What is an Expat Package?
Rumours of expats working for a few years on huge salaries and then retiring in a large property in an exotic location lead people to believe they can expect something similar. Reality is nearly always much more down to earth. Human resources departments often have a hard time managing these distorted expectations. They have to find a balance between adequate compensation for the expat staff, and a cost effective staffing solution for the company. Obviously, it's important to be informed before making demands, which might turn out to be unreasonable and cause friction with your employer before you've even started.
Traditional, comprehensive, full expat packages are becoming rare these days. Many employers are able to fill positions with local staff and where they can't find the right talent locally, they might only seek unmarried expat staff in order to reduce costs i.e. no expensive family relocations or international school fees to pay etc. That said, where a company truly needs expat staff, they are still going to have to remunerate accordingly.
In principle, an expat package is designed to cover the expenses you will incur by moving yourself and your family abroad. Further, a traditional package will compensate you for the hardship of leaving your life behind by paying you the equivalent of what you would be earning had you remained at home, and ordinarily you should expect another 10 percent on top of that. In a difficult location, this could be much, much higher. Certainly, you should be no worse off for becoming an expat if you are required to relocate. This should continue for the duration of your overseas posting and cover the cost of you moving back home again when the job is done.
Many employers will place a time limit on some or all parts of the package. For example, they may consider you to be local staff after, say, four years and you'll then be paid at the local prevailing rate. Of course, this is negotiable if they need you to remain and you threaten to leave. In a brief survey we conducted, some people were getting their contracts renewed over and over, one of which had been doing so for two decades.
Let's break down what should be covered. . .
Some expats will bring everything with them. Anything that's not nailed to the floor will be packed and stuffed into a shipping container. Others will just sell everything, or put it all into storage. This is a subject we won't cover in this article but you can read the following forum topic: Tips when choosing shipping and relocation companies
Whatever you decide to do, these costs should obviously be covered by the relocation allowance.
Airfare and Annual Trip Home
Obviously, your company will be paying your flight costs. Often, an annual return trip to your home country (sometimes more frequently) for you and your family will be paid for, and where you don't use that entitlement, you might be able to take the cash instead.
This is a difficult aspect to cover in just one paragraph. You should expect to be housed in a manner you have become accustomed to. Generally, foreign staff wind up living in expat ghettos where a chunk of change is thrown at the accommodation to just make it happen and get moved in. This means higher prices are generally paid in such areas, where the population often consists almost entirely of foreigners.
In more recent years, a much smaller housing allowance may be offered and you'll be left on your own to see what you can find for the money. In that case, you're more likely to be living on the fringes of those expat ghettos, or much more integrated into the local population.
Company Car Allowance
Depending on where you live, you might get a car. If you're somewhere with superb public transport infrastructure, this may be a perk reserved only for very senior management.
Education for Expat Children
This is obviously a very important consideration if you're bringing your family. International schools normally offer a very high standard of education, but are expensive. Your employer will cover the bulk of this cost, or in some cases all of it.
Often, you will be offered a comprehensive health insurance package, although it may only be in part for your dependants. In some cases, the employer will just promise to pay your hospital fees in case something goes wrong. If that is the case, it will obviously require a degree of trust on your part, which is why a proper insurance policy is the norm. Dental care might not be included.
You could get your dependants enrolled on a language course to make life easier for them, and more enjoyable. Cultural coaching can also be very useful. Your employer might stump up for this.
If you elect to return to your home country at the end of the posting, you can expect the full cost of the move to be paid for by the company.
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In reality, places like Hong Kong and Singapore can't be considered hardship postings anymore. Even Bangkok is an attractive gig these days with all the modern amenities, good schools, quality accommodation, modern infrastructure and good entertainment to satisfy even the most demanding of expat. A lot of people are keen to relocate to 'advanced' destinations like Singapore, thus weakening your leverage when negotiating pay and terms. Push too hard and there might be someone cheaper to do your job.
It's amazing how many potential expats sign up to our forum that seem to think their 'expat status' automatically entitles them to make unreasonable demands. You have to be a little more down to earth these days and in most cases, you will only be able to command a few of the perks listed above, unless you really are at the top...
Locations such as Singapore, Hong Kong, or Dubai, can hardly be compared to Lagos for example, or some distant corner of Siberia. A hardship posting can be defined as somewhere that presents unhealthy conditions, a potential risk to personal security, a difficult climate, a remote or inaccessible location, lack of availability of goods and services... in these circumstances you will have firmer grounds on which to negotiate.
You should also carefully examine taxation. For example, the very low overall tax burden in places like Hong Kong, will have a significant effect on your disposable income and could be used as a bargaining chip by your employer.
You must do your due diligence. Use expatriate forum communities like the one here at Xpat.Life. Find out how much it really costs to rent an apartment, send your children to a good school, lease a car etc. If your employer tells you it will cost $2000 for this, that or the other, check that this really is the case.
You must also be sensitive to local staff. They may be on a much lower overall salary but doing a similar job to yours. Be wary of the friction this may cause.