Anyone who reads the various relocation-related industry magazines will notice a recent rash of articles related to split pay – its definitions, options, pitfalls, etc. As much as I’d like to address all of these topics, let’s just focus on why using a split payroll can benefit companies sending employees on international assignments.
In the 2010 Cartus Global Mobility Policy & Practices Survey, we see that 56% of clients currently use home-based compensation, 18% use host country, 24% use split pay, and 8% use a headquarters-based pay scheme. This is approximately a 10% rise in split pay compared with our 2007 survey.
One could say, especially if you are a fan of the author Dan Brown, that it all started with the Knights Templar! How, you ask? Well, history shows that when the Knights Templar won over the Holy Lands in and around current-day Jerusalem after a crusade, they were enlisted to protect the pilgrims who were traveling to and from the Holy Lands. In doing so, they established the first international bank. This meant that a pilgrim in Italy could turn in his gold coins in Italy to a Templar “bank” and receive a Templar “check” that he could cash in for hard currency once he arrived in the Holy Land, thus protecting him from being robbed along the dangerous route. Even the early pilgrims knew they needed to have some spending money in local currency to purchase goods, services and, of course, souvenir T-shirts, once they arrived at their destination! Now, jumping to modern-day international assignees, that same need still exists today. So the first “why” behind split pay is assignees’ need for local currency. (more…)