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Compensation for International Employees 

2.4      Compensation for International (Non-US-Based) Employees

CARE USA uses the balance sheet approach in its overseas compensation package for international employees.  This approach anchors international staff salaries to CARE USA headquarters in Atlanta for the purpose of base pay.  The balance sheet approach also maintains equity in total pay through allowances and deductions to base pay.  This process allows CARE USA to attempt to achieve global compensation equity for staff in locations with varying costs by setting pay elements similar to what you would experience living in Atlanta.

There are three fundamental components of the balance sheet approach:

  • Consistent salary administration regardless of geographical location.  Salary ranges and pay policies are the same for each staff member whose position is within a given grade whether internationally- or US-based.  Salaries for CARE USA international staff are set according to a global scale for “non-profit” as well as “all employers” (both for- and non-profit organizations).
  • Equalization components to offset differences between US and overseas costs and the difference in Social Security benefits for US citizens and permanent residents and non-US citizens.  CARE USA international staff are subject to hypothetical taxes and housing deductions, but are at least partially sheltered from actual tax and housing costs. 
  • Incentives to live and work in hardship locations.

2.4.1          Allowances

CARE USA has established the following allowances for international employees living outside of the US.  These allowances are applicable for regular full-time and regular part-time employees only, and may be dependent upon actual living location.

2.4.1.1      Cost of Living Allowance (COLA)

The Cost-of-living Allowance (COLA) is designed to protect an expatriate against any additional costs incurred while purchasing goods and services in a foreign location.  The market basket of goods and services included in a COLA includes items from the following categories: food consumed at home; household supplies; personal care; clothing; medical care; telephone; household furnishings;  transportation; recreation and entertainment; and food away from home.

 Eligibility

International regular and part time staff are eligible to receive COLA.  This allowance is not available to:

·         Short-term staff

·         Staff on TDY assignments

·         Staff working in their country of citizenship

How COLA is Calculated

COLA is calculated based upon the employee’s living location, number of dependents at the post of assignment and CARE’s spendable income tables (not gross annual wages).  If eligible, COLA is earned and paid on your monthly payroll and is not calculated as part of your base salary. This allowance is included as a separate line item in your monthly pay and is considered additional income for the purpose of calculating applicable taxes.  Updates to COLA will be reviewed annually and changes will be made at CARE’s discretion.

CARE partners with a reputable vendor that obtains cost of living data by conducting pricing surveys worldwide.   Click here for more information.

The COLA will typically increase when the following conditions are present:

·         There is higher inflation at post of assignment than in Atlanta, GA (meaning that the cost of goods and services at the foreign location increases more rapidly than in Atlanta GA ), and/or

·         There has been a devaluation of currency in Atlanta, GA (meaning that a larger amount of currency at post of assignment is needed to purchase the same amount of foreign currency).

The COLA will typically decrease when the following conditions are present:

·         There is higher inflation at headquarters (Atlanta, GA) than at the post of assignment (meaning that the cost of goods and services in Atlanta, GA increases more rapidly than at the foreign location), and/or

·         There has been a devaluation of foreign currency (meaning that a smaller amount of currency in Atlanta, GA is needed to purchase the same amount of foreign currency).

If you and your spouse or domestic partner are both employed by CARE and living in the same location, the total of your gross base salaries will be used to determine the cost of living allowance.  

2.4.1.2      Education Allowance

CARE’s education allowance is provided to help mitigate the cost of educational services normally free of charge in U.S. public schools. The employee has the freedom of choice to send his/her children to any school, subject to the conditions of this policy.  The employee will be responsible for any costs in excess of the education allowance.

Eligibility 

International regular and part time staff are eligible to receive Education allowance for their eligible dependents.  Staff and dependents listed below are not eligible for this allowance.

·         Short-term staff

·        Staff on TDY assignments

·         Staff assigned to unaccompanied posts.

