Designing a compliant international employee benefits plan: key considerations for HR in 2026

Why compliance matters in employee benefits

A benefits plan that looks generous on paper can quickly become a liability if it breaches local laws or fails to secure employees’ rights. Compliance is the foundation of an effective benefits strategy for several reasons:

• Legal and financial exposure. Fines, back taxes and penalties can arise when benefits programmes do not align with host‑country legislation. For example, remote workers may trigger tax residency and permanent establishment risks, requiring employers to register with foreign tax authorities^[10][11]. In the US, employers with at least 50 full‑time (or full‑time equivalent) employees are considered Applicable Large Employers (ALEs) and must offer affordable, minimum‑value health coverage to at least 95 % of full‑time employees or face employer‑shared responsibility payments^[14].
• Employee protection and social security continuity. Social security coordination in the EU/EEA ensures that cross‑border workers are covered in a single system at a time and that contributions are aggregated^[8]. Telework rules specify that if remote work is less than 25 % of an employee’s working time in their country of residence, social security remains in the employer’s country; over 50 % may transfer it^[9]. Providing compliant benefits ensures employees remain eligible for health care, pensions and disability benefits.
• Reputation and talent attraction. A mismanaged benefits plan can harm employer branding and make retention difficult. Employees expect employers to meet statutory obligations and protect their wellbeing.
• Operational continuity. Unanticipated compliance issues can delay deployments, result in visa or work‑permit refusals, or disrupt business operations.

Minimum viable compliance operating model

For global organisations, compliance cannot be ad hoc. A structured operating model helps manage complexity:

• Roles and governance. Assign a global benefits compliance lead accountable to senior management. Create a cross‑functional committee including HR, legal, finance/tax and data‑protection specialists. Define jurisdictional owners for each country or region.
• Processes. Implement a regulatory monitoring process to track changes in labour, tax and insurance laws. Maintain a standardised benefits design template that identifies mandatory benefits, plan rules and opt‑outs by jurisdiction. Use decision logs to document why a funding model or provider was chosen, referencing legal opinions where relevant. Establish escalation procedures for exceptions and urgent regulatory changes.
• Documentation and audit. Keep an inventory of all benefit plans, policies and third‑party contracts. Maintain a register of decisions, including risk assessments and compliance sign‑off. Schedule periodic audits to verify that employee coverage matches eligibility and that contributions are paid correctly.
• Vendor oversight. Conduct due diligence on insurers, third‑party administrators and payroll providers. Ensure they hold appropriate licences, adhere to data‑protection requirements and can demonstrate strong claims processes. Include compliance clauses in contracts and monitor service levels regularly.

By embedding governance, processes, documentation and vendor oversight into day‑to‑day operations, HR teams can manage compliance proactively rather than reactively.

Overview of relevant regulations (IDD, GDPR, local labour laws)

The regulatory landscape for employee benefits spans insurance distribution, data protection and labour law. The following overview highlights key frameworks and their implications for HR.

Insurance Distribution Directive (IDD) and UK equivalents

The EU’s Insurance Distribution Directive (IDD) regulates the sale and distribution of insurance products. It introduces conduct and transparency requirements, ensuring that distributors are qualified, registered and act honestly and professionally. Distributors must disclose their identity, status and remuneration and ensure that products meet customers’ demands and needs^[1]. Cross‑border business procedures and sanctions for breaches are also defined^[1].

The UK implemented the IDD in 2018 and, after exiting the EU, has retained and transposed the directive’s delegated regulations into its own regulatory framework. The Financial Conduct Authority’s (FCA) consultation paper notes that the UK intends to include requirements on product oversight and governance, the insurance product information document and conduct of business rules within its rulebook to maintain continuity^[2]. This means that UK brokers and insurers must still comply with IDD‑style rules even though the directive no longer applies directly.

