New research reveals significant compliance risks as global workforce management grows increasingly complex. Just over a third (35%) of companies with employees working overseas benchmark their benefits to ensure legislative compliance, according to revealing new research from Towergate Employee Benefits.

This concerning statistic highlights a significant risk area for UK businesses operating internationally, as benefit requirements vary substantially across different jurisdictions and can change frequently. For employers managing global teams, the consequences of non-compliance can be severe – from hefty fines to visa complications that could derail business operations.

"In the context of ensuring benefits compliance, benchmarking helps ensure that a company’s benefits packages for employees working overseas align with relevant legal and regulatory requirements in each country," explains Sarah Dennis, head of international at Towergate Employee Benefits. "Benchmarking can help identify gaps between current practices and industry standards or regulatory requirements, by country. By identifying and addressing any gaps, employers can mitigate the risks associated with non-compliance."

Competitive vs. compliant benefits

While 79% of employers with overseas employees do benchmark to ensure their benefits remain competitive, this approach may not sufficiently address compliance requirements. Effective international benefits benchmarking must consider both competitive positioning and mandatory benefits in each location.

The research also reveals a nuanced challenge in international benefits management. As more companies hire local nationals rather than relocating employees from their home country, understanding which benefits are already provided through state systems becomes crucial to avoid unnecessary duplication and costs.

"In Italy, many benefits were traditionally covered by the state system, but with more companies relocating employees there, local companies are now expected to implement benefits to match the offerings of the multi-national employers," notes Dennis. "This can create a domino effect of ever-increasing benefits packages, and overseas employers should make sure they are not over-compensating and offering benefits that are already in place through government schemes."

Size doesn’t matter

The research emphasises that even companies with minimal overseas presence – perhaps just a single employee – still need robust benchmarking processes. Compliance requirements apply regardless of workforce size, and international operations frequently expand rapidly, making early establishment of proper benchmarking practices essential.

To be effective, employers should benchmark by region, country, sector and size. Some markets require even more granular analysis – for example, the US market varies significantly by state and industry sector, making country-level benchmarking insufficient.

"International benefits packages are increasingly complex, and this reflects the changing trends in recruiting, such as employing local nationals," Dennis concludes. "Benchmarking should be an ongoing process and will then allow for continuous improvement and unbroken compliance. Benchmarking can be an incredibly useful exercise, but it must incorporate the right components to be of genuine use."

As global workforces continue to evolve post-pandemic, with more distributed teams and complex employment arrangements, the importance of robust international benefits benchmarking has never been greater for UK employers.