Relocating globally or going on an assignment for a job is considered a major life event because it often requires an employee selling a home before moving the family to a new country and changing many of their typical routines. Your employee letter of understanding must cover a number of important topics, but without increasing your employee's anxiety.
A letter of understanding outlines the details and benefits of the assignment. This legally binding document basically serves as an addendum to the employee’s regular employment contract and lays out any varying or additional terms that apply for the duration of the assignment. As such, it must be signed by all parties. In addition to the assignment start and end date, job title and location, the letter of assignment must specify all contractual agreements, code of conduct, compensation and benefits, assignment-specific benefits such as moving expenses and repatriation allowance, tax equalization and other fiscal matters.
It’s important that the letter of understanding lay out all pertinent details of an assignment in a way that leaves no room for misinterpretation. Any lack of clarity could lead to misunderstanding, which in turn could lead to costly and time-consuming problems. This can be a drain on resources, and it can create a distraction for the employee and impact the success of the assignment.
The key to drafting effective letters of understanding begins with knowing your employees and focusing on them and their families. You can find sample templates on the internet to help you draft a letter of understanding, but unfortunately, many of them begin something like this:
Dear Mr. Jones,
This letter is to inform you that you will be transferred effective [date] to our location in...
Considering the upheaval a relocation will cause in your employee's life, this approach is rather abrupt. Here are some best practices to help you write an effective letter of understanding.
Discuss the Global Relocation or Assignment First
Your company has made the decision to relocate or send an employee on assignment to benefit the organization in some way. You may need to add talent to a business unit in another city, or to reduce it at the employee’s current location. You may want to move a manager to provide new leadership in another territory. You may even want to give a high-potential employee broader experience as part of a career development plan. No matter the reason, be sure you or the appropriate manager(s) discuss those reasons with the employee long before you write the letter.
Having a detailed discussion provides an opportunity to create enthusiasm about a new role by:
- Increasing the likelihood of an accepted offer.
- Providing a platform to discuss your global mobility policy and company-provided financial assistance.
- Clarifying the specific skill-building and learning opportunities available in the new role.
- Showing that the company values the employee and wants to make an investment in his or her future.
- Demonstrating that the employee is important to the growth of the business.
Holding a preliminary discussion shows respect for the employee and allows you to craft a letter tailored to that individual. In turn, you’re more likely to increase loyalty and productivity — and reduce the chance of a relocation offer being declined.
Outline the New Role
Your employee’s job title and responsibilities may remain the same in the new location. If that is the case, make sure the transfer letter of understanding includes the name of the person to whom the employee will report and the duration of the transfer or assignment. For employees taking on new responsibilities, you’ll also want to include the following:
- The employee's new job title or position.
- A description of any increased benefits, salary or bonuses.
Similar in some ways to an employment offer letter to a prospective new employee, this portion of the letter of understanding focuses on the specifics of the new role. It documents the job title, salary and related matters to eliminate misunderstandings later. The letter should be dated and signed by the appropriate manager, and be sure the letter contains:
- The employee's full name and current home address.
- Department names — both the current department and the new destination department.
- The effective date the employee should report to the new location.
- The anticipated end date in the case of an assignment.
- The name of the employee's new supervisor.
- The date by which the individual relocation and assignment benefits must be used.
After you proved this pertinent information, you can delve into the specifics of your company's global mobility policy and explain the benefits the employee will receive. Check back next week to learn about the five most important topics to include in your global assignment employee letter of understanding.