Who is an Expatriate Employee?

Who are Expatriate Employees and Are You Considered One

We’ve all been hearing this term expat employee or expatriate worker. Living abroad and working on expat assignments are part of being an expatriate employee. Sometimes, the assignments are short, and sometimes it takes more than a year. Other times, expat employees travel from one country to another to complete their job tasks. So what exactly does it mean? In this article, we will explore the definition and what exactly it is to be an expatriate employee.

Definition of Expatriate Employees

A person living/working in a country other than his or her country of citizenship is considered an expat. Expatriate employees are often working in another country temporarily. Expatriated employees are usually sent abroad by a multinational employer (profit or non-profit) on a long-term job assignment over a year. Often, the organization has to send a senior manager to oversee the operation abroad or set up a new branch office. Often, there will be local nationals in the office – which would be the employees who are citizens of the country or have been domiciled there for a long period of time.

Understanding Expat Employees

When it comes to expat workers, they earn more than they would at home and more than local employees. Furthermore, if you’ve chosen to become an expat employee, your company will also give your expat employee benefits such as relocation assistance and housing allowance. Becoming an expatriate has a lot of benefits, from getting opportunities for career advancement and global business exposure to living abroad and exploring exotic cities and cultures.

On the other hand, it can also be a difficult transition emotionally for some expats as they will have to leave their friends and family back home and adjust to a new culture and work environment. It is also one of the main reasons companies offer higher compensation and benefits to expat workers.

Expat Employees are “Special”

Generally, expatriate employees expect and deserve higher levels of pay, international health insurance, benefits and more from global employers for a variety of reasons:

• Expats are often in high demand, and their positions are more often than not senior management level
• They fulfil essential positions abroad that are critical for your organization’s financial success
• International experience is considered to require additional income
• Expats are moving abroad by themselves, especially with their families making a big financial and emotional commitment. Picking up stakes and moving your life abroad to a new country is also a big deal.
• Expat assignments are expensive. Not only do they often get paid more, but you have to factor in costs such as housing, schools, insurance, travel and much more. A failed expat assignment can cost hundreds of thousands.
• Finding the right expat employee can be very expensive, especially if a “head hunter” is used as their fees often range between ten and twenty percent of the annual wage.

Who are Expatriate Employees?

Expat employees are professional or skilled workers in his or her profession. The employer can become an expat employee by taking job opportunities outside of their home country, either independently or through his or her employer. The employer can be a company, university, government, or even non-governmental organization. A simple example is if you are working in the Silicon Valley office, and your employer sends you to work for a year in its Hong Kong office. In the Hong Kong office, you’re an expatriate employee.

Who is NOT considered as Expatriate Employee?

Business traveller

Business travellers are those who are still employed and have a payroll with their employers in the home country. They can be sent on short-term global mobility assignments, and their place of employment is still in their home country. For example, someone can go overseas on a business trip for a few days or longer, yet it’ll still be a short-term assignment. Most business traveling employees are going on trips in under six months. Companies should make sure they secure a robust business travel plan for their entire company if sending employees abroad for short-term trips.

Accidental expat

An accidental expat is when a business traveler stays overseas for too long, and sometimes with the host country’s law, the place of employment may shift to the host country. They may work for a year, coming home only on the weekends. In such a scenario, business travel risks becoming an accidental expatriate. In other cases, even global nomads who move from one country to another without returning home become accidental expat. The COVID-19 pandemic has certainly added a lot of accidental expats as employees traveling are now stranded in overseas locations.

Foreign hires

Other than business travelers, another type of false expatriate employee is foreign hire. Multinational companies occasionally recruit candidates from one country to work in another country. For example, contractors in the Middle East recruit laborers from Indonesia, Phillippines, and other developing Asian countries.

Another example is giant tech companies in the USA recruiting graduates from top universities in India for jobs in California. Foreign hires also include US multinational companies hiring American security guards to work in the Middle East. All these employees are considered foreign hires and not expatriate employees because their employer is in just one country. However, one may certainly disagree with this description – you might just call these valued hires ex-pats.

Expat Contractors

Some global mobility managers will not consider contractor employees if the person is sent or hired abroad for a short or long-term assignment. They are not on the company payroll and are often considered contractors or consulting employees. However, if that “contractor” is only working for your company and indeed if the contract is extended beyond a year, is he or she really a contractor? If something goes wrong or if there is a sickness or injury, that expat contractor might be seen as an employee by the courts – local or back in the home country.

Duty of Care for Expatriate Employees

We have written some articles on the global mobility manager’s duty of care. It is a hot topic in global mobility circles these days. Suffice it to say it is critical for managers to ensure that expat employees, local nationals, contractors, and business travelers are protected and well-insured. All too often, we see people sent abroad for short and long-term assignments with inadequate global healthcare coverage, disability, evacuation, and life insurance coverage on a group or individual basis.

Many expat employers do not place adequate kidnap and ransom coverage for employees in high-risk locations. This puts employees and employers at risk – either because global mobility managers are not being well-advised or the employer wants to save money. Many countries, including the USA and Canada, have issued guidelines for meeting the duty of care for overseas employees. This can extend to adequate insurance but also health and safety as well. International employers need to take a proactive stance to insure, prepare, and protect their employees everywhere.

As part of TFG Global Insurance Solutions Ltd, we can discuss your organization’s duty of care from an expat insurance specialist perspective. If your organization would like to have us examine your global benefits plan, please feel free to reach out to us today. If possible, you can send us the details on your global health insurance plans, expat census, and contracts. We have often been able to find holes in current insurance coverage that were putting employees and the company at risk.

Our firm hase been able to secure thousands in savings for clients when our firm has been appointed as broker of record for their existing insurance policy, often keeping them with the existing insurer after conducting an expat benefit plan RFP. It really makes sense to work with an expat insurance specialist firm.