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EY Human Capital Conference 2012: Global employment organizations - who, where, what, why and how?

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How a Global Employment Organization (GEO) works to manage employee mobility, the drivers for a GEO and observations on leading practices.

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2012 Human Capital Conference 23–26 October Global employment i ti h h organizations: who, where, what, why and how?
Circular 230 disclaimer ► Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Page 2 Global employment organizations: who, where, what, why and how?
Disclaimer ► Ernst & Young refers to the global organization of member firms of Ernst Y E t & Young Global Li it d each of which i a separate l Gl b l Limited, h f hi h is t legal entity. l tit Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US. ► This Thi presentation i ( ) 2012 E t & Y t ti is (c) Ernst Young LLP All rights reserved. N LLP. i ht d No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, photocopying transmission recording rekeying or using any information storage and retrieval system, without written permission from Ernst & Young LLP. Any reproduction, transmission or d st but o o t s o o a y o t e ate a e e s p o b ted and s distribution of this form or any of the material herein is prohibited a d is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or its contents by any third party. ► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP. Page 3 Global employment organizations: who, where, what, why and how?
Presenters ► Rachel D’Argenio g ► Chris Debner ► Ernst & Young LLP ► Ernst & Young Ltd. ► rachel.dargenio@ey.com ► chris.debner@ch.ey.com Page 4 Global employment organizations: who, where, what, why and how?
Agenda ► Global employment organizations (GEOs) ► Current developments ► Leading practices ► Case studies Page 5 Global employment organizations: who, where, what, why and how?
Theme and key points ► Define the GEO ► Identify current market trends ► Evaluate the pros and cons of the structure Page 6 Global employment organizations: who, where, what, why and how?
Model without GEO ► This model shows the typical pattern of a multinational’s assignee population and how Hong cross-border moves can b d Kong China develop with complex Belgium US country combinations Panama India Canada India Chile Philippines pp Spain US Spain Switzer- land Italy Mexico Page 7 Global employment organizations: who, where, what, why and how?
Basic GEO model In its most basic sense, a GEO is i a separate corporate entity t t tit that exists for the sole purpose of providing employment- related services to the Hong Kong organization’s international China Belgium operations or projects. The US Panama GEO is the recognized India employer of th l f these assignees i Canada and subsequently seconds or India GEO leases these employees to the various international Chile Philippines pp operations or projects of the Spain parent company. Spain US Switzer- land Italy Mexico Page 8 Global employment organizations: who, where, what, why and how?
How a GEO works ► A GEO can act as an in-house employment agency: l t ► An individual is employed by the GEO. ► Th GEO provides employment The id l t Tax and Payments social contract, assignment letter and security professionals similar documents. Local GEO Employee ► The GEO pays salary and company p y Employs and provides allowances. Benefits compensation services providers ► The GEO provides benefits. Charges for services ► The GEO provides administrative support. ► The GEO bills host company/ receiving entity. ► The GEO keeps markup for its services as an employer. Page 9 Global employment organizations: who, where, what, why and how?
Current drivers for a GEO ► Risk management opportunities for challenging, non- g pp g g, traditional populations: ► Employer of regional teams ► Employer of rotational employees ► Employer of short-term business travelers ► Employer of executive management team ► Efficient corporate tax planning: ► Facilitating corporate deductibility ► Managing withholding tax charges Page 10 Global employment organizations: who, where, what, why and how?
Current drivers for a GEO ► Managing swift g g g growth in the number of assignees: g ► Maintaining tax compliance ► Improving processes ► Keeping the program attractive to the employees ► Mechanism for entry into new markets where local presence d does not exist: t i t ► Fulfill reporting and withholding requirements ► Manage corporate tax risk for the company ► Develop framework to deploy resources into new countries where there is no current local presence and no local entity is planned Page 11 Global employment organizations: who, where, what, why and how?
Current drivers for a GEO ► Increase in speed to deployment: p p y ► Efficient and well-established processes and policies ► Cost-reduction opportunities: pp ► Administrative cost reductions ► Social security tax cost reduction opportunities, especially in Europe E rope ► Policy and process exception management Page 12 Global employment organizations: who, where, what, why and how?
Current drivers for a GEO ► Population bifurcation opportunities: p pp ► Set up special treatment for one population while protecting integrity of regular international assignee program ► Manage new types of populations such as globalists, who may have lost ties to home country ► Manage careers a d ta e t a age ca ee s and talent ► Simplify assignee experience Page 13 Global employment organizations: who, where, what, why and how?
Observations on leading practices ► Evaluate the risk, cost and benefit before you design and , y g implement any solution; up-front planning and analysis will clearly establish the benefits and costs for the company while highlighting any potential pitfalls ► Address the project holistically: ► Think across all functions that touch mobility ► Evaluate all areas of tax and law that are impacted by mobility Page 14 Global employment organizations: who, where, what, why and how?
Observations on leading practices ► Find the perfect fit: p ► Consideration of the location for the GEO establishment and the number of GEOs is very important, as it will drive future savings opportunities. opportunities ► Consideration of the goals of the structure may result in a different final design of structure. ► Detailed due diligence identifies potential pitfalls before they become a reality. This allows for the following benefits: b fit ► Risks are isolated and minimized. ► It helps identify registrations up front so that the company can be compliant from the onset. ► It helps develop an understanding of the compliance requirements to t bli h t establish necessary processes t b compliant. to be li t Page 15 Global employment organizations: who, where, what, why and how?
Observations on leading practices ► Implementation and maintenance is key to success: p y ► Make sure you have top management buy-in to support implementation ► Have the right resources on the team so they operate and manage the structure long term ► Establish c ea y de ed p ocesses a d p ocedu es to facilitate stab s clearly defined processes and procedures ac tate ongoing operation ► Review the structure periodically to check if it is still meeting company objectives Page 16 Global employment organizations: who, where, what, why and how?
Conclusion ► Hold a workshop of key stakeholders ► Develop a business case ► Design for company needs of today and tomorrow ► Don’t rush into a design that isn’t well-developed ► Allow time for implementation, including documentation and t i i d training Page 17 Global employment organizations: who, where, what, why and how?
Questions Page 18 Global employment organizations: who, where, what, why and how?

