements.
- Develop a clear and comprehensive EBT/FBT policy.
- Define and limit the activities of EBTs/FBTs to the appropriate business actions when out of the home country.
- Identify all compliance issues and educate all affected employees and stakeholders in your company and partner networks of the potential risks, how to avoid them and what to do if they occur.
- Establish a tracking system for EBTs and FBTs.
- Incorporate methods to receive regular updates on regional and country laws where you do business.
Global mobility is constantly changing, impacted by new or shifting regulations and requirements, protection and location-specific issues; and with EBTs in particular, there are some regional changes on the horizon to understand. Three current issues are surfacing in Australia, Brazil and Hong Kong.
- Australia will deliver changes to the Temporary Work (Skilled) (Subclass 457) Visa, the main work visa for the country. In 2014 , the Australian government announced an independent review into the 457 visa programme and toward the end of the year, an independent panel released their report, titled “Robust New Foundations – A Streamlined, Transparent and Responsive System for the 457 Programme,” outlining 22 recommendations.
In March, the Australian government released its response; an intention to act on recommendations of the 457 Integrity Review to strengthen integrity in the programme, whilst also reducing cost and burden on employers needing to access the program to address genuine skill shortages.
- Brazil is experiencing concerns with business visas and technical visas, as these types of assignees are not engaged in the local payroll and are often managed by a client, causing workforce and regulatory challenges.
- In a 2015 Policy Address, Hong Kong announced suspension of the Capital Investment Entrant Scheme, and that there will be some new relaxation/enhancement measures for various types of visas in the region later this year.
As companies become increasingly global, clearly detailing and defining the global mobility programme enables companies to apply best practices, to emerging relocation alternatives such as EBT and FBT. Partnering with a knowledgeable relocation management company can help companies manage risk, incorporate cost efficiencies and address these recommendations for a strong programme: developing clarity around business strategy; understanding all of the assignment options; viewing extended business as part of mobility; designing a tailored immigration programme; incorporating a solid system for data tracking; ensuring a process to manage risk; and avoiding unnecessary visa/immigration renewals. And – finally and perhaps most importantly – planning well in advance to avoid delays and ensuring your company’s workforce is in place—and in compliance.
Jennifer Igval is vice president, global consulting for SIRVA leading SIRVA’s consulting practice globally. Igval provides strategic thought leadership to SIRVA’s global services delivery and business development teams, leads a team of subject matter experts to deliver best-practice mobility program analysis, benchmarking and policy development and provides consulting support to clients in various areas of global mobility. Also contributing to this article were: Maria Hrambanis, service delivery manager – visa & immigration, SIRVA Australia; Oliver Schilling, director client services, SIRVA Germany; Renato Lima, director, SIRVA Brazil; and Patrick Fok, on-site visa support, SIRVA Hong Kong.
Posted July 30, 2015 in Relocation
In case your employer offers you a job in a foreign country subsidiary, but relocation is undesirable for several personal and family reasons, becoming an international commuter is a possible solution. Indeed, a recent report by ECA International on commuter assignments indicates that this practice is becoming more and more popular.
So far, the most commonly cited reason (84%) for using commuter assignments is about fulfilling temporary needs, such as short-term projects. However, when looking at the permanent commuter assignments, this type of mobility becomes a solution to barriers of traditional relocations. Just under half of respondents indicated that permanent commuter assignments are a way of adjusting to employees’ personal circumstances. Moreover nearly 40% of employees reported that such assignments are preferred to relocating the whole family.
International commuting – the employees’ perspective
The stories presented in a recent Financial Times article illustrate the reported data well. Instead of relocating for the job, many people prefer to stay local in order to avoid disrupting their partner’s careers and children’s education, to stay close to friends and relatives, as well as to look after ageing parents. However, satisfying these personal circumstances and at the same time fulfilling job requirements abroad comes at a price of constant commuting.
The drawbacks of such a lifestyle are visible especially to the so-called marathon commuters, who fly out every week and return home for weekends. Frequent absence from home can be stressful for both commuters and their families. Recent research from Swedish Umea University concluded that long-distance commuting jeopardizes partner relationships, as the risk of separation is 40 percent higher among long-distance commuters than among other people. Naturally, ‘living out of a suitcase’ may also influence work-life balance, and the time spent on the road can produce extra fatigue and stress.
International commuting – the employers’ perspective
For companies, cross-border commuting is beneficial foremost as a means to get the right people in the right places. As noted in the FT article, ‘employers like cross-border commuting if it persuades a preferred candidate to do a job they might otherwise turn down’. Another advantage, mentioned in the ECA report, is that being localized in the home country allows assignees to maintain strong links with the home country company, thus making the post-assignment re-integration easier. Finally, many companies perceive international commuting as a cheaper option as opposed to relocation. However, this is quite disputable, as, for example, higher travel costs and temporary housing rentals can offset the savings of not relocating. As the ECA report shows, only 14% of companies cited that commuting reduced costs compared with traditional assignments.
As for the challenges of international commuting, compliancy with governmental immigration and tax laws remains the biggest headache for employers. Commuters, as well as frequent business flyers, are the main population at risk of becoming ‘accidental expatriates’, or so-called stealth-pats. To stay on the right side with legislations, employers need to have good tracking systems in place. Mainly these include tracking the time spent abroad, taking into account job responsibilities and tax laws of host and home countries. In addition, tracking costs is a good idea for controlling travel expenses, and evaluating the return on investment of such initiatives.