At That Point
  • home
  • our story
  • our services
  • your resources
  • SA Industry News

Expat pay more complicated than just calculating exchange rate

23/4/2018

0 Comments

 
Picture
Experts trained in how to balance the expectations of international workers with the strategic, financial and practical constraints faced by the employer are in high demand. The driver of this demand is the technology that makes a larger international mobile workforce possible.

“Aligning an expatriate’s reward expectations with company policy is an intricate science,” says Nicol Mullins, Chartered Reward Specialist and Chairperson of the International Mobility Group at the South African Reward Association (SARA).

International assignees must get a fair pay package in return for their willingness to uproot themselves from their local support system. Employers should however not hand over a blank cheque.

If a company pays for staff to take their pets on a foreign assignment, does that include the relocation cost for an employee’s horse? Would a female employee be able to develop her career in Saudi Arabia? Will a country's high tax rate overwhelm the benefits of an otherwise handsome remuneration package? Considerations like these are often overlooked when dealing with expatriates, especially for urgent deployments.

This is where the services of an International Mobility Reward Specialist prove invaluable. According to Nicol, expatriate reward programmes must be based on a comprehensive set of policies for each foreign destination to which employees may be assigned.

“Mobility specialists are businesses’ architects of expatriate reward programmes,” he says. “They are also the custodians of the standard by which all international deployment decisions will be made.”

A Mobility Reward specialist develops the what and how of expatriate remuneration and benefits; the International Mobility Policy and the International Mobility Framework derived from it.

The International Mobility Policy is informed by a large body of tax, immigration, legislation, cultural and other data about selected destinations, gathered and correlated by the mobility specialist. They consider rewards in terms of identified trends, best practices and their organisation's own HR remuneration directives.

“It is because of the complexity of the knowledge required that expatriate reward programmes should be treated differently than local reward calculations,” explains Nicol.

Coordination
While the mobility specialist must have a good knowledge of each subject their policies address, it is impossible to know the intimate details of visas, legislation, tax or lifestyle for every target location. For this, they build and leverage a network of validated and reliable foreign area specialists, like relocation agents, tax advisors and environmental adjustment consultants.

“These service providers are like the pieces on a chessboard,” Nicol explains. “Without a dedicated organising authority like the mobility specialist, companies would struggle to coordinate the efforts and interests of all stakeholders.”

Protecting the investment
Ultimately, an expatriate is deployed to achieve a corporate goal, making their remuneration only part of a larger investment.

Many foreign assignments fail because an accompanying partner is unable to adapt to an unfamiliar lifestyle, culture or surroundings. Another common problem is the lack of a visa for the partner that allows them to pursue fulfilling their own purpose.

“It is a pity when either the rewards or the total investment are devalued or even rendered worthless by unforeseen problems that could have been anticipated,” says Nicol.
 “A mobility specialist will track cases where a successful transition was achieved in a specific environment. They will also be able to identify the best solution to potential problems, ensuring the employer’s objectives are not derailed.”

Bringing order

The greatest advantage of employing an International Mobility Reward Specialist is that they prevent the foreign assignment dynamic from devolving into a chaotic and costly mess.

“No organisation that deploys expatriates is too small to benefit from the order that mobility policies and controls establish,” concludes Nicol.

ENDS

MEDIA CONTACT:
Juanita Vorster, 079 523 8374, [email protected], www.atthatpoint.co.za  

For more information on SARA please visit:

Website: www.sara.co.za  
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association
0 Comments

SARS’ new rule: Is travel compensation still worth the chase?

10/4/2018

2 Comments

 
Picture
Which is better - company car or travel allowance? It’s a question that regularly plagues both employers and employees. “In light of new SARS requirements for travel reimbursements, it needs to be carefully revisited,” says Jerry Botha, Master Reward Specialist and Executive Committee member of the South African Reward Association (SARA).

Important changes
Botha is referring to the removal of the 12,000 km limit that was previously applied to reimbursements. If travel exceeded this distance was reimbursed at a per kilometer rate higher than that prescribed by SARS, or other travel allowance was paid, the total amount needed to be reflected under code 3702. However, reimbursement paid at or below the prescribed rate was declared under code 3703. Either way, PAYE was not deducted from the employee’s income.

From 1st March 2018, if an employer reimburses staff at a per kilometer rate higher than that prescribed by SARS, they have to split any reimbursement into two components. The portion that falls within SARS’ rate must be declared using code 3702 while the portion above that rate must be reflected under a new code, 3722. If the employer also pays a fixed travel allowance, this is declared separately with code 3701 as usual.

Under this new system, the excess reimbursed portion is subject to PAYE just like a fixed travel allowance or fuel, garage and maintenance cards. Reimbursement at or below the prescribed rate is reported using code 3702 as before.

“More important than the new code and method of calculation is the removal of the 12,000 km limit and the introduction of PAYE on the excess portion,” says Botha. “These changes affect the reward dynamics significantly.”

Employers should therefore review the new rule to ensure their workers are enjoying the best tax and cost benefits, especially those who reimburse certain segments of personnel well over the prescribed rate.

It may be that a lower reimbursement rate puts more money into an employee’s pocket, as there is no PAYE thereon and the reimbursement does also not have to be substantiated by a logbook on filing of the employee personal income tax return.  

Either way, the compliance around the new rules makes it important for all employers to enforce compulsory employee logbooks, even where the employee does not claim on a tax return. We know employer PAYE audits is a SARS focus area and employee logbooks is critical for the employer to evidence tax compliance.

Is it time to offer a company car?
In seeking travel compensation that is fair and rewarding to a worker, it is a good opportunity to decide if they would benefit from a company car. “As a rule of thumb,” advises Botha, “if more than 60% to 65% of an employee’s travel is for business purposes, they are losing out by using their personal vehicle.”

Typically, fuel only makes up 50% of the total cost of running a car. Additional expenses, like maintenance and insurance, or depreciation on the vehicle are not covered by travel allowances, reimbursements or fuel cards. A highly mobile employee may also have to bear the early replacement costs of their private car.

The vehicle buying habits of South African employers and employees remain routed in emotion and decisions are not made based on running the numbers. This causes the employer to be burdened with too high fleet costs, whilst the employee is mostly significantly out of pocket, often only realising the mistake when they want to trade in their vehicle.

According to Botha, there remains a sweet spot for travel reimbursement, reimbursement with travel allowance and company vehicles. The employers who care about the cost and staff allows all three, as part of their Total Package approach. Especially for employees on high business travel, the employee is severely disadvantaged where not on a company vehicle. “If an employer does the calculation correctly,” says Botha, “they will see that a company vehicle is the best reward strategy in this case.”

Botha advises organisations to engage their reward specialist to ensure their employees receive the appropriate package for their needs.

ENDS

MEDIA CONTACT: Juanita Vorster, 079 523 8374, [email protected], www.atthatpoint.co.za  

For more information on SARA please visit:
Website: www.sara.co.za  
Twitter: @SA_reward
LinkedIn: South African Reward Association
Facebook: SARA – South African Reward Association
2 Comments
    Welcome to the SARA newsroom. 

    Archives

    May 2025
    March 2025
    January 2025
    December 2024
    November 2024
    October 2024
    August 2024
    July 2024
    March 2023
    February 2023
    October 2022
    August 2022
    July 2022
    May 2022
    April 2022
    March 2022
    January 2022
    November 2021
    October 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    November 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    January 2019
    December 2018
    November 2018
    October 2018
    August 2018
    May 2018
    April 2018
    March 2018
    February 2018
    December 2017
    November 2017
    October 2017
    August 2017
    July 2017
    June 2017
    April 2017
    March 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015

    Welcome to the South African Reward Association newsroom.

    Categories

    All
    2016 SARA Reward Awards
    2016 South African Reward Association Conference
    2021 SARA Reward Awards
    2024 SARA Reward Awards
    4IR
    ABSA
    Agile Remuneration
    AI
    André Daniels
    Anglo AMerican
    Annual Salary Increase
    Artificial Intelligence
    Benefits
    Board
    Bridgestone
    Career
    Career Growth
    Carmen Arico
    CCMA
    Chris Blair
    Companies Amendment Act 16 Of 2024
    Compensation
    Corruption
    Covid 19
    Covid-19
    Cyber-attacks
    Cybersecurity
    Deon Smit
    Digital
    Disruption
    Diverste Needs
    Dr Mark Bussin
    Dr Ronel Nienaber
    Economic Growth
    Economy
    Education
    Employee
    Employee Empowerment
    Employee Engagement
    Employee Experience Management
    Employee Performance Management
    Employees
    Employers
    Employment Equity Act
    Equal-pay-for-work-of-equal-value
    Equity
    Executive Bonuses
    Executive Pay
    Executive Remuneration
    Fair Pay
    Female Employees
    Financial And Non Financial Rewards
    Financial And Non-financial Rewards
    Fixed Pay
    Flexibility
    FNB
    Four-day Work Week
    GDP
    Gender Inequality
    Gender Pay Gap
    Generation Z
    Gen Z
    Global Workforce
    Goldfields
    Governance
    Holistic Total Awards
    HR
    Human Recources
    Incentives
    Inequality
    Inflation
    International Mobility
    Janine O’Riley
    Jerry Botha
    Job Retention
    Job Security
    Job Seekers
    Kevan Hawley
    Khokhela Consulting
    Kim Lombard
    King IV
    Kirk Kruger
    Labour Relations Act
    Laurence Grubb
    Lindiwe Sebesho
    Living Wage
    Marie Claire Mclachlan
    Marie-Claire Mclachlan
    Martin Hopkins
    Mental Wellness
    Millennials
    Minimum Wage
    Morag Phillips
    Mr Price Group
    MTN
    Muhammed Goolab
    MultiChoice
    Multi-generational Workforce
    Nazlie Samodien
    Negotiating Salary
    Nicol Mullins
    Openserve
    Parental Leave
    Pay Discrepancies
    Pay Gap
    Peet Kruger
    Performance-based Remuneration
    Performance Management
    Personal Development
    PwC
    RemCo
    Remote Working
    Remuneration
    Remuneration Policies
    Remuneration Resolutions
    Remuneration Voting
    Reward Awards
    Rewards
    Reward Systems
    Salary
    Salary Increase
    Salary Negotiation
    SARA
    SARA Conference 2015
    SARA Conference 2020
    Shareholder Votes
    Skill-based Pay
    Slilled
    South African Reward Association
    Standard Bank
    Talent
    Technology
    Termination Pay
    The South African Reserve Bank
    Total Reward Internship Programme
    Total Reward Package
    Total Rewards Model
    Total Reward Strategy
    UIF
    Vaccination
    Variable Pay
    Wage Freeze
    Wage Negotiations
    WFH
    Women In Business
    Women's Day
    Women's Month 2024
    Workers
    Workforce
    WorldatWork
    World Of Work
    Yolanda Sedlmaier
    Zondo Report
    Zuma

    RSS Feed

CONTACT US

office [at] atthatpoint [dot] co [dot] za
© COPYRIGHT 2025
ALL RIGHTS RESERVED
  • home
  • our story
  • our services
  • your resources
  • SA Industry News