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Expat contract negotiation

Updated 15 Jun 2023

The allure of Asia and the financial opportunities in Middle Eastern countries such as the UAE result in a large portion of Western expats flocking eastwards. With inflation soaring, many businesses are still less likely to offer expats the luxury contracts of the past.

While there certainly are still lucrative opportunities for expats, there is also a move in many countries towards hiring homegrown talent. This means that expats need to be better than the competition and, in some cases, willing to compromise on their demands. That said, there are still important features in an expat's contract that should be inflexible.


Base salary

Contract negotiations always begin by determining remuneration, a subject complex enough to warrant a specialist field such as salary benchmarking. This benefits both parties, ensuring that employees receive fair market-related salaries, and helps businesses to come up with packages that can attract and retain talented employees.

This doesn't make negotiating any less important, but it does help with the most important part of negotiations – having as much information as possible. You should know what to ask for and be able to back up your requests. It is also crucial to factor in your new destination's cost of living; it's the only way you’ll know what an offer is really worth.


Cost of living

The cost of living in your destination could be used as justification for a higher base salary. The most expensive cost for expats is often housing. In Dubai, for example, housing is the single largest contributor to living costs, while most other things are fairly inexpensive. On the other hand, if an employer is already paying for your housing, your new destination's higher cost of living might not be reflected in a salary increase. 

Before you start negotiating, make sure you've already researched what your highest expenses will be, and back that up by quoting prices. Visit the cost of living section relevant to you on Expat Arrivals, search the web and consult the Mercer Cost of Living Survey.


Housing and accommodation

Accommodation costs are perhaps the largest variable in negotiating a contract. This is a large amount of money that companies don't usually pay for their local employees, and they may be reluctant to include it as part of your relocation perks. Its significance changes greatly, however, depending on your destination. Some expats in India find themselves unable to afford housing that is up to the standard of what they had in their home country. In a less expensive city, though, housing may be overlooked to negotiate for other benefits or a higher salary.

An accommodation benefit may either be in the form of an allowance to be spent on accommodation each month or, less frequently, paid-for accommodation in an apartment, compound or villa already owned or rented by the company.


Work visas and residency permits

In most cases, it shouldn't be necessary for expats to negotiate or pay for their work or residency permit. Most countries require the company to justify your employment and submit the relevant paperwork to the authorities. Companies who regularly hire expats are generally accustomed to the procedures and you'll often only need to follow directions.


Schooling and education

Companies that relocate employees are obligated to look after their families as well. This largely means covering or contributing to tuition costs at international schools. Whether you're going to South Africa or South Korea, the cost of international schooling is eye-wateringly high all over the world. If you have a family and this cost isn't included as part of a relocation package, it can take a significant bite out of your salary.


Healthcare

Many countries don't have adequate public health facilities and private care is usually expensive – in such cases, having comprehensive medical insurance is essential for expats. Companies should always provide this for their foreign employees and their families.

It's important to remember that insurance policies differ and have multiple levels of premiums and co-pays. Discuss what happens in an emergency and whether the initial payment for treatment is out-of-pocket and then reimbursed, or whether it is immediately covered. Make sure that evacuations are also covered, whether for natural disasters or medical emergencies.


Car allowance

Few contracts will include the provision of a motor vehicle but it's often appropriate and necessary to negotiate for the cost of a driver. In some so-called third-world countries, driving yourself around is perilous and having a driver is essential. You should also consider that having a four-wheel-drive vehicle may be necessary to cope with bad road conditions and off-road terrains.


Return flights and vacations

Flights to and from your home country are expected. Extended contracts should also include flights home for the holidays, usually one return ticket for the whole family per year. Sometimes the employee initially pays and is then reimbursed by the company. Several extra days of vacation are also commonly given to accommodate time spent flying.


Hardship allowance

In addition to their standard salary, many relocated expats receive a hardship allowance. This is increasingly uncommon and largely restricted to specific industries but it could still be used as a negotiating chip. “Hardship” is difficult to define but it's fairly obvious that it could be applicable in destinations such as Nigeria, Afghanistan and Iraq. Factors such as pollution, crime, danger and restrictions of freedom all contribute to determining the level of hardship an expat has to face.


Final thoughts

Expats that bring more information to the negotiating table are much more likely to walk away with expatriation extras. The best advice is to research the destination well and predict what costs you could incur. Always ask for the benefits you want, as companies often won't include everything they're willing to offer unless you bring them up at the negotiation table.

The best time to negotiate with a prospective employer is after receiving a concrete offer, but before the contract has been signed. Once you've put pen to paper, improving your conditions is unlikely, but getting too pushy too early can jeopardise your chances of getting an offer in the first place.

The key is to be prepared and informed about what you want – learn to choose your battles while conceding on features that are less important to you.

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