In the modern global economy, it’s increasingly common to have employees located in multiple countries. According to the Bureau of Economic Analysis, multinational businesses based in the United States employed more than 43.9 million workers worldwide in 2019. Many of these employees were in countries like China, Mexico, India, Canada, and the United Kingdom.
Major U.S. businesses such as the Kellogg Company, Fresh Del Monte Produce, Whirlpool, and Hanesbrands employ more international workers than domestic employees.
The possibility of remote work following the COVID-19 pandemic has allowed businesses to hire more international workers than before. While organizations still have to establish a subsidiary or partner with an employer of register (EOR) in most countries, they no longer have to worry about office space or how international workers will fit into their teams.
Managing a multinational company, however, has its complexities. Take employee benefits, for example. Traditional, organization-oriented benefits such as group health insurance, 401k plans, and wellness programs are often unfeasible or not cost-effective for multinational companies.
So, where does this leave companies with international employees who want to offer competitive employee benefits?
In this article, we’ll explain how to build an international employee benefits package by offering personalized benefits by covering the following:
- How important are international benefits?
- What are personalized benefits?
- How to offer international employees a health benefit
- How to offer employee perks to international employees
- Other benefit considerations
How important are international benefits?
With so many businesses hiring international talent, you’ll want to offer competitive benefits to attract your ideal employees. Each country has its own set of benefits that are considered standard, which is different from the U.S.
In some countries, like the United Arab Emirates, health insurance is a required benefit for employees, much like it is for applicable large employers (ALEs) in the U.S.
Offering benefits to your international employees helps you satisfy legal requirements and meet your employees’ benefits expectations so that they don’t leave for other opportunities.
However, even if a country doesn’t usually offer as many benefits as your company might in the U.S., you’ll still want to provide your international employees with the same benefits as your domestic employees.
Be sure to offer benefits and perks to your international employees that promote your company culture and the health and wellbeing of your employees.
What are personalized benefits?
Instead of using traditional standardized benefits for all of your employees, you can use personalized benefits. Personalized employee benefits allow your employees to use their benefits the way they want to, rather than being lumped into a one-size-fits-all group plan.
This is often done by providing employees with a monthly or annual allowance for expense reimbursement. You can reimburse your employees for healthcare expenses, employee perks, and employment-related expenses such as remote work costs.
For companies with a small team abroad, this approach to employee benefits provides flexibility, cost savings, and minimal administration time.
How to offer international employees a health benefit
Health benefits are one of the most important employee benefits to offer. However, it can be hard to provide health coverage to domestic and international employees with traditional group health insurance.
International employees will have different needs than domestic employees. And many insurance companies don’t offer coverage outside of the U.S., or they may have limited network availability. While some international health insurance plans exist, most plans are limited in international coverage, if they offer any.
Plus, some countries cover healthcare costs for all citizens through taxes. For example, the United Kingdom offers healthcare to all permanent residents for free, all paid for though taxes. U.K. citizens don’t have to pay for hospital stays or visits to their general practitioner. In the U.K., residents still have to pay for dental and vision care and prescriptions.
Offering group health insurance to an employee in one of these countries wouldn’t be necessary. However, these employees can still use a health benefit for their out-of-pocket dental, vision, and prescription costs.
If group health insurance is largely off the table, how do you offer an international health benefit that works for both foreign and domestic workers?
Offering an HRA to your domestic workforce
HRAs are a great health benefits option for domestic employees. With an HRA, you provide your employees with an allowance for their health expenses. Employees submit a request for reimbursement, and qualifying health expenses are paid out, usually on their next paycheck.
In the U.S., HRAs are tax-free for the employer and employees. Employees can use their allowance for individual health insurance premiums, prescriptions, and out-of-pocket expenses if the employer allows it.
With an individual coverage HRA (ICHRA), you can offer the benefit to only your domestic employees through employee classes. That way, you aren’t required to offer the benefit to international workers as you might with group health insurance.
It’s also possible to legally offer a qualified small employer HRA (QSEHRA) to your domestic and international employees. It would just be a taxable stipend in other countries unless social benefits are tax-advantaged in the country you are looking to hire in. However, with PeopleKeep, all employees receiving a QSEHRA must be W-2 employees.
