This article is the fifth of the seven dilemmas series that discusses some of the most important questions that global mobility managers will have to address in the coming years. These seven dilemmas are not entirely new; however, demographic, technological, and business practice changes will give them a particular importance going forward. The discussion about the dilemmas is an invitation to move away from oversimplified visions of global mobility and understand that the complexity of the issues discussed also offers an opportunity for mobility and HR teams to become more strategic and expand their horizon. This article series is available as a PDF download.
Dilemma 5: Flexibility Versus Duty of Care
By Olivier Meier, Mercer
Understanding the Dilemma
The expectations of new generations of assignees and the rise of new types of mobility are increasing the pressure on companies to have more flexible approaches when managing international assignments.
Increased flexibility can take the form of more segmented policies with different terms and conditions for different types of assignments (for example by differentiating between self-requested moves and business essential ones). It can also lead companies to offer assignees more choice in terms of mobility benefits (the “cafeteria” model) or allow employees to take cash amounts instead of benefits in kind.
However, an excess of flexibility and a full laissez-faire approach could lead to situations where companies are not compliant with the duty of care principle.
Duty of Care: A Legal Requirement
In the strict sense, duty of care is about taking all possible steps to ensure the safety, health, and wellbeing of employees. This is a legal requirement that companies cannot ignore.
International assignments can lead to many situations where assignees could be at risk. The first examples that come to mind are related to security. Giving too much flexibility to assignees can lead them to take unnecessary risks and venture into dangerous zones.
Adding too much flexibility in policies and expatriates packages can indirectly put assignees at risk. For example, providing full flexibility in terms of housing, or just providing a lump sum without restrictions, could lead to cases where assignees try to save money by living in unsafe parts of the host city. The same can happen with transportation: assignees might be tempted to make their own arrangements and put themselves at risk.
Risk is, however, not restricted to security issues in hardship locations. Lack of proper healthcare coverage or, more generally, insufficient support could put assignees in trouble. Sometimes the risk is long term and more difficult to evaluate, as is the case with assignments to heavily polluted cities in China or India.
The scope of duty of care is wider than many think and applies, to a large extent, to the family of the assignees – it is applicable if the family is relocated to the host location with the employee but sometimes also when the family doesn’t live abroad and just visits the assignee for a short period of time.
When discussing duty of care for local employees, a distinction can be made between time at work (when the company is deemed responsible) and time off work (when the company is normally not responsible). This distinction becomes blurred when dealing with expatriates: companies might have a duty of care even if the assignee and the family are taking time off. If the assignee and the family are facing problems that they would not have had in their home country, the company could be held responsible.
Failure to comply with duty of care could expose companies to lawsuits from assignees. In some countries, managers can even face civil or criminal charges. Differences among countries in terms of employment law and scope of the duty of care can lead to unpleasant surprises for companies.
Providing more choice to employees doesn’t exonerate companies from their responsibilities and asking the employee to sign a waiver of liability doesn’t always guarantee that the company cannot be held responsible. Such waivers may not be interpreted the same in every jurisdiction.
Beyond Strict Duty of Care: Ensuring Fairness and Protecting the Company’s Reputation
Beyond the minimum legal requirements, the objectives are to look at the bigger picture, provide a fair treatment to international assignees, and ensure that they are not being penalized and face unreasonable costs, family issues, or other problems as a result of the assignment.
It’s a matter of trust and credibility for the company, and it could affect recruiting and retention. If a problem arises, the impact to the company’s reputation could be disproportionate: the news that company is not looking properly after its assignees would spread fast on expat networks and in discussion groups.
The lack of understanding of potential issues by management as well as pressure on employees to accept assignments or, on the contrary, a laissez-faire approach for all employees can lead to problems down the line and prompt employees to turn against the company.
Young assignees at the beginning of their careers might make the wrong decisions financially and realize after a few years that their savings have evaporated. Similarly they might realize too late that their fragmented pension history could reduce their retirement income. Letting assignees cash out on benefits could have side effects and expose employees to huge tax bills or exchange rate fluctuations. Companies are not responsible for private financial decisions made by their assignees, but if employees make these decisions because of the assignment, companies have a duty to inform, educate, and help mitigate potential negative consequences.
The challenge is to set the right degree of flexibility versus control to balance the subjective choices of the assignees with sufficient level of protection.
Resolving the Dilemma
- Audit what risks, compliance issues, and problems international assignees could face in the host destinations. Establish a duty of care checklist to ensure that no issue is being left out. Establishing this checklist might involve different departments to cover all aspects of duty of care – take a broad definition of duty of care and don’t limit it to the most obvious security risks.
- Understand that the new types of mobility (such as short assignments, locally hired foreigners, and gig workers) as well as the increasing diversity of expatriate population could increase risks or at least make them more difficult to track. Remember that different employees groups might have different requirements. Minorities might face risks that other employees would not. Make sure to proactively identify these risks.
- Set a limit to flexibility and define the minimum requirements that are non-negotiable and that the company must implement. Categorize policy items: fixed/non-negotiable, flexible in terms of delivery but with a minimal coverage, and optional. Ensure that the minimum requirements are implemented in all policies covering the different types of assignment and communicated to local HR.
- Define who should be the decision-maker for each item in the policy (the mobility team, local HR, or the assignee). Specify which benefits can be cashed out.
- Policy flexibility does not have to be the same for all types of assignments. Consider limiting flexibility for moves to hardship locations and certain types of moves (e.g. moves with the family.)
- Make sure that employees can make informed choices through financial and tax education. Involve local HR teams and management in the process so that they understand the implications of duty of care.
Mobility managers need to reconcile two realities: managing mobile millennials and developing a more agile workforce might require more flexible policies, but international assignments remain a complex exercise that can put employees in harm’s way physically, emotionally, and financially. Predicting the demise of traditional expat management can be misleading: compensation packages and policies are evolving in the direction of flexibility, but there are still assignments that require a more structured approach. Assignment management won’t become easier by offering more choice to assignees. Millennials and other employees are not necessarily better equipped than previous generations to manage security, financial, health, and other types of risks. A sensible compromise between full flexibility and paternalistic expatriate approach has to be found. From that perspective, the role of mobility management remains more important than ever.
Contact the author: Olivier Meier
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