In the States, your employee benefits package might include retirement benefits, health insurance, and PTO (among other fringe benefits). Operating in multiple countries means offering different benefits plans based on local employment laws, cultural differences, and general employee expectations.
This article shows you how to navigate the challenges when creating a global employee benefits package.
What are global employee benefits?
'Employee benefits' is a blanket term for all the extra perks and advantages you provide your employees beyond a salary. They can range from small (free lunch in the office) to large and impactful (retirement and health insurance plans).
Global employee benefits are the non-wage compensation employers offer their international workforce. They're tailored to meet the specific needs and expectations of employees in different countries and regions your company operates.
Why offer benefits packages to your global workforce?
Competitive employee benefits improve employee retention.
The main reason to offer comprehensive benefits to your global employees is to attract and retain them. They're ultimately what makes or breaks your organization's success.
According to a 2022 MetLife study:
- Two-thirds of employees say a comprehensive benefits package is an absolute must.
- Employees who are happy with their employer's benefits are twice as likely to have high job satisfaction.
- They're also 70% likelier to stick with their employer.
Globally, 40% of employees say they might leave their jobs in the next 3-6 months, according to McKinsey research. In some countries — e.g., India — employees at risk of attrition make up as much as two-thirds of the workforce.
Addressing your employees' holistic needs (physical, mental, social, and financial) through your benefits package is an essential element of your employee retention program. Around the world, employers who invest in their employees earn a reputation as an employer of choice, which directly impacts their bottom line.
Local labor laws require it.
One of the biggest challenges with going into business outside the U.S. is working with labor laws you're (presumably) unfamiliar with.
As an employer, not meeting statutory benefits requirements subjects you to:
- legal action (and fees)
- reputational damage
- employee unrest
- interruptions and lost productivity
Global benefits give you a hiring edge in local labor markets.
Around the world, employers are engaged in their own talent wars. Depending on where you're hiring from and what roles you're filling specifically, competition might even be more fierce.
In India and Latin America, for example, software developers are constantly approached by local companies, American corporations, and organizations all over the world. If their skills are in demand in their home country, they have the luxury of being even more selective than an employee in the U.S., who would probably only consider offers from U.S. companies.
According to the abovementioned MetLife study, 80% of employers say meeting their employees' needs across different life stages and the diversity spectrum is important, just 31% plan to offer comprehensive benefits packages to back this claim.
But making employee benefits a priority will help you stand out to the best candidates in these markets. It's the only way to convince local, top-tier talent to choose your company over anyone else offering them a job. And we guarantee others are already doing this.
Two types of global employee benefits
Before creating your global benefits program, you have to understand the difference between statutory and supplemental benefits.
Statutory employee benefits are mandatory benefits you're required to offer as an employer. In every country, labor authorities have their own set of rules and regulations regarding what benefits your employees must have access to.
You might be required to provide them with:
- minimal salary amounts or wages
- overtime pay
- maternity, paternity, and parental leave
- vacation days (also known as public holidays)
- enrollment in government healthcare programs
- paid time off (PTO)
- worker's compensation
To know which statutory benefits you're specifically required to provide, you'll have to do research on the local labor laws in each country.
The best international employees want more than just the basics. Supplemental benefits (also called fringe benefits) are the perks that go beyond the bare minimum. These benefits give employees and their families comprehensive coverage.
- mental health support
- wellness programs
- flexible working arrangements
- private healthcare plans
- educational assistance
- transportation and housing allowances
- relocation stipends for new hires
- statutory benefits, at higher coverage levels
Again, what you offer depends on the specific needs of your local employees. You'll have to learn about the particular expectations and cultural norms of each country you're operating in.
Examples: How employee benefits differ around the world
Looking at global employee benefits trends is helpful, but you won't really know what benefits employees really care about unless you understand regional specifics. It's all about creating curated local plans.
Here's a look at how benefits vary from place to place:
Healthcare is perhaps the best example of how benefits differ in America versus abroad. In most of the developed world, the government provides at least a basic level of healthcare for all citizens. The U.S. is an outlier, as it has no national healthcare system.
Employers in the U.S. often provide their own comprehensive healthcare plans — like PPOs/HMOs and health savings accounts (HSAs) — to employees and their families.
