Many employers give overseas staff a cash sum for self-selected benefits; this poses risks.
- 83% of employers with overseas employees opt for cash lump sums for benefits, potentially leading to inadequate support.
- Sarah Dennis of Towergate warns this method exposes both employers and employees to unforeseen risks.
- Issues such as economies of scale and compliance challenges arise from this benefits approach.
- Expert advice in choosing employee benefits is recommended to safeguard all parties involved.
Research undertaken by Towergate Health & Protection highlights that a significant percentage of employers, specifically 83%, provide overseas staff with cash lump sums to choose their own benefits. This approach, however, often leads to inadequate support, as noted by Sarah Dennis, the head of international at the firm. She emphasises that the decision to provide cash rather than specific benefits can expose employers and employees alike to unforeseen challenges.
One of the primary concerns for employers is the loss of economies of scale. Typically, it is more cost-effective for employers to purchase healthcare through group schemes rather than leaving individuals to make their own arrangements. Consequently, providing lump sums instead can result in higher expenses for the organisation.
Furthermore, employers have a duty of care, particularly towards employees working abroad. It is challenging to fulfil this obligation when support is limited to financial provisions, without ensuring access to expert-recommended services. Offering specific, expert-driven benefits programs promotes a company’s responsibility towards its staff.
In terms of talent acquisition and retention, the way employee benefits are managed significantly affects an organisation’s appeal. Specifically, for overseas positions, a mere cash lump sum does not reflect positively on the employer and can impact recruitment and retention efforts, potentially leading to decreased employee loyalty.
From the employee’s viewpoint, the risks are equally significant. Non-compliance with local benefit requirements, such as mandatory health insurance for visa eligibility, can lead to serious issues, including visa revocations. Moreover, there is a risk of employees making poor or uninformed choices, resulting in gaps in cover that could lead to exorbitant costs, particularly for healthcare.
Employees often lack the expertise required to navigate health and wellbeing benefits effectively, especially in an international context. The complexity of selecting appropriate coverage such as international private medical insurance (PMI), life assurance, or income protection can be overwhelming.
Another critical issue is the gap in communication. When employees independently choose their benefits, they may miss out on important updates and information provided by their employer regarding available support and utilisation.
Sarah Dennis reiterates the importance of leveraging expert advice in crafting international employee benefits packages. This approach not only ensures the wellbeing and protection of employees but also aligns with organisational needs.
Employers must prioritise expert-led benefit strategies to protect both employees and business interests overseas.
