Recruitment is not always at the top of the list when an organisation plans its first overseas office. Premises and licensing often come first, with legal advice close behind. The employment package may be settled last, sometimes by taking the head-office version and attaching a locally benchmarked salary. It is not always revisited once the office opens.
That shortcut has a weakness. What a candidate regards as a complete offer is shaped locally (partly by law, partly by custom), and custom can be difficult to read from another continent.
How Candidates Read an Offer
Salary is usually the first figure a candidate checks, but it is seldom the only one. Many will set the offer against their present arrangements, and those arrangements reflect local tax rules as well as personal preference. In one market annual leave may matter most; in another, a car allowance.
Salary surveys may not capture this kind of expectation. It can surface late in the process, sometimes in a final interview, when the candidate asks about a benefit the offer does not include. A headline figure that looked strong on paper can lose some of its appeal at that point.
The effect may be more noticeable in competitive sectors. Candidates can be reluctant to give up a benefit they already receive, even a minor one, and some may decline an offer as a result.
Where Australia Differs
For employers entering Australia, one benefit that may come up is salary packaging. A portion of an employee’s salary can be directed towards eligible expenses through a salary packaging arrangement, with some payments made from pre-tax income. Many Australian employees are familiar with the concept, while overseas head offices may not be. Vehicles are a common example.
For a car, the arrangement typically takes the form of a novated lease. Three parties are involved: the employee, the employer and a finance provider. The employee chooses the vehicle, whether new or used, petrol, hybrid or electric. Lease payments are made from pre-tax income. Running costs (fuel and insurance, for instance, along with registration and servicing) can sit inside the same arrangement, which leaves the employee with one regular payment rather than several separate bills.
For the employee, this may mean a lower taxable income and a budget that is easier to plan. For the employer, the benefit is different: it can make an offer more attractive without a change to base salary.
What Is Asked of the Employer
The employer agrees to the arrangement, and payroll will need to accommodate the relevant deductions, while the salary packaging provider generally handles much of the administration and documentation. The exact division of responsibilities can vary between employers, providers and arrangements, so it is worth confirming early.
A lease can also move with an employee when they change jobs, provided the new employer offers salary sacrificing and agrees to continue the arrangement. Novated leases commonly run for several years, so an organisation unsure how large its Australian team will grow ought to factor that in.
That portability may appeal to candidates. It also means the benefit should not be presented as something that ties an employee to the company; it can strengthen an offer, but it is not a retention guarantee. Saying so plainly at the start can prevent misunderstandings later.
Before the Offer Letter Goes Out
Some practical groundwork is needed first. Can payroll process pre-tax deductions correctly? Systems configured overseas may need adjustment. Will the organisation work with a particular salary packaging provider, or leave employees to choose one? And who will answer questions once staff begin signing up? It helps to settle these points early. The offer letter should describe the benefit as optional, since whether it suits a given employee depends on that person’s circumstances.
Because tax treatment depends on individual circumstances, independent professional advice, for the organisation and for each employee, should come before any commitment, and employees should obtain a quote and read the proposed lease terms closely before they sign.
A Small Step at the Planning Stage
A conversation with a local adviser during planning can help clarify how salary packaging works and whether it suits the organisation. Compared with the time spent on premises and licensing, that is a modest step, and it may influence whether a preferred candidate accepts an offer. Raising the question early can make the hiring process simpler.
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