3 Ways To Reduce Risk As International Benefits Requirements Increase

November 5th, 2015

US-based companies expanding abroad are facing a diverse number of challenges right now, including new global economic pressure on state-run systems to shift the burden of health and welfare benefits costs to employers.

Here are three ways for employers to reduce the risks associated with international benefits and global compliance.

  1. Manage Trends In Global Compliance

Similar to defined-benefit employee pension plans in the US, which have migrated to defined contribution 401(k) plans where employees bear most of the risk, many European countries are pulling the reigns in on social and benefits programs once thought to be an entitlement among workforce nationals.

What’s more, Obamacare has introduced a number of new compliance stipulations that impact US expats and in-pats (multinational company employees from a foreign country who take assignments in the US), says Hays Companies Vice President of International Benefits, Anne Terry.

The UK pension reform movement is an example of the way foreign governments have signaled a shift in the way retirement benefits will be accumulated and administered, because the state can no longer afford to fund retirement programs. Employers operating in the UK are now expected to share a significant part of the burden and employees are expected to participate and help fund private 401(k)-type defined contribution plans.

“Historically, US-based companies growing through acquisition have pretty much left the HR and benefits functions of acquired companies to run autonomously. It was thought to be a lot easier, logistically and administratively, to leave things in place, especially where the cost of health care and other benefits was perceived to be lower in the foreign countries concerned. Now, CEOs are more concerned with a global bottom line—they want to know their true exposure from benefits costs everywhere and how to minimize compliance risks abroad,” Terry adds.

  1. Leverage In-Country Expertise

When US companies set up business internationally, HR and benefits administration responsibilities are usually delegated to the HR teams of US-based companies, including talent acquisition and recruiting new hires. Often, these HR teams don’t know where to go to become educated on how to approach each country from a hiring and benefits perspective.

Terry and her Hays Companies associates act as consultant-educators for clients in such cases, offering in-country assistance through a global network of broker-partners with special benefits and compliance subject matter expertise for that particular nation or territory. The brokers, who focus exclusively on US-based companies expanding abroad, work strategically and collaboratively with Terry and her team to close the accountability loop on plan renewals and global compliance.

  1. Solve International Talent Acquisition/New Hire Concerns

Companies who are growing through international expansion don’t hire or add HR people at the same rate they’re building out operations abroad, says Terry, and this is another reason why clients find Hays’ international benefits services to be a good fit.

In addition to international benefit plan changes and global compliance, it can be very difficult for US-based companies to keep with up with emerging markets, changing economies, and unprecedented job growth in the foreign countries where they have operations. For example, Terry references a technology company operating in Singapore, where her client needed to attract new hires in an economy with a 2% unemployment rate among technology workers. She leveraged targeted benchmarking data and in-country expertise to the client’s satisfaction.

Terry concludes: “We view international benefits as an extension of the overall services we provide to our Hays Companies clients based in the US, and this consistently works in our clients’ favor from a cost perspective, as compared to reaching out to another independent international consultant.”


Thanks to Anne Terry & Ross Krasnow for their contributions to this piece.