Employee Benefits: Global differences
Employees who work for a branch of their organisation overseas can receive quite different benefits from their UK-based colleagues. Peter Crush and David Woods look at the differences.
Apparently, Oregon in the US is a pretty good place for UK nationals to be sent to work. Ahead of many of its neighbouring states, some 60% of companies there offer health insurance, while almost 50% of its firms also offer health benefits to the spouses and dependants of full- time workers. It means this latter benefit is actually taken up by two-thirds of the state's full-time workers.
The popularity of health insurance (in the UK just 10% of companies offer it) is a reflection of America's completely different attitude to free health. But for wary employees, nervous of uprooting themselves to work abroad - even for the same company - the benefit is a comforting boon they may not have been used to in the UK.
The notion that employees working for the same company can often have widely different benefits is not new. The world is full of peculiarities, often determined by historic, religious and cultural references. In parts of Eastern Europe, for instance, employees are legally obliged to pay 15% of their gross salary into a pension fund (with those under 40 paying an additional 5%); Portugal, Spain and Greece offer 33-36 holiday days per year (with Austria having the most, at 38). China actually has rules limiting the amount of overtime workers can do to no more than five hours per week.
Just some of these differences make the benefits English workers receive abroad very different from their UK counterparts. To find out what this really means, HR magazine picked two companies with English staff abroad and asked them just how much of a difference the benefits they received made to their lives. Did they lose out? Did they miss UK benefits, or did the new benefits they received make so much of an impact that it did not matter?
Working in the UK: Jon Bush, adviser, Abbey e-commerce
What he gets: a range of work options including part-time working, job-sharing and flexi-time, annualised hours and career breaks.
What he values: "Being able to work flexibly at Abbey has helped me tremendously. Many of the courses and training that I have completed as a member of the Territorial Army (TA) would not have been possible had Abbey not provided me with the flexibility to change shifts to free up a weekend at the last minute. My line manager has been crucial to my establishing a good balance between work and the TA by going out of his way to ensure that I can meet my responsibilities."
Working in Spain: Victor Ronco, marketing and communications, Santander global banking and markets
What he gets: Access to Santander's global reward model, which is part- centralised and part-decentralised. The cash reward strategy follows a group model, while benefits provision (via its 'Let Abbey Benefit You' online portal), is managed locally to cater for local sensitivities and country-specific legislation.
What he values: "A benefit that many of my Spanish colleagues have taken up is the free language classes offered by Santander. Language courses can be expensive but they provide a much needed skill when moving overseas. The free classes have been really well received."
What's new: Santander's Sharesave scheme is the latest addition to the Abbey reward package. It is a significant development for Abbey as it is the first scheme of its type anywhere in the Santander Group. This move also demonstrates the decentralised part of Santander's global reward model.
PENSIONS FOR EX-PATS
One of the most complicated areas in multinational benefits is pensions, mostly because taxation and capital gains tax rules vary wildly between countries. According to research by Fidelity, pensions continue to be an area of confusion. It found only 45% of organisations provide multinational retirement plans for their employees. Half of these were defined-benefit plans, while two-fifths were defined- contribution (DC) plans. In response to this Fidelity is in the process of launching a new service which effectively sets up a replica of a DC plan, but in an offshore structure. "It's called a retirement savings plan that looks like a pensions plan, but isn't one," says Julian Webb, executive director, DC, Fidelity International. "It gets around difficult local differences by sitting above taxation and regulations, but employees pay into it by having it deducted from pay."
BRITISH OR FOREIGN BENEFITS?