·         Staff working in their country of citizenship

·         Dependents who remain in the staff member's home of record

 

 Allowance Detail 

CARE USA contributes to the cost of tuition and books for eligible dependents from kindergarten through Grade 12 for eligible employees. Kindergarten, except for a special needs child, means a one school-year program immediately preceding Grade 1 (or equivalent) and does not include the nursery/ pre-school level. School year typically refers to a year beginning in August or September through May or June. 

An assignment location may or may not have adequate schools at post.  To meet the criteria for “adequate” a school must have an internationally recognized accreditation.  The Country Director, in consultation with the Regional Director and the Security Department, has sole responsibility and authority for designating adequate schools in the respective locationto and/or from school.

 

For locations with adequate schooling: CARE USA will pay ninety percent (90%) of the cost of tuition and books for each eligible dependent(s), and the employee is responsible for the remaining ten percent (10%).  If an employee chooses to send a dependent to a school not at post despite the availability of adequate schools at post, CARE will neither pay nor be responsible for any cost of schooling. 

 

For locations without adequate schooling: When the Country Director determines that schools in the location of assignment are deemed inadequate, the Country Director will designate an alternative institution(s) within the region.  In this situation, CARE will share the cost of tuition, books and boarding up to ninety percent (90%).  The employee is responsible for the remaining ten percent (10%).  If an employee chooses to send an Eligible Dependent to a school other than the designated alternative institution(s), CARE will neither pay nor be responsible for any cost of schooling.

 

Home Schooling: If an employee decides to home school eligible dependents at post, CARE will pay up to ninety percent (90%) and employee ten percent (10%)of the cost of the following:

·         Books related to level of education

·         Eligible teaching tools and supplies (click here for a sample list)

·         Tutors (excludes parents)

 

Change of Accompanied Status: If a post of assignment changes from accompanied to unaccompanied, an employee will be required to relocate his/her dependent(s) that are at post.  In these situations, CARE will continue to help mitigate the cost of education for up to 1 year after effective date of the change to unaccompanied.  CARE will share the cost of tuition, books and boarding up to ninety percent (90%) at an institution within the region that the Country Director has designated as an adequate alternative.  The employee is responsible for the remaining ten percent (10%).  If an employee chooses to send an Eligible Dependent to a school other than the designated alternative institution(s), CARE will neither pay nor be responsible for any cost of schooling

  

Excludable Costs

CARE USA will not reimburse the following expenses:

  • Dependent pre-school, day care, nursery school fees, post secondary preparatory, college or university.

  • Extracurricular activities such as riding, dancing lessons, music lessons, tutors, school trips and sports activities, etc.

  • Computers, printers and electronic equipment

  • Meals, snacks, and boarding costs (with the exception of stipulations given above)

  • Miscellaneous costs like insurance, uniforms, and spending money, etc

  • Transportation to and/or from school

 

Process 

1.      Employee will provide copy of school issued invoice to Country Office (CO) representative

2.   CO Representative will issue payment in the amount of 90% of eligible cost(s) directly to the school/institution3.

3.   Employee will be responsible for issuing the remainder of the cost to the school/institution directly (no salary advances available)

4.  CO Representative will record payment issued on behalf of the employee and report it on the quarterly IIR report

 

2.4.1.3      Education Travel Subsidy and Shipping Allowance

CARE USA provides a travel subsidy and a shipping allowance for child dependents attending college or an approved vocational or technical school outside your country of assignment. 

Travel Subsidy

You are eligible for up to three round-trip air tickets per dependent, less a $400 deductible for each round-trip fare.  In addition, not more than one trip may be taken in a twelve-month period.  These tickets will be reimbursed by your country office and are considered taxable income for US citizens and permanent residents.

Shipping Allowance

When a school-bound dependent leaves your country of assignment to take up residence in a different location, the student is entitled to a one-time personal effects surface shipment allowance up to 500 lbs./227 kgs. 

The shipment will be made from your country assignment to either the school or other address designated by you.  The shipment cannot be divided and sent to more than one location.  The dependent may take advantage of this allowance only one time unless:

  • You are transferred, resulting in a change of primary or secondary schools for the dependent, in which case a second allowance is granted.
  • You are terminated and consequently relocated.
  • The dependent graduates from a primary or secondary school. 

If any of these situations occur, a second allowance is permitted.  If the full weight allotment is not used for any single shipment, it is forfeited. 

This policy does not apply to a student moving from one university to another – only from a primary school to a secondary school or from secondary school to college.

2.4.1.4      Hardship Allowance

CARE USA provides a hardship allowance to employees working in areas where they may confront a variety of difficulties, such as a lack of security, no educational facilities, food shortages, etc. The Hardship Allowance aims to compensate staff for difficult living conditions at post of assignment. Although each location has a hardship rating, not all locations will receive Hardship Allowance.  

Eligibility 

International regular and part time staff on assignment in a post in cateogries C, D or E are leigible to receive Hardship Allowance.  This allowance is not available to:

• Short-term staff  

• Staff on TDY assignments

• Staff working in their country of citizenship

Hardship Ratings 

Hardship ratings or categories asses the overall quality of life at a post of assignment. In determining the degree of hardship, consideration is given to local conditions of safety and security, health care, education, housing, climate, isolation and the availability of the basic amenities of life that result in a less than acceptable standard of living for staff and their families. Assignment locations are categorized on a scale of difficulty from A to E with A being the least difficult and E the most difficult. Unaccompanied posts are normally assigned a rating of E.

If an employee transfers to a location with a different hardship rating, any allowance changes will take effect in the month following the official transfer date. Hardship Allowance is reviewed on an annual basis but may also change on an ad-hoc basis due to extenuating circumstances. Updates to ratings are made at CARE’s discretion.

Designated Hardship Ratings & Allowances 

There are 5 hardship ratings A – E. All locations are assigned into one of these five ratings. Hardship allowance can be monetary or in the form of leave days.

 

Category

Annual Hardship Leave

Annual Hardship Allowance

 

A

 

0 days

 

$0

 

B

 

0 days

 

$0

 

C

 

5 days

 

$0

 

D

 

10 days

 

$4,000

 

E

 

10 days

 

$6,500

 

Hardship leave days are given to locations assigned a rating of C, D or E. This is in addition to bank of days and may not be carried over from one year to the next. They are accrued on a quarterly basis and an employee must be actively employed for at least fifteen (15) business days in a quarter to receive credit for that quarter. Hardship leave days will not be paid out upon separation.

Hardship monetary allowance is only available in locations with a rating of D or E. If eligible, Hardship Allowance is earned and paid on your monthly payroll. This allowance is included as a separate line item in your monthly pay and is considered additional income for the purpose of calculating applicable taxes.

• Locations assigned a rating of A or B do not receive any Hardship Allowance.

If eligible, Hardship allowance is earned and paid monthly and is not calculated as part of your base salary.  This allowance is included as a separate line item in your monthly pay and is considered additional income for the purpose of calculating applicable taxes.  It is the sole responsibility of the Country Office to track hardship leave balances and to accrue the expense at the end of each quarter for leave accrued but not taken.

2.4.1.5      Housing and Quarters Allowance

Housing Allowances are intended to subsidize the cost of housing rent and utilities while in the country of assignment.  CARE partners with a third party vendor that obtains the housing rental allowance data by conducting surveys worldwide and providing market housing rental cost by location.  The information/tables used to determine the rental housing caps is reviewed to ensure the rental housing cap limits reflects the current market cost of rental of housing.  The rental housing allowance tables are used to determine the maximum amount of rental housing costs CARE will pay on the behalf of the employee.  CARE will pay up to the standards provided by the vendor.

The allowance will be effective when the employee starts incurring incurring the housing charges, not in advance.   Monthly rent and utilities are paid directly by your country office, and housing contracts should be made in the name of CARE.  Payments will be administered by the Country Office up to the rental housing cap set for the location and reasonable cost of utilities.  Employees may choose to live in an accommodation that is more expensive than the approved allowance but must consider that they will be personally responsible for any cost in excess of the allowance.  The allowance is non-cash earning and is considered income for the purpose of calculating applicable taxes.  It is the sole responsibility of the Country Office to track all cost paid on employee’s behalf and to report it to the HQ Finance Department on the Income Information Report (IIR).  While you are on approved travel (conferences, temporary assignments, annual leave, etc), CARE USA will continue to pay the full housing allowance in the country of assignment as long as the residence is maintained. 

For staff members assigned to designated “unaccompanied” locations and who have eligible dependents, CARE USA will waive the hypothetical housing deduction to help mitigate the cost of maintaining two homes.

Eligibility

International regular and part time staff are eligible to receive Housing/Quarters Allowance.  This allowance is not available to:

·         Staff staying in shared housing

·         Short term contracts

·         Staff on TDY assignments

·         Staff working in their country of citizenship (and/or whose spouse or partner owns a house at post of assignment)

Excludable Costs 

The following are excluded from the policy and CARE will not pay for the cost of:

·         Domestic help – maids, cooks, gardeners, etc…

·         Repairs and maintenance

·         Furniture (unless already provided)

Amounts received under housing allowances are considered non-cash earnings that are considered income for the purpose of calculating applicable taxes.

2.4.1.6      International Allowance

The international allowance permits you, when working outside your country of origin, to visit your home come country on an annual basis.  This allowance is a cash allowance paid monthly to cover the cost of an annual round-trip airplane ticket for your and your approved dependents living with you, from the most accessible international airport in-country to the airport closest to the your home of record. 

2.4.1.7      Settling-In Allowance

A settling in allowance of $750 with no dependents or $1,500 with dependents will be paid to you upon arrival in the country of assignment.  This amount will be paid by your country office and is considered taxable income for US citizens and permanent residents.

2.4.1.8      Social Security and Medicare (FICA) Equivalent Program

For US citizens and permanent residents, CARE makes a contribution to the United States social security and federal health insurance programs.  To equalize this benefit for non-US citizens/permanent residents, CARE USA will pay this same benefit to you via your monthly paycheck.  This enables you to contribute to your own national social security plan while living abroad, if you so choose.

2.4.1.9      Additional Personal Effects Shipment

Every two years, international staff members who are not being reassigned during their leave period and who will return to their ongoing assignments may airfreight to their posts up to 150 lbs/68 kgs., (single) or 244 lbs./102 kgs., (with dependents), of miscellaneous personal effects purchased abroad.  This can also be in the form of excess baggage provided the cost does not exceed the airfreight cost.  The cost of the airfreight is based on costs from the home of record to post.  You will be responsible for any costs in excess of the approved maximum as well as any import duties.  Requests for shipments should be submitted to your country director for review and approval.  These amounts are considered taxable income and must be reported to CARE USA’s payroll department.

2.4.1.10   Travel Allowance for Dependents Not at Post

If you have approved dependents who do not accompany you to post, you may be eligible for additional tickets for your dependents to visit you, or for you to visit them.  This allowance is available for employees posted to locations that are considered "unaccompanied" due to the in-country situation and for employees who choose to leave their approved dependents at their home of record for whatever reason.

CARE will provide, annually, two additional round trip tickets for you to your home of record, to be utilized either by you or your dependents not at post.  This also will provide for visits at the point of your choosing, provided the cost does not exceed the post-to-home of record cost.  CARE will reimburse expenses based upon the cost of a round-trip economy ticket from post to the employee's home of record.  Unused visits will not be paid out at year-end or when you separate from CARE.

Dependents covered by the policy include individuals currently covered under your CARE-sponsored insurance benefits and individuals for whom you can demonstrate dependent status, through, for example, tax statements or a court order showing that you have a legal financial obligation to the dependent.  (Financial dependency does not include alimony).  Dependent children currently covered under the Educational and Travel Subsidy policy are not covered by this policy.

Reimbursements will be made directly to the employee upon submission of a Travel Expense Report (TER) to the country/regional office or unit, and are considered taxable income.

2.4.2          Deductions

2.4.2.1      Federal Income Taxes and Social Security (US Citizens/Permanent Residents Only)

CARE USA is required to withhold, report or levy federal income taxes and social security deductions all US citizens and permanent residents working in CARE USA’s country offices.  International employees (US citizens including dual citizens, and permanent residents) may be exempted from all or a portion of US Federal income taxes for services performed outside of the US.  US citizens and permanent residents are encouraged to consult with a tax advisor and to review IRS Publication 54 for details on taxation.  Non-US citizens/permanent residents are responsible for understanding the laws in their home countries.

Federal Insurance Contributions Act (FICA – Social Security) and Federal Health Insurance (FHI - Medicare) are levied on employees who are US citizens or permanent residents working overseas.  CARE USA withholds and deposits your part of these taxes and pays a matching amount into your Social Security and Medicare accounts with the federal government.  Each of these taxes is reported separately on your pay statements.

Wages subject to FICA and FHI taxes include, but are not limited to:  earnings; cost of living adjustments (COLA); international allowances; moving expenses; annual leave payments; and imputed income on CARE USA-paid life insurance. 

2.4.2.2      Hypothetical Housing & Tax Deductions

A hypothetical amount is deducted from wages of international employees to maintain equity with employees in Atlanta who are required to pay income taxes to the US government and to pay for their own housing. 

Annual leave is subject to the hypothetical housing and tax (H&T) deduction.  When employees are on annual leave the H&T deduction continues.  If you terminate employment with CARE USA and your final payment includes annual leave, it is also subject to the H&T deduction. 

Hypothetical Housing Deduction

A hypothetical amount for housing will be deducted from each regular international employee's gross monthly wage in order to:  a) equalize US-based and overseas net pay; and b) mitigate excessively high housing costs in some countries. 

The housing deduction amount is based on a survey of Atlanta housing norms, and takes into account your gross monthly wage and the number of dependents at post.  Gross monthly wage includes regular pay, retroactive earnings and any annual leave, but does not include overbase adjustments.  If you own your own home in the country of assignment, CARE USA will waive the hypothetical housing deduction; but you are responsible for all associated costs such as electricity, water, security, etc.  If you do not own a home and the deduction is taken, CARE USA will cover these costs. 

If you and your spouse or domestic partner are both employed by CARE and living in the same location, CARE will assess the housing deduction based on the higher paid employee.

CARE USA will waive the hypothetical housing deduction if the country/regional director believes suitable single-family housing is neither available nor provided by CARE in the location of assignment.

Hypothetical Tax Deduction

A hypothetical tax deduction ensures that you experience a tax obligation similar to what you would incur if living in the United States.  A hypothetical amount for income tax will be deducted from each regular international employee's gross monthly wage in order to equalize US-based and overseas net pay. 

The tax deduction amount takes into account your gross monthly wage and the number of dependents at post.  Gross monthly wage includes regular pay, retroactive earnings and any annual leave, but does not include overbase adjustments. 

If you and your spouse or domestic partner are both employed by CARE and living in the same location, CARE will assess the hypothetical tax deduction based on the combined salaries of both employees.

If you are assessed taxes in either your home country or your country of assignment, you may be eligible for income tax relief (see Additional Benefits Section 3.3.12), up to the amount of your hypothetical tax deduction.

2.4.2.3      Vehicle Deduction

International employees who are provided with a vehicle to transport them to and from work are subject to having a vehicle deduction taken from their gross pay.  This minimal charge covers the cost of gasoline and repairs to the vehicle.  In addition, the IRS requires that CARE USA calculate the imputed income on the vehicle use of US citizens and permanent residents, and charge mileage on a certain portion of the personal use of the vehicle.  CARE vehicles may only be used by authorized drivers – spouses, domestic partners or other dependents must be authorized by the relevant country office or regional management unit.  Staff who can establish they do not use a CARE provided vehicle for travel to and from work or for any personal travel may apply for a waiver of this tax.  Click here for the full policy or contact the HR Service Center.

2.4.2.4      Home Country Payroll Tax

Staff members on assignment in their home country may be subject to payroll tax withholding.  CARE USA will comply with all requirements for employers in a country in which we operate.