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5 Important Topics to Include in a Global Assignment Letter of Understanding

Posted by Amy Mergler on Thu, Jul 19, 2018

Image of businessman at airport looking at airplane taking offOne way to help ensure global assignment success is to prepare an effective global assignment letter of understanding that outlines the pertinent details and benefits of the assignment in a way that leaves no room for misinterpretation. 

After your letter of understanding addresses specific information regarding the scope of the assignment, you can delve into the specifics of your global mobility policy and explain the benefits the employee will receive.

Explain Your Global Mobility Policy

Your letter should summarize the portions of your global mobility policy that are applicable to the employee. Among the issues your policy addresses, it is important to include information on the five topics below because they are:

  • The most costly components of an assignment or transfer and
  • Usually the greatest stressors to an employee, which can cause reduced productivity.

Relocation Expenses

When writing the letter, review your policies to determine what is relevant to the particular employee. While it’s not recommended to copy your policy verbatim into the letter, you should summarize:

  • Specific expenses and the amounts the company pays for directly.
  • Types of expenses that can be reimbursed, along with any limits. Note whether the employee is required to document each expense, should submit a consolidated summary or will be given a lump sum amount for miscellaneous expenses.
  • The ongoing allowances for specific benefits.
  • Expenses the employee is responsible for paying.
  • Repayment agreement terms.

Moving Household Goods

Household goods shipments can be a significant part of your overall global relocation expense. The moving cost can vary widely depending upon whether the employee is relocating permanently or will be on assignment for a set length of time, the distance between the current and destination locations and the family size.

Global movement of household goods will typically include sea and air shipments and long-term storage. The letter of understanding should be clear on what is covered. Typical benefits include a 20-foot or 40-foot container and 500 pounds for an air shipment. Long-term storage is generally only provided for those on assignment, and for the length of the assignment.

The cost of storage and valuation coverage for household goods must also be considered. Your letter should specify the amount the company will pay for household goods transport, storage and valuation along with any limitations or restrictions.

Tax Implications and Assistance

Taxes Concept on File Label in Multicolor Card Index. Closeup View. Selective Focus.Global assignments and relocation can have significant tax implications. The letter of understanding should outline the assistance provided, which may include a pre-assignment/relocation orientation with a third-party tax provider, tax return preparation assistance and tax equalization. It should also include details on the employee’s and the company’s responsibilities. The company’s tax provider may also suggest including a tax equalization addendum that outlines the company’s policy to be signed by the employee.

Immigration

The letter of understanding should emphasize the importance of compliance with global immigration laws and should outline the assistance provided by the immigration partner or department. The employee’s responsibilities to provide accurate and timely information and to follow all instructions regarding travel limitations of the host country should be clearly documented. The assignment or relocation cannot begin until required immigration documents are obtained.

Housing and Settling In Assistance

Getting your employee and their family settled into a new residence is crucial because it helps them to return to full productivity quickly. Each employee is unique. Some may need temporary housing while they search for a new residence. Your letter should reflect the level of assistance the company provides.

  • Temporary Housing: Summarize what provisions the company makes for temporary living and for how long.
  • Home Finding Travel: Summarize the assistance the company provides, such as home finding trips. Include the number of trips allowed, the expenses covered and the family members approved.
  • Destination Services: Summarize the services the company provides, which might include home finding assistance, orientation to the new area, contacts with local schools, colleges, medical facilities, etc.
  • Long-Term Housing (Assignments Only): Summarize the housing assistance provided, including monthly housing allowance based on family size and location, method of payment, utilities included and employee responsibilities for maintenance and upkeep.

Ideally, your letter of understanding should focus on the employee and the benefits of the new role while creating a positive impression and enthusiasm for the new opportunity. Make sure to outline the expectations and responsibilities in the new role to avoid any possible misunderstanding. Explain and summarize the relevant points from your global mobility policy, paying particular attention to the five topics discussed above.

Writing an International Letter of Understanding

Topics: global mobility, global assignments, global mobility management, letter of understanding, global mobility policy

Best practices for Writing a Global Assignment Letter Of Understanding

Posted by Amy Mergler on Thu, Jul 12, 2018

reeditor-2015-singapore-flying-high-for-global-mobility_3566Relocating 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

team of successful business people having a meeting in executive sunlit officeYour 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.

Writing an International Letter of Understanding

Topics: global mobility, global assignments, global mobility management, letter of understanding

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