In other countries, employers typically offer supplemental coverage to "top up" the government benefits or help with healthcare costs. Depending on the level and quality of care offered by the public healthcare system, employers may offer private health insurance on an opt-in basis.
Maternity leave is different in every country. In the U.S., the Family and Medical Leave Act (FMLA) guarantees 12 weeks of unpaid leave time for new mothers — with job protection.
In other countries, you’ll find more generous benefits: paid parental leave that can last as long as a year.
- Bulgaria has a paid maternity leave of 58.6 weeks.
- Greece offers 43 weeks.
- The U.K. requires a 39-week minimum.
- In Chile, 30 weeks minimum maternity leave starts several weeks before the expected birth.
The amount of pay employees are legally entitled to also differs from country to country. In India, employees are entitled to 26 weeks at 100% pay. In Mexico, it's 12 weeks at 100% pay. For Australian employees, it's at least 18 weeks at 42% pay.
Paid time off (PTO)
Every major industrialized nation (except the United States) requires at least some PTO each year.
EU member countries, for example, are all required to provide employees a minimum of 4 weeks paid vacation time each year. This is dramatically different from the US, where 20% of private sector employees have none and more than half of them don't end up using it all.
U.S. employers can find themselves in legal trouble if they fail to provide adequate vacation time for employees. Considering 4 weeks is practically unheard of in the U.S., it's a more common mistake than you might think.
In the United States (and most other countries), commuter benefits are a nice-to-have. But Brazil requires employers to cover a portion of their employees' transportation costs.
Office-based employees who have to commute by public transport from home to work are entitled to be reimbursed for their transportation costs if the transportation cost exceeds 6% of their monthly pay.
A holiday bonus or end-of-year bonus is a traditional way to say thank you and reward hard work. It's also seen as a sign of appreciation for employees’ loyalty over the course of the year.
- In Mexico, every employee is legally entitled to a Christmas bonus of minimum 15 days' worth of pay, due by December 20.
- Spain requires employees to offer two holiday bonus payments per year — one in December, one in the summer. They're each equivalent to a month's worth of salary (effectively doubling their salary that month).
- Brazil mandates a 13th-month salary, but it's illegal to offer it in a lump sum. Companies have to offer one installment between Feb. 1 and Nov. 30 and another between Nov. 30 and Dec. 20.
Regardless of legal requirements, it's often customary to offer things like holiday bonuses or additional vacation days at certain times throughout the year.
China, for example, has seven public holidays in addition to the standard vacation days. People typically take extra days off work around national holidays and festivals, such as Chinese New Year and the Mid-Autumn Festival.
Around Chinese New Year, it's not legally required to offer a 13th month of pay. But every employee in the country will expect it!
Benefits for digital nomads
Let's say your absolute rockstar of an employee wants to use your work-from-home policy to work from outside the U.S.
Downgrading her to statutory benefits would probably motivate their to look elsewhere for a more favorable option.
Instead, you would work with an Employer of Record (EOR) to provide employees with the same or better benefits while they're working abroad. This includes health insurance, legal protection, and payroll processing, so you don't have to worry about accounting for the different regional tax laws.
It's worth noting these benefits will also differ within the United States depending on state and local laws. In addition to delivering global employee benefits, you will have to consider benefits requirements across state lines.
Developing your global benefits strategy with Compt
To administer benefits at the global level, you'll need to pay attention to legal requirements, employee interests and values, and local cultural norms. Your global employee benefits strategy has to be tailored to the regional specifics of every employee, which only gets harder as you expand to multiple countries.
Using Compt, you can:
- Eliminate health benefit headaches. Global employees can select from local vendors and curate a plan suited to their needs. You won't have to worry about finding plans in multiple countries or figuring out the paperwork.
- Offer stipends to your international workforce. Stipend software makes it easy to implement health and wellness programs, commuter benefits, education assistance, professional development, and just about any other benefit you can imagine in the most inclusive way possible.
- Effortlessly manage finances and tax compliance. Since it's 100% tax-compliant and has expense management built in, your finance team won't be ripping their hair out over complicated laws and regulations.
- Track your global team's engagement. Compt lets you easily follow engagement across global teams and review the success of your global benefits strategy.
- Offer personalization across the globe. If you have a distributed team, finding a single vendor to serve them all is basically impossible. Using a reimbursement stipend, employees have the power of choice.