Ryan FowlerNearly three quarters (74%) of businesses with employees working abroad are risking not meeting their duty of care obligations by providing cash lump sums for staff to purchase their own health and wellbeing support, according to new research from Towergate Employee Benefits.
The study found that rather than sourcing and funding specific employee benefits, most employers opt for giving staff money to arrange their own coverage, which could expose both parties to significant risks.
Sarah Dennis, head of international at Towergate Employee Benefits, said: “Offering a cash lump sum to overseas employees is still quite common, and the problem is that employers can’t be sure the money is being spent in the right way. It is not unheard of for the globally mobile to use the money to help fund lifestyle choices rather than the insurances they need, and this is a choice that could have repercussions for the employer, as well as the employee themselves.”
The research highlights that smaller companies with fewer than 250 employees are more likely to offer cash lump sums than larger corporates (76% versus 68% respectively).
Additionally, companies with more employees working abroad across multiple countries tend to move away from the cash lump sum approach.
The risks of improper coverage can be substantial – medical procedures overseas could cost tens of thousands of pounds, while failure to secure life assurance could leave families with debts and no income source.
Dennis added: “While a lump sum of cash may seem tempting for an employee, being provided with the benefits themselves is likely to be the best and most effective option. If the provision is carefully communicated, then employees should understand the true worth of what they are being offered.”
The research also points out that company-purchased global benefits programmes often include valuable added services such as Employee Assistance Programmes (EAPs), providing overseas staff with support ranging from legal advice to counselling services – resources that individual employees would struggle to source independently.
Employers have both legal and ethical obligations to support the health, wellbeing and safety of all employees, whether UK-based or abroad.
The research suggests that overseas workers may actually require more comprehensive support, as they often lack access to state benefits or medical provision available to local nationals.
Dennis added: “It is understandable that smaller companies with only a few employees overseas in a small number of countries are more inclined to provide a cash lump sum than an employee benefits package, but this may be shortsighted. In the long run, taking the seemingly easier option of providing a cash lump sum could turn out to be very costly and complicated should something go wrong.”
