What’s included in a typical expat contract?

Over the years living as an expatriate and making friends within Expater circles, I’ve noticed that a fat pay slip doesn’t always equal the most comprehensive expat deal. Some friends really seems to have sold themselves short, while others have blagged their way into a paradise lifestyle.

So here’s the question – what’s included in an expatriate contract anyway?

Not such a straightforward question.

Ask one expat to the next and you’ll get wildly different answers. Contracts vary from those including personal bodyguards, fancy cars, drivers, cooks and maids as well as private healthcare and education, to a simple one way (economy) flight ticket.

The shifting sands of expat deals

It gets more complicated.

For various reasons, some companies prefer to pay a more generous salary, but exclude any mention of an expat deal.

Why? Well, firstly, individual salaries are generally more confidential within the office, but it’s pretty obvious if you’re using a company car. This means that some savvy managers may prefer to employ an expat on a ‘local’ deal to avoid making the newbie expat the target of jealousy within the workplace. You may be paid well above the local market rate salary, but on paper you’ll be classified as a local.

Secondly, many multinational companies pay different taxes depending on their main headquarters and their employee’s residence. To weave through complicated tax loopholes, it may work out more financially astute for its employees to be based in one particular country than the other. So while your home may be in one country, on paper it could be another.

Finally, after a series of crises worldwide, the expansion of the global workforce, and the decline of various industries from oil to minerals, from print media to many forms of transport, companies have been tightening their purse strings. The expat deals that existed 20 years ago bear no resemblance to most of those of today.

A fair price

So what is a fair deal?

Well, it depends. It’s up to you to negotiate according to your personal worth, the market value and your individual needs.

It makes no sense to accept a deal that’s going to leave you or your family in danger, in financial difficulty, or in a dodgy tax situation. Don’t be mistaken that large multinationals or international organisations always play by the rules. In fact, I know of many large institutions that left their employees out to dry so as to save the pennies.

Firstly, ask yourself what you need to live comfortably in the proposed host country. Do your research. What’s already included in your package and what must you negotiate to make the deal work for you?

Analyzing your essentials

What level of security will you need? A bullet proof car with a bodyguard, an apartment in a safe area of town, or just a front door? As a foreigner you may stand out more, so you might need to err on the side of caution, especially at the beginning of your expat adventure.

What are the local living costs like? How much does it cost to do an average grocery shop? What are average rental costs in a decent area of town like? Are good homes within a reasonable commute to work easy to find?

What about medical care – is the state level of care adequate or will you require fully comprehensive private insurance? Does the proposed medical care include everything, such as emergency care if you need to travel, for you and your family? Will it cover the cost of pregnancy or preexisting conditions? What about medicine prescription charges? And any essential vaccines or medicines whilst you’re there?

How much are flights home to visit family and friends? Even if you think you would be happier in your new country, bear in mind possible emergencies calling you homewards. Are the flights included business or economy? Is this set according to a predefined budget? Remember that as well as a more comfortable journey, business class tickets will allow more date flexibility and a much larger luggage allowance.

How much will it cost to hire a nanny, or send your children to nursery or school? Will your child need to attend a private international school? Or boarding school? Or will a local school suffice? Plan ahead and bear in mind the rising costs of education, as well as one off incorporation and registration fees.

The big move

Is the transportation of your goods included, or how many kilos worth is allowed? Or how big is the container that you will be assigned for your belongings? (We found a 20 foot container adequate as a young couple without too many goods, but as a family with two children and another on the way, we easily filled a 40 foot beast last time we moved). What are you allowed to ship? Many companies exclude the transport of wine cellars and pets. So if you want to bring your beloved Merlot or Milous you may have to stump up the additional costs.

Now ask yourself if you’re going to need local relocation assistance. 99% of the time, I reckon you do. Even in the most familiar of countries it pays to have local contacts on the ground. Until you get settled, you’re might not know or have the time to investigate good handymen, mobile phone companies, internet providers and so forth.

Relocation companies vary hugely, so check beforehand what’s included in their package. On one move, some of our primary tasks included finding a good nursery for our child, getting the tax on our imported car settled and helping me to find a new source of employment – none of these were included within the relocation company’s package and they were unable to help. Meanwhile, here in Chile, our ‘relocation angel’ has not only scoured Santiago to find us an apartment according to very, very specific criteria, she’s gone the extra mile to help me in times of emergency.

Budgeting for the ‘oh crap’ costs

Finally add on to this the unexpected, unplanned costs. The days you need to take off work to coordinate the removal. The time you’ll need to take items to the rubbish tip. The trip back to Ikea because the box of household items including the oh so essential corkscrew has gone missing. The flight tickets you need to pay now until you can claim for them later. The other costs which you could probably charge back to the company except you’ve lost the receipt. The first month of dining out in restaurants and surviving on take aways and the exorbitantly priced local corner shop until you have the time and the energy to scour out better options.

The next step is to consider the going market rate for someone similar in your position. Are you being taken for a ride? Yes, the deal seems worth it to you, but are you undervaluing yourself? What are you worth? Speak to trustworthy colleagues, contacts on LinkedIn. Check reviews of the company and its pay structure on sites such as Glassdoor.com. What kind of hours will you be working? What level of responsibility will you hold?

Also take into consideration the tax rates you’ll be liable for. As aforementioned, you may be liable for tax in the country’s headquaters, rather than the country on your passport or in which you’ll be living.

Not just about the money

Wise was the man who said he’d rather be rich and unhappy than poor and unhappy. But money can’t buy happiness.

Money is not the only deciding factor. Consider how content you and your dependents will feel in your new host country in both the short and the long term. Is the new work role rewarding? Is it a step up on your CV? Or at least step in the right direction? Will your partner and /or children be happy in their new home? How do they feel about the deal?

Weighing it up

I know many friends who live in very dangerous or difficult environments because they love their work over their pay cheques. Any move is a very personal choice and takes into account a whole host of factors. For us, our move to Chile has been very, very tough in parts, but with two small children and another on the way, the lifestyle suits us better than many other countries could possibly offer.

So my advice is to weigh up all the pros and cons. Write them down on paper. Discuss them openly with those affected by the move. It’s impossible to know everything in advance, but do your research as much as possible.

Then go for it, whatever you decide.

Comment on this post

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Connect on Instagram
%d bloggers like this: