Policy Management
Client: Confidential (US private equity firm)
Location: London
Date: January 2001
The firm, “A1”, had set up its London office three months prior to hiring us. The challenge was to author a suite a policy documents that would be compliant with UK regulations and laws yet consistent in ‘culture’ to the US policies with which the predominantly expatriate employees were familiar.
With certain anomalies between US and UK entitlements it was important to identify where a unique policy might apply (for example Health & Safety and IT, Internet & Email) and where varied policies might be required to reflect the distinct obligations and entitlements relative to residential and working status (e.g. Maternity and Travel & Expenses).
The primary challenge was to manage A1’s custom and practice with regards expense management. The expatriate staff had been granted business credit cards to which they charged business expenses but for which they did not account. We ran a comprehensive audit of A1‘s account management and engaged the financial advisory services of Deloittes, who provided a template expense management policy. Simultaneously, we consulted with A1’s US financial advisors to clarify the federal and state fiscal obligations of the expatriate staff, none of whom were officially UK domiciled.
Despite their non-domiciled status, all the expatriate staff had dual US and UK tax obligations. Although A1 did not wish to ask their senior executives to account for the charges they were making on their business credit cards (customarily this facility was seen as a ‘perk’) it was apparent that the level of expenditure significantly exceeded the UK limits for non-accounting. Deloittes expressed concern that unless stringent expense accounting procedures were introduced individuals and the company as a whole would become liable for tax-evasion prosecution.
The US parent company considered alternative ways to provide the financial ‘perk’ that business credit cards represented to their expatriate staff. Their solution was a quantified investment plan, which was managed in the US and represented a tax benefit to the employees. This offering was made contingent on accepting the new regulations surrounding the business credit cards. We prepared and issued a Travel & Expenses Policy, with Deloittes giving a detailed presentation to the employees, and with us following up with 1:1 learning sessions available to all employees. At the same time, an Excel-based reporting form was standardised, and secretarial staff were trained in managing expense processing for their bosses. Although the change was not easy to implement, the investigative process was important for the business as it highlighted associated weaknesses in A1’s basic financial accounting. For example, a number of office fit-out purchases had been mis-categorised, and by correctly assigning these expenses we identified almost £100,000 that was recoupable in tax benefits.
Once the Travel & Expenses Policy had been fully rolled-out, we were able to author the remaining policies. The US office did not have specific contractual policies but did issue a comprehensive Employee Guide which described expected behavioural standards. This document also described the levels of benefit available to employees, and provided certain ‘housekeeping’ information.
Given that the employees of the London office had distinct statutory obligations and entitlements, it was agreed that a UK version of the Employee Guide would be designed to indicate expected behaviours and also provide contractual policy information which would apply to domiciled employees only. For the contractual policies, non-domiciled employees would be subject to the company’s US policy (where this existed) or to statute (where policy did not exist).
The contractual policies contained within the UK Employee Guide were:
- Maternity, Paternity & Parental Leave
- Disciplinary & Grievance
- Sickness & Absence
- IT, Internet & Email
Additionally, non contractual policies were published in the UK Employee Guide, these being equally applicable to both non-domiciled and domiciled employees:
- Travel & Expenses Policy
- Health & Safety
The UK Employee Guide also included certain employment statements on behalf of A1:
- Equal Opportunities
- Diversity
- Dignity at Work
On completion of the policy management project, the US parent company revised its US Employee Guide to reflect the style of the UK version. It was acknowledged that the straightforward use of language, the clarity in respect of contractual and non contractual policy, and the establishment of distinct entitlements, made the document ‘relevant’ and ‘readable’. Additionally, and although it had not been the commissioning partner’s intent, the disciplines established through the Travel & Expenses policy had led to such evident cost savings that the US office adopted some of the UK standards for non executive staff.
Client Comments:
“Your diligence was exceptional – thank you for working so hard and getting it so right.”
“You did a fantastic job.”