How does this help your global workforce if you can only offer an HRA domestically?
Because you’re offering your domestic workers a tax-advantaged ICHRA, you are now free to offer your international employees a taxable health stipend, which we’ll cover in the next section.
Offering a health stipend to your global workforce
Health stipends work similarly to an HRA in that employers reimburse their employees for healthcare expenses. While an HRA is tax-free, health stipends are counted as taxable income on an employee’s W-2. Employees will be required to pay income taxes on these stipends.
Because health stipend reimbursements are often added to an employee’s paycheck after a reimbursement request is approved, you can offer them to both your domestic and international employees. This is a simple option for businesses because you can provide the same monthly allowance to all employees or change the amount based on their employment type or location.
If you decide to offer your domestic workforce an ICHRA, you can still offer your international employees a health stipend. That way, they can still receive a similar benefit to your domestic workers without any additional benefits management headaches.
Remember that you’ll be required to provide foreign workers with similar benefits to your domestic workers to avoid anti-discrimination laws in some places. Stipends are a great way to prevent this by giving all your employees the same health benefits.
How to offer employee perks to international employees
You may also want to offer additional benefits to your global workforce. Some of the most popular employee perks, also known as fringe benefits, include reimbursement for wellness and remote work costs.
According to SHRM’s Employee Benefits Survey, 64% of U.S. employers provided wellness resources, while 58% offered wellness programs such as gym memberships and stress reduction programs.
Don’t forget—if you’re offering benefits to your domestic employees, you should also be offering similar perks to international employees. This will help you remain competitive in the international job market while helping foreign workers feel appreciated. This way, they’ll know that they’re as equally appreciated as your domestic workers.
How do you offer wellness benefits to global employees, especially when you aren’t familiar with their area or culture?
Offering a wellness stipend is a great way to provide flexibility to your employees no matter where they live. Like with a health stipend, these benefits are taxable income you can offer to anyone. The best part is, employees can choose how they spend their allowance, so you don’t have to anticipate their unique needs.
Employees submit requests for reimbursement, and then you approve the amount for the categories you’ve set up.
Wellness stipends can reimburse employees for a variety of expenses, including:
- Gym memberships
- Fitness classes
- Home exercise equipment
- Meditation apps
This allows employees in any country to take advantage of their wellness benefits.
You can also offer your remote employees a remote work stipend in the same manner. This helps reimburse workers for their home office expenses, internet bills, and phone bills.
Other benefit considerations
When looking to hire employees in other countries, you’ll need to be aware of any local laws that require employers to provide certain benefits. You’ll also want to consider what benefits are already offered by the government.
For example, paid time off is a common benefit in the U.S. But, the Fair Labor Standards Act (FLSA) doesn’t require employers to pay employees for time not worked. Some countries require employees to offer a certain number of paid days off per year.
Some countries may also require you to provide your employees with the same benefits required under U.S. and local laws.
Another thing to keep in mind is that collective bargaining agreements (CBAs) cover 60% of employees in the European Union. CBAs are contracts between an employer and a union that outline things like wages, hours, and benefits for employees. Once a CBA is established, employers and union workers must abide by the agreement.
So, what other benefits should you offer to international employees?
You may want to consider offering your employees the following additional benefits depending on where they’re located:
- Housing benefits
- School/tuition expenses for your employees’ children
- Retirement benefits
- Life and disability insurance
Whatever benefits you decide to offer in your international employee benefits package, just be sure to check local laws, regulations, and cultural norms to be sure that they’ll be a good fit for your employees.
Hiring international workers has its complexities. No matter where you’re looking to hire, offering a compliant and competitive benefits package can help you attract your ideal employees. With expense reimbursements such as HRAs or employee stipends, you can easily manage benefits for your domestic and international workers.
Are you ready to offer international benefits to your global workforce? With WorkPerks by PeopleKeep, you can create personalized domestic and global employee benefits in minutes.
This blog article was originally published on November 8, 2018. It was last updated on March 15, 2022.