Research highlights the risk of providing cash lump sums for benefits to overseas employees.
- 83% of employers offer cash for benefits, potentially leading to risks.
- Lump sums may lead to higher costs due to lack of economies of scale.
- Employees may face risks regarding compliance and benefit selection.
- Expert advice is recommended to ensure adequate support and compliance.
A recent survey conducted by Towergate Health & Protection sheds light on a prevailing issue whereby 83% of employers with overseas staff choose to allocate a cash lump sum for employee benefits rather than offering tailored packages. This research warns against such practices due to the potential risks involved for both employers and employees, which could be mitigated through more structured benefit offerings.
One significant concern is the financial inefficiency linked to economies of scale. Employers choosing to offer lump sums rather than group benefits may incur higher costs as individuals purchase healthcare independently. This strategy may appear economical initially but can ultimately lead to greater expense, highlighting the need for comprehensive group schemes.
Additionally, employers have a duty of care, especially concerning employees stationed abroad. Providing a cash sum without specific benefits can render it challenging to fulfil this obligation effectively, possibly impacting the company’s reputation and its ability to attract and retain talent. Health and wellbeing benefits are crucial in overseas roles, and inadequate support could undermine employee loyalty and retention.
From the employee’s perspective, this approach may lead to non-compliance with local requirements. In nations where certain benefits are mandatory for visa eligibility, there is a risk of employees unknowingly omitting essential benefits, thereby jeopardising their legal status and exposing employers to compliance issues. Furthermore, the absence of informed decision-making can result in inappropriate benefit choices, leaving employees underinsured, particularly in regions with high medical costs.
The lack of expertise among employees in selecting appropriate benefits further complicates matters. The intricacies of international employee benefits necessitate a nuanced understanding, which may not be possessed by every individual. Employees may also miss vital communications from employers regarding health and wellbeing support when handling their benefits, leading to lower utilisation rates.
Sarah Dennis, the head of international at Towergate Health & Protection, underscores the necessity of expert guidance to ensure all parties are adequately covered. She emphasises that the focus should not only be on the employee’s needs but also consider the business’s requirements, advocating for a specialist approach in managing international employee benefits.
The insights underscore the importance of expert guidance in managing overseas employee benefits to mitigate the inherent risks.
