Employers with overseas staff risk invalidated work visas as 83 percent of employers give people a cash lump sum to choose their own benefits, Towergate Health and Protection has warned.
Research from the health and wellbeing broker found that more than four fifths of employers with overseas staff offer benefits via a cash lump. But this is rarely the best option, it said, as it can create issues of non-compliance.
Employee benefits are mandatory in some countries and having them in place is linked to eligibility for a work visa. For example in Dubai, overseas workers must have private medical insurance (PMI).
But when an employee chooses their own benefits, they may not know which benefits are compulsory and failure to comply could mean their work visa is denied or revoked.
Sarah Dennis, head of international at Towergate Health and Protection, said: “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.”
As well as invalidated visas, when employees purchase their own benefits it can work out more expensive for the employer. Individuals buying their own healthcare miss out on the economies of scale that an employer can access via a group scheme.
An employer’s duty of care is also harder to fulfil when people are left to arrange their own benefits because they may not receive approved, expert advice. This can lead to employees not buying enough cover or failing to buy any at all. The broker said that if they don’t buy dental insurance, for example, costs for medical treatment abroad can be huge.
Individuals are not experts in health and wellbeing support, Towergate said, adding that a high level of understanding is required to find the right international PMI, life assurance, and income protection. It emphasised that this is particularly true of benefits being bought abroad or to cover international employees, not to mention that it is “an onerous task for individuals to take on in addition to their day job”.
Offering lump sums also negates the opportunity to engage overseas talent through a company’s employee benefits, which can have detrimental effects on attracting and retaining the best people. The broker said that when an employer provides just a cash lump sum, it doesn’t reflect well on them and could impact the recruitment process and staff loyalty.
Providing specific benefits offers a communication point of contact that helps people understand what is available, how to access it and nudges them to use it.
Dennis added: “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.”
