Expatriate Compensation

Education Allowances

Children of expatriates usually attend private schools in the host country. This is partly because of the variable nature of public education throughout the world, and partly because the children of expatriates are not usually fluent in the language of the host country. For example, many families want their children to stay on an educational curriculum that is similar to the one in their home country to ease the repatriation process and not lose valuable years in the educational process.

Companies typically pay for the added expense of private schools since this can be a costly proposition for the expatriate. For many expatriates with children, the benefit of education allowances can make an expatriate assignment more attractive.

For information about schools, please refer to International School Services www.iss.edu and
European Council of International Schools www.ecis.org.

Hardship and Danger Allowances

Not all short- and long-term assignments are in desirable places. Companies typically offer an allowance or bonus to expatriates to relocate to countries where living conditions are difficult or dangerous. These allowances are often needed to encourage employees to take the assignment.

Hardship. The U.S. Department of State maintains a list of hardship posts and the corresponding recommended allowances. The criteria used by the U.S. Department of State is:

• extraordinarily difficult living conditions such as inadequate housing, bad transportation, or difficulty obtaining proper food
• excessive physical hardship such as climate or altitude
• unhealthy conditions such as poor sanitation, disease, or lack of adequate health facilities

Danger pay. A danger pay allowance should be considered when conditions exist that threaten physical harm or pose imminent danger to the health or well-being of an employee. The U.S. Department of State identifies these conditions to include:

• civil insurrection
• civil war
• terrorism
• wartime

The U.S. Department of State provides quarterly reports that indicate differentials for hardship and danger pay.