Three years ago, the British Council, which has 7,500 staff across 110 different countries, decided it was easier to put all its staff on enhanced minimum British benefits. The revamp of the benefits package meant providing overly-generous holiday, and medical and pension arrangements were installed, often better than the statutory obligations of the host counties. Staff receive 35 days' holiday including public holidays, a death-in-service benefit, long-term paid sick leave of up to six months and injury insurance. But not all companies want to go British. Many are more than happy going native:
- 15% of Microsoft's 35,000 workers in Seattle are Indian, so Microsoft celebrates Indian holidays such as its Republic Day in January, and Independence Day in August. It also runs cricket teams for Indian staff and pays for staff's prescription drugs
- Every year 15,000 Wal-Mart employees have children, and UK staff, who are involved in job exchanges with Wal-Mart in America, will be entitled to receive its new 2009 launch services. These include its 'Life With Baby' programme, which provides workers with consultations with registered nurses through all phases of maternity. Other preventive benefits include providing mammograms, colonoscopies and flu vaccinations to workers. Nearly 93% of Wal-Mart employees have healthcare coverage, including 50.2% who are covered by the retailer's plan. Wal-Mart has 1.4 million US workers
Working in the UK: Isabel Naidoo, talent and citizenship lead
"In 2007 Accenture introduced new maternity leave benefits, and enhanced its existing benefits by introducing pre-and post-maternity workshops and buddying systems. I went on maternity leave in March 2007 and during my nine months away from work Accenture did a great deal to support me. In addition to receiving full pay, I was able to maintain links with the office via 'keep in touch days' which kept me informed as to the progress of projects I was involved in at that time. Now that I have returned, flexible working programmes allow me to work two days a week from home and I have altered my hours so that I can arrive earlier, and leave earlier in the day. I'm one of the 90%-plus of mothers who come back to work at Accenture after having children."
Working in the US: Stacey Jones, senior executive, Accenture US
"Accenture's Back-up Dependant Care Programme provides employees with 40 hours of dependant care each year. It means that when necessary, a third party helps locate suitable back-up for the required dates and times, and Accenture subsidises the rate paid by employees. When I returned to work following my own maternity leave this was a fantastic help. I have also benefited from our 'future leave' programme which is a self-funded, and our 'time away' scheme that offers short-term breaks for staff away from work to spend time on personal priorities. This can include time away to look after a new child. Although this absence is unpaid, it offers a number of advantages over a traditional leave of absence, including benefits continuation."
Go to www.hrmagazine to read the full list of Accenture's benefits in the UK and America
China: Most organisations work a six-day week. National holidays are fewer - New Year's Day; Spring Festival (Chinese New Year); International Labour Day (1 May) and National Day (1 October).
Germany: The working week is 35 hours. Following recent reforms, tax and National Insurance (NI) rates are similar to those in the UK. Income tax is on a progressive scale from 20% to 42% and NI is paid both by the employer and employee.
Russia: The average working week is 40 hours, with typically 28 days holiday per year. The biggest benefit is that Russia has a flat personal income tax rate of 13%. This ranks it as the country with the second most attractive personal tax system for single managers in the world, according to a 2007 survey by investment services firm Mercer Human Resource Consulting.
Compiled with the help of Prospects (www.prospects.ac.uk)
DIARY OF A DUBAI WORKER
In 2005 journalist Ali Masud swapped the comfort of working in the UK for two years in Dubai. He recounts what this meant for his benefits: "The contract I received was a tax-free salary. But because the UAE dirham is tied to the US dollar, a sliding dollar and strong sterling meant that when I left (December 2006) I was earning less in terms of sterling than I had been at the start of my contract. This isn't often spelled out. In Dubai there is no free medical care for overseas workers, so I was covered by my company. My employer looked after my visa regulations - very important for working in the UAE. In terms of cultural differences, scheduling meetings was an interesting problem, especially during Ramadan. However, the flip side was that I was allowed to leave early if I was fasting. In terms of holidays, although there were no bank holidays as such, it worked out that there were more given out ... you just didn't know when. I think there are 10 national holidays each year that change annually, according to the sighting of the moon. You normally found out by email the day before. In July/August work virtually stops because of the heat, but on the downside you were expected to come in on one of your weekend days (Fri/Sat as opposed to Sat/Sun). During my time over there, the ruler of the UAE died, so the office was closed for three days as a mark of respect. Apparently, the police make a point of going and checking if companies are closed just to make sure."