Implications for HR: When selecting or advising on employee benefits, ensure that brokers or intermediaries are appropriately licensed and meet disclosure obligations. In EU and UK contexts, ask for the Insurance Product Information Document (IPID) and confirm that any recommendations are based on employees’ needs rather than sales incentives. Overseas schemes marketed into the EU/UK may require local authorisations.

General Data Protection Regulation (GDPR) and other privacy laws

Health information is a “special category” of personal data under the GDPR. Employers must have a lawful basis to collect and process such data, use it fairly and transparently, and collect only what is necessary^[3]. Guidance from the European Data Protection Supervisor advises that health data be handled by medical professionals bound by secrecy; administrative staff should receive only necessary information^[4]. Employers should limit access to medical certificates, store data securely and destroy it when no longer needed^[3].

Outside the EU, privacy rules vary significantly:

• Switzerland (nFADP). The new Federal Act on Data Protection, effective from 1 September 2023, introduces privacy by design and by default, requires a register of processing activities (with exceptions for low‑risk SMEs), mandates breach notification to the Federal Data Protection and Information Commissioner, and defines genetic and biometric data as sensitive^[5].
• United States. HIPAA governs health‑care plans’ handling of medical information. ERISA pre‑empts state insurance laws for self‑funded plans^[13]. State privacy laws (e.g., California Consumer Privacy Act) impose additional obligations.
• GCC / UAE. Data‑privacy frameworks are emerging, often requiring consent for processing health data and restrictions on cross‑border transfers. Employers should monitor updates alongside labour law changes.
• APAC. The Asia‑Pacific region features diverse privacy frameworks. Some jurisdictions (China, Vietnam, India) do not recognise legitimate interests as a lawful basis, impose broader restrictions on outbound transfers, require local language notices and local representatives, and have heightened rules around collection of national identification information^[15]. Australia’s Privacy Act requires organisations to take reasonable steps to ensure that foreign recipients meet Australian privacy standards or rely on equivalent legal regimes^[15].

Implications for HR: Collect only medical information necessary for benefits enrolment, keep health records separate from general HR files, and ensure cross‑border data transfers have appropriate safeguards (e.g., Standard Contractual Clauses or local equivalents). Where laws differ, comply with the stricter standard.

Local labour and social security laws

Labour laws determine minimum benefits, working time, termination rights and leave entitlements. The EU Working Time Directive guarantees a maximum 48‑hour average working week, minimum daily and weekly rest periods and at least four weeks of paid annual leave^[12]. When employing cross‑border or remote workers, local labour laws where work is actually performed typically apply^[10].

Social security rules add another layer. EU social security coordination ensures that a worker is subject to only one state’s social security system at a time; rights are portable and contributions are aggregated^[8]. The cross‑border telework framework clarifies that if telework constitutes less than 25 % of working time in the employee’s state of residence, coverage remains in the employer’s country; between 25 % and 50 % telework, coverage can remain in the employer’s country if both states sign the framework agreement; over 50 % triggers coverage in the worker’s residence country^[9].

Region‑specific highlights (high‑level)

Choosing between insured and self-funded solutions

Selecting the right funding model is a strategic decision. Fully insured plans transfer risk to an insurer, offering predictable premiums and local compliance support. Self‑funded (or “self‑insured”) arrangements mean the employer pays claims out of its own assets, often with stop‑loss insurance to cap catastrophic exposures. Both models have advantages and drawbacks.

Fully insured plans

• Regulatory alignment – the insurer is responsible for complying with local insurance laws and must be licensed in the jurisdiction, reducing the employer’s risk of unlicensed insurance distribution.
• Predictable budgeting – premiums are known in advance and provide cost certainty; insurers often bundle ancillary services such as claims handling, network management and statutory reporting.
• Limited flexibility – benefits may be standardised across jurisdictions; amendments require insurer approval and can take time.
• Subject to local insurance laws – in many countries, fully insured plans must adhere to benefit mandates and insurