International Commuters: Understanding the Benefits and Challenges

Man rushing through an airport terminalIn case your employer offers you a job in a foreign country subsidiary, but relocation is undesirable for several personal and family reasons, becoming an international commuter is a possible solution. Indeed, a recent report by ECA International on commuter assignments indicates that this practice is becoming more and more popular.

So far, the most commonly cited reason (84%) for using commuter assignments is about fulfilling temporary needs, such as short-term projects. However, when looking at the permanent commuter assignments, this type of mobility becomes a solution to barriers of traditional relocations. Just under half of respondents indicated that permanent commuter assignments are a way of adjusting to employees’ personal circumstances. Moreover nearly 40% of employees reported that such assignments are preferred to relocating the whole family.

 

International commuting – the employees’ perspective

The stories presented in a recent Financial Times article illustrate the reported data well. Instead of relocating for the job, many people prefer to stay local in order to avoid disrupting their partner’s careers and children’s education, to stay close to friends and relatives, as well as to look after ageing parents. However, satisfying these personal circumstances and at the same time fulfilling job requirements abroad comes at a price of constant commuting.

The drawbacks of such a lifestyle are visible especially to the so-called marathon commuters, who fly out every week and return home for weekends. Frequent absence from home can be stressful for both commuters and their families. Recent research from Swedish Umea University concluded that long-distance commuting jeopardizes partner relationships, as the risk of separation is 40 percent higher among long-distance commuters than among other people. Naturally, ‘living out of a suitcase’ may also influence work-life balance, and the time spent on the road can produce extra fatigue and stress.

 

International commuting – the employers’ perspective

For companies, cross-border commuting is beneficial foremost as a means to get the right people in the right places. As noted in the FT article, ‘employers like cross-border commuting if it persuades a preferred candidate to do a job they might otherwise turn down’. Another advantage, mentioned in the ECA report, is that being localized in the home country allows assignees to maintain strong links with the home country company, thus making the post-assignment re-integration easier. Finally, many companies perceive international commuting as a cheaper option as opposed to relocation. However, this is quite disputable, as, for example, higher travel costs and temporary housing rentals can offset the savings of not relocating. As the ECA report shows, only 14% of companies cited that commuting reduced costs compared with traditional assignments.

As for the challenges of international commuting, compliancy with governmental immigration and tax laws remains the biggest headache for employers. Commuters, as well as frequent business flyers, are the main population at risk of becoming ‘accidental expatriates’, or so-called stealth-pats. To stay on the right side with legislations, employers need to have good tracking systems in place. Mainly these include tracking the time spent abroad, taking into account job responsibilities and tax laws of host and home countries. In addition, tracking costs is a good idea for controlling travel expenses, and evaluating the return on investment of such initiatives.

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Sebastian Reiche

B. Sebastian Reiche is Associate Professor in the Department of Managing People in Organizations at IESE. He holds a Ph.D. from the University of Melbourne, Australia.

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Comments

  1. Tom

    Ive been commuting internationally for awhile it’s really rough on my family so this ends up being a really good article that anyone should check out if they are planing on taking something like this on and what you can expect as well as some stresses involved.

    Reply
  2. sukhbir singh

    I would say there is an inherent limit to the extend one could become an international commuter. If one is posted within a 5 hour flight radius of one’s home country, it could very well be ideal.

    If one is posted to say Singapore in East Asia and the HQ is in USA say New York, then relocation is the only option.

    With regards to the ‘accidental expatriate’ staying on the right side of tax laws, one has to be mindful of the 183 days rule applied in most countries for tax status purposes.

    All in all, it is an interesting read and I am quite sure this is going to be very common in the near future.

    Reply
  3. Anne Egros, Global Executive Coach

    Very interesting article. We always been together my husband and I with our son for each move we have done across 3 continents for 20+ years.

    Not living in the same country with your family is detrimental for learning fully about the culture. Local employees may also treat you as an outsider, not really part of the team as you can’t share social events involving partners or children.

    Each family situation is different but if you embrace expatriation as a great way to grow then I prefer to do it with the whole family. However I understand that sometimes other considerations such as schooling system or health care or dangerous locations may give no choice but commuting, I think this situation should be exceptional and not exceed 1 year.

    I am not surprised that long-distance commuters have 40 percent higher risk of separation compared to other people who already have 50 percent chance to get divorced in most countries nowadays.

    And yes the tax filing can become a nightmare and a costly exercise, especially for US residents and citizen

    Reply

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