More Related Content

EY Human Capital Conference 2012: Global employment organizations - who, where, what, why and how?

  • 1. 2012 Human Capital Conference 23–26 October Global employment i ti h h organizations: who, where, what, why and how?
  • 2. Circular 230 disclaimer ► Any US tax advice contained herein was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Page 2 Global employment organizations: who, where, what, why and how?
  • 3. Disclaimer ► Ernst & Young refers to the global organization of member firms of Ernst Y E t & Young Global Li it d each of which i a separate l Gl b l Limited, h f hi h is t legal entity. l tit Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US. ► This Thi presentation i ( ) 2012 E t & Y t ti is (c) Ernst Young LLP All rights reserved. N LLP. i ht d No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, photocopying transmission recording rekeying or using any information storage and retrieval system, without written permission from Ernst & Young LLP. Any reproduction, transmission or d st but o o t s o o a y o t e ate a e e s p o b ted and s distribution of this form or any of the material herein is prohibited a d is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or its contents by any third party. ► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP. Page 3 Global employment organizations: who, where, what, why and how?
  • 4. Presenters ► Rachel D’Argenio g ► Chris Debner ► Ernst & Young LLP ► Ernst & Young Ltd. ► rachel.dargenio@ey.com ► chris.debner@ch.ey.com Page 4 Global employment organizations: who, where, what, why and how?
  • 5. Agenda ► Global employment organizations (GEOs) ► Current developments ► Leading practices ► Case studies Page 5 Global employment organizations: who, where, what, why and how?
  • 6. Theme and key points ► Define the GEO ► Identify current market trends ► Evaluate the pros and cons of the structure Page 6 Global employment organizations: who, where, what, why and how?
  • 7. Model without GEO ► This model shows the typical pattern of a multinational’s assignee population and how Hong cross-border moves can b d Kong China develop with complex Belgium US country combinations Panama India Canada India Chile Philippines pp Spain US Spain Switzer- land Italy Mexico Page 7 Global employment organizations: who, where, what, why and how?
  • 8. Basic GEO model In its most basic sense, a GEO is i a separate corporate entity t t tit that exists for the sole purpose of providing employment- related services to the Hong Kong organization’s international China Belgium operations or projects. The US Panama GEO is the recognized India employer of th l f these assignees i Canada and subsequently seconds or India GEO leases these employees to the various international Chile Philippines pp operations or projects of the Spain parent company. Spain US Switzer- land Italy Mexico Page 8 Global employment organizations: who, where, what, why and how?
  • 9. How a GEO works ► A GEO can act as an in-house employment agency: l t ► An individual is employed by the GEO. ► Th GEO provides employment The id l t Tax and Payments social contract, assignment letter and security professionals similar documents. Local GEO Employee ► The GEO pays salary and company p y Employs and provides allowances. Benefits compensation services providers ► The GEO provides benefits. Charges for services ► The GEO provides administrative support. ► The GEO bills host company/ receiving entity. ► The GEO keeps markup for its services as an employer. Page 9 Global employment organizations: who, where, what, why and how?
  • 10. Current drivers for a GEO ► Risk management opportunities for challenging, non- g pp g g, traditional populations: ► Employer of regional teams ► Employer of rotational employees ► Employer of short-term business travelers ► Employer of executive management team ► Efficient corporate tax planning: ► Facilitating corporate deductibility ► Managing withholding tax charges Page 10 Global employment organizations: who, where, what, why and how?
