13 May 2025
74% of businesses with overseas employees risking duty of care with cash lump sums
Research1 from the international experts at Towergate Employee Benefits shows that nearly three quarters (74%) of businesses with employees working abroad are risking not meeting their duty of care as they provide cash lump sums for staff to buy their own health and wellbeing support, rather than sourcing and funding employee benefits for them.
The research asked businesses with overseas employees whether they provide their staff with a benefits package or with a cash lump sum. The rationale behind employers offering a cash lump sum is so that the employees can source their own employee benefits products, such as private healthcare and life insurance. But with the vast majority providing the cash alternative, Towergate Employee Benefits is warning employers that they may be opening themselves up to future problems.
Sarah Dennis, head of international at Towergate Employee Benefits, says: “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 risks
If an employee needs medical treatment and does not have the appropriate cover, then a medical procedure abroad could cost ten of thousands of pounds. If an employee failed to purchase life assurance, for example, then their family could be left stranded with debts and no source of income.
Duty of care
Employers have a legal and ethical obligation to ensure they support the health, wellbeing and safety of all employees, whether they are based in the UK or abroad. Indeed, it could be argued that employees working abroad are at greater risk and need more support than those based in the UK, as they may not have the same state benefits as local nationals, or access to state medical provision, so employers do need to ensure that support is put in place.
Essential benefits for those working abroad may include such elements as private healthcare and life assurance. The employer may not even be aware if their employee decides not to use their lump sum to purchase these, and this may then leave the employer or employee to facing sudden, large and unexpected costs.
The need for expert advice
Even if employees do want to purchase the necessary employee benefits to cover themselves while working abroad, they may well lack the full knowledge to do so successfully. Without expert advice, it is possible that employees will not adequately cover themselves for all eventualities. Individual employees purchasing individual benefits will also not have the buying power of an organisation and are likely to receive less for their money.
Sarah Dennis says: “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.”
Benefiting from added-value options
Many global benefits programmes purchased by the company will also include access to added-value options, like a global Employee Assistance Programme (EAP). This can be an invaluable resource for employees working overseas, providing information on subjects from legal issues to financial queries, and offering services such as counselling.
Decisions based on number of employees and countries covered
Of those with overseas employees, smaller companies - those with fewer than 250 employees in total - are more likely to offer cash lump sums than larger corporates (those with 250 or more employees) with the figures being 76% and 68% respectively. The research also shows that the more people a company has working abroad, and the greater the number of countries covered, the less likely they tend to be to provide a cash lump sum for employees to source their own benefits.
Sarah Dennis comments: “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.”
1. Research conducted by Opinium on behalf of Towergate Employee Benefits among 500 HR decision makers across the UK from 7 to 16 January 2025
For more information please contact:
Georgina Dunlop
SMUK Marketing and PR
gdunlop@smuk.org.uk
Mob: 07912 178156
Sarah Dennis
Head of International, Towergate Employee Benefits
sarah.dennis@towergate.co.uk
Mob: +44 (0) 7467220043
About Towergate Employee Benefits
Towergate Employee Benefits is one of the UK’s largest independent employee benefits advisers, dedicated to delivering tailored solutions to employers and their employees. The company aims to help employers attract, retain and engage the very best talent, resulting in a healthy, motivated and productive workforce.
Specialist advice and solutions from Towergate Employee Benefits include healthcare benefits - such as private medical insurance, cash plans, dental insurance and employee assistance programmes; financial benefits - such as group income protection, group critical illness and life insurance; and additional services such as wellbeing, occupational health and pensions governance, as well as award-winning benefits technology.
For global companies, Towergate Employee Benefits offers international private medical insurance, travel insurance, global employee assistance programmes and kidnap and ransom cover; as well as the expertise to manage comprehensive global benefits programmes. Through a worldwide network of partner firms, Towergate Employee Benefits can deliver tailored global benefit design and governance, ensuring business are supported wherever they operate.
Towergate Employee Benefits has a nationwide team of specialist advisers with a commitment to service that has been recognised as gold in its accreditation by Investor in Customers. For further information please visit www.towergatehealthandprotection.co.uk/