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.
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.
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.
International regular and part time staff are eligible to receive COLA. This allowance is not available to:
· Short-term staff
· Staff on TDY assignments
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.
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.
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
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 location.
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
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
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
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.
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.
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.
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.
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 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.
Annual Hardship Leave
Annual Hardship Allowance
• 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.
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.
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)
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.
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.
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.
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.
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.
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.
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.
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.
It is CARE’s policy not to provide staff with CARE vehicles unless approved by Regional Director in accordance with the Safety & Security standards and operating environment.
In Country Offices where CARE vehicles are approved for personal usage, CARE will comply with United States (US) tax laws that require employees to report personal use of company vehicles as additional income on tax returns and covers the personal use of all vehicles owned/leased by CARE and or/donor funding. CARE’s vehicle policy only applies to CARE vehicles – cars and motorcycles. Public transportation - buses or taxis, and/or individually owned cars are not considered under this policy.
If use of a CARE vehicle is approved in a respective Country Office for personal use:
1. Monthly usage fee
CARE will deduct a sum of $65.00 USD from the monthly paycheck of each CARE USA employee who drives a CARE vehicle for personal use and $35.00 USD for CARE USA employees who drive a motorcycle for personal use. This is to offset gas and maintenance expenses.
2. Imputed Income
For US Citizens/permanent residents, CARE USA is also required to show one of the following amounts of imputed income per month.
• $135.00 of imputed income per month for use of a CARE vehicle (car or truck).
• $35.00 of imputed income per month for use of a CARE motorcycle.
Please note that this policy does not give any overseas employee an implied right to access of a CARE vehicle for personal usage; local country office polices will identify who has such rights.
3. Excess Personal Usage
All CARE USA employees will be required to track any personal usage that exceeds "their total daily commutes to and from their place of residence plus an additional 161 kilometers (100 miles) per month" and pay the following per kilometer rate for this excess usage (gas and maintenance are included in this charge).
• For cars and trucks - US $0.35 per kilometer.
• For motorcycles - US $0.17 per kilometer.
Waiving Vehicle Usage
Any overseas employee in a location that approves the use of vehicles and who does not require or wish to have access to a CARE vehicle will be required to sign a form to waive charges mentioned. Failure to sign this form will result in the overseas employee being charged for access to a CARE USA vehicle. Unless informed otherwise, it will be assumed that CARE vehicle was offered as the means of transportation.
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.