  • 11. Current drivers for a GEO ► Managing swift g g g growth in the number of assignees: g ► Maintaining tax compliance ► Improving processes ► Keeping the program attractive to the employees ► Mechanism for entry into new markets where local presence d does not exist: t i t ► Fulfill reporting and withholding requirements ► Manage corporate tax risk for the company ► Develop framework to deploy resources into new countries where there is no current local presence and no local entity is planned Page 11 Global employment organizations: who, where, what, why and how?
  • 12. Current drivers for a GEO ► Increase in speed to deployment: p p y ► Efficient and well-established processes and policies ► Cost-reduction opportunities: pp ► Administrative cost reductions ► Social security tax cost reduction opportunities, especially in Europe E rope ► Policy and process exception management Page 12 Global employment organizations: who, where, what, why and how?
  • 13. Current drivers for a GEO ► Population bifurcation opportunities: p pp ► Set up special treatment for one population while protecting integrity of regular international assignee program ► Manage new types of populations such as globalists, who may have lost ties to home country ► Manage careers a d ta e t a age ca ee s and talent ► Simplify assignee experience Page 13 Global employment organizations: who, where, what, why and how?
  • 14. Observations on leading practices ► Evaluate the risk, cost and benefit before you design and , y g implement any solution; up-front planning and analysis will clearly establish the benefits and costs for the company while highlighting any potential pitfalls ► Address the project holistically: ► Think across all functions that touch mobility ► Evaluate all areas of tax and law that are impacted by mobility Page 14 Global employment organizations: who, where, what, why and how?
  • 15. Observations on leading practices ► Find the perfect fit: p ► Consideration of the location for the GEO establishment and the number of GEOs is very important, as it will drive future savings opportunities. opportunities ► Consideration of the goals of the structure may result in a different final design of structure. ► Detailed due diligence identifies potential pitfalls before they become a reality. This allows for the following benefits: b fit ► Risks are isolated and minimized. ► It helps identify registrations up front so that the company can be compliant from the onset. ► It helps develop an understanding of the compliance requirements to t bli h t establish necessary processes t b compliant. to be li t Page 15 Global employment organizations: who, where, what, why and how?
  • 16. Observations on leading practices ► Implementation and maintenance is key to success: p y ► Make sure you have top management buy-in to support implementation ► Have the right resources on the team so they operate and manage the structure long term ► Establish c ea y de ed p ocesses a d p ocedu es to facilitate stab s clearly defined processes and procedures ac tate ongoing operation ► Review the structure periodically to check if it is still meeting company objectives Page 16 Global employment organizations: who, where, what, why and how?
  • 17. Conclusion ► Hold a workshop of key stakeholders ► Develop a business case ► Design for company needs of today and tomorrow ► Don’t rush into a design that isn’t well-developed ► Allow time for implementation, including documentation and t i i d training Page 17 Global employment organizations: who, where, what, why and how?
  • 18. Questions Page 18 Global employment organizations: who, where, what, why and how?