Sarah Dennis, Head of International at Towergate Health & Protection says: “Providing a cash lump sum to employees overseas, rather than offering specific benefits, leaves both the employer and the employee open to potentially unforeseen risks.”

There are numerous issues associated with providing employees who are working abroad with a cash lump sum to purchase their own benefits, some of which impact the employer and some impact the employee, and it’s important to be aware of the pitfalls.”. 

Employer impact

Economies of scale

It can be more expensive for an individual to purchase their own healthcare than it is for an employer via a group scheme. So providing individuals with lump sums is likely to work out to be more expensive for the employer. 

Duty of care

Employers have a duty of care to all employees, and arguably especially for employees working abroad. It’s difficult to fulfil a duty of care when only offering a lump sum and leaving an employee to choose their own cover, rather than offering specific support from an approved and expert source.

The talent gap

Health and wellbeing support, and the surrounding employee benefits, are a crucial part of attracting and retaining the right talent, especially for overseas posts. If the employer is purely providing a cash lump sum, then this does not reflect well on them, and may impact the recruitment process and mean that staff are less loyal.

Employee impact

Non-compliance

In some countries, certain employee benefits are mandatory in order for the employee to be eligible for a working visa, such as having PMI in Dubai. If the employee selects their own benefits, they are at risk of not knowing which elements are compulsory, and leave themselves, and their employer, open to non-compliance issues, such as working visas not being given, or being revoked.

Poor choices

An employee is unlikely to know the best ways to spend the money available, and they may not buy any cover at all, or not buy the cover they need. If they fail to buy dental insurance, for example, costs for medical treatment abroad can be astronomical. 

Lack of expertise

Individuals are not experts in health and wellbeing support. A high level of understanding is often required to find the right employee benefits, including international PMI, life assurance, and income protection. This is particularly true of benefits being purchased abroad or to cover international employees. This can be an onerous task for individuals to take on in addition to their day job.

Lack of communication

If an overseas employee purchases their own benefits, then they will not receive employer communications regarding health and wellbeing support, what is available, and how to access it. This communication is vital to support take-up and as a result, utilisation may well be lower. 

Sarah Dennis continues: “International employee benefits is a specialist area and it is best to take expert advice to ensure both the employer and the employee are properly protected. This should not only focus on the needs of the employees, but also on the needs of the business.”