No longer simply an ‘alternative’ assignment type, short-term international assignments are evolving to become an essential means of moving talent for a wide range of purposes, especially for project work, career development, or to overcome some of the challenges that come with long-term assignments.
Employees on short-term assignments normally retain their home compensation and benefits plans and continue to be paid through their usual payroll. However, practice varies on how to compensate these employees for living costs incurred during the assignment. In ECA’s last survey on short-term assignments, most participating companies reported providing a cash allowance to cover all daily expenditure in the host country, although a sizeable minority reported that they instead compensate for the difference in living costs between the home and host countries by providing a cost of living adjustment (COLA).
Which approach should you apply? Providing COLA to short-term assignees may work in some cases and is generally the more cost-effective option. However, global mobility teams may face pushback, or even low assignment uptake, if remuneration falls short of expectations (assignees whose families remain at home, for example, need to cover living costs in two countries). Allowances designed to cover essentials in full, such as those produced by ECA’s Short-term Allowance Calculator, can overcome these issues and give companies an equitable, consistent and defensible approach to apply for all assignees.
Below is a guide to some of the key differences between short-term allowances and COLAs:
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Our Short-term Assignments Survey, which is now open, looks at how leading global organisations pay, manage and track their employees on short-term assignments. Participants receive a FREE copy of the results, enabling them to compare their approach with best practice in the industry - take part now to receive your free copy!
The allowances produced by ECA's Short-term Allowance Calculator cover the costs of day-to-day essentials in the host location more cost-effectively than per diems, making them ideal for assignments of up to one year in length. A choice of regional bases enables you to create consistent allowances in every host location, whatever the nationality of the assignee. Find out more about the calculator or request a demo.