With global expansion of the Scottish oil and gas industry – often through mergers and acquisitions – comes the need to recruit employees and, in most countries, it is more cost efficient to hire locally than to import workers.
This leads to the need for employee benefits packages distinguished by individual countries reflecting local social security legislation.
For example, in Algeria there is no requirement for private retirement planning due to the state scheme provision, whereas in Russia, Singapore and Kazakhstan, government retirement arrangements require compulsory membership and contributions from employers.
Many companies venturing overseas attempt to implement employee benefits themselves, leaving this to the last, perhaps believing they can set these up without specialist advice. It is vital that employee benefits are looked at as early as possible to help recruit and retain a company’s most valuable asset – employees.
What happens if they get it wrong? Recently, a company which didn’t use an employee benefits adviser set up a savings plan instead of a local registered retirement plan. This cost the company additional human resources time to rectify, and significant embarrassment with employees.
But for quick rectification, it is likely the company would have faced a significant fine and their employees’ additional tax charges on their contributions.
The lesson is – taking advice and getting it right first time can mean lower costs and increased staff satisfaction and retention.
Companies have to know types and levels of benefits to be provided and how to source providers and competitive rates. For example, how would a company source a medical package for local workers in Chad or Cameroon where typical benefits are completely different to the western world? Language and terminology are common hurdles and, in places, communication can be interrupted by civil unrest.
Most will need to hire a professional employee benefit adviser to source and set up the requirements. Costs involved depend on the country and benefits to be provided.
Can the employee benefits be set up via the parent company or done locally in each country? Either is possible. However, many clients, especially where the parent company is UK-based, are keen to be fully aware of what is in place overseas and the costs involved.
Benefits can be established on a local country basis, as a multinational pooling arrangement or within a worldwide policy.
The most recent development is the introduction of worldwide policies for certain benefits, principally life assurance and personal accident, allowing employers to utilise economies of scale, and reporting benefits.
Where companies have established benefits through local sources, audits can clarify what’s in place and result in significant premium savings, outweighing fees.
The expansion of Scottish oil-related companies internationally is reflected in the fact that, over the last five years, the countries our clients operate in have already increased from one to more than 20, resulting in an extensive network of connections sourcing benefits worldwide and the recent creation of a specialist international employee benefits team.