BUS FPX 3040 Assessment 4 Compensation and Benefits

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Capella University

BUS-FPX3040 Fundamentals of Human Resource Management

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Date

Base Pay

Base pay, also known as salary, constitutes the taxable income disbursed to employees according to a regular pay schedule. The monetary value of base pay is individually determined by benchmarking the standard pay for a specific position across the broader economy, particularly within the respective industry of the business. Java Corp., as an established entity, retains data concerning employees’ base pay, pay increments, and comparative data sourced from industry research such as CompAnalyst Market Data by Salary.com, as well as publicly available information like that provided by the Bureau of Labor Statistics (Salary.com, 2018; Bureau of Labor Statistics, 2021).

In the United Kingdom, similar data is accessible through the Office for National Statistics (Office for National Statistics, 2022). By juxtaposing the current base pay structure for Java Corp. executives in the U.S. with industry norms for compensation in the U.K., factoring in prospective employee qualifications, experience, considering the cost of living differential between countries, and accommodating Java Corp.’s preference for highly qualified candidates, an appropriate range of base pay for the position can be determined.

Additional Pay Considerations

Additional pay considerations are commonly extended to expatriate employees to incentivize and compensate them for the challenging task of relocating themselves and their families to an unfamiliar cultural milieu. While relocation within the United States may entail moving allowances, bonuses, company housing, and various other forms of additional compensation, it is generally acknowledged that domestic relocation does not present the same level of hardship as foreign relocation. Given the substantial expenses and time commitments involved in expatriating an employee, companies seek to ensure that such individuals are highly motivated to remain in their positions for the requisite duration, whether for a contracted period or indefinitely.

These additional pay considerations may include a foreign service premium, incentive pay, hardship allowance, mobility premium, among others, all structured to augment their total compensation with the understanding that expatriation is challenging and merits compensation. LawInsider.com provides sample foreign service premium clauses that may be incorporated into employee contracts, illustrating the variability of such clauses, which may include stipulations regarding minimum time served in the host country, an expiry date for the foreign service premium, or other mutually agreed-upon conditional clauses (LawInsider.com, 2013).

Legally Required Benefits & Standard Offerings

Benefits, which encompass healthcare plans, life and disability insurance, housing and transportation allowances, among others, are crucial beyond base pay and bonuses. Inadequate benefit structures can impose significant additional costs on employees, while non-compliance with government-mandated benefits can lead to lawsuits, fines, and other legal ramifications. Ensuring compliance with benefits, taxation, and regulations is particularly intricate for American companies operating overseas. While U.S. mandated benefits such as FMLA do not apply to expatriate employees, regulations such as ADA, ADEA, and Title VII typically do (Mohl, 2019). U.S. citizens are obligated to pay income, Social Security, and FICA taxes, even if they are permanent residents of foreign countries, although certain countries may offer tax relief to offset this burden. However, all government-mandated benefits of the host country are applicable to employees of foreign companies licensed to operate within that country. Legal counsel is advisable to ensure proper compliance with required benefits in the U.K., as outlined by Thomson Reuters partner Paul McGrath (2020).

Additional Benefits for Expatriate Employees

Companies can offer a diverse array of additional benefits to incentivize and enhance conditions for expatriate employees. These may include relocation and/or housing allowances, school funding for children, cost-of-living adjustments, job placement assistance for spouses, language and/or cultural training, and repatriation compensation for when the employee returns to their country of origin (Morris, 2020). Depending on the government-mandated benefits of the host country, it may be imperative for companies to provide expanded benefits for expatriate employees to ensure access to quality healthcare, particularly in countries with less developed healthcare systems.

References

Bureau of Labor Statistics. (2021, June 10). Overview of BLS Statistics on Pay and Benefits: U.S. Bureau of Labor Statistics. Bls.gov. https://www.bls.gov/bls/wages.htm

Equal Employment Opportunity Commission. (2003, April 23). Employee Rights When Working for Multinational Employers | U.S. Equal Employment Opportunity Commission. Eeoc.gov. https://www.eeoc.gov/laws/guidance/employee-rights-when-working-multinational-employers

LawInsider.com. (2013). Foreign Service Premium Sample Clauses | Law Insider. Law Insider; Law Insider. https://www.lawinsider.com/clause/foreignservice-premium

McGrath, P. (2020). Employment and employee benefits in the UK: overview | Practical Law. Practical Law. https://uk.practicallaw.thomsonreuters.com/7-503- 4973?transitionType=Default&contextData=(sc.Default)&firstPage=true

BUS FPX 3040 Assessment 4 Compensation and Benefits

Mohl, D. (2019). The FMLA, ADA and Overseas Employees. The National Law Review. https://www.natlawreview.com/article/fmla-ada-and-overseas-employees

Morris, A. (2020). Expat Package (What Do Employees Expect?) | DavidsonMorris. DavidsonMorris. https://www.davidsonmorris.com/expatpackage/

Office for National Statistics. (2022). People in work – Office for National Statistics. Ons.gov.uk. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork

Salary.com. (2018, May 21). CompAnalyst Market Data. Salary.com; Salary.com. https://www.salary.com/business/compensation-data/market-data/

BUS FPX 3040 Assessment 4 Compensation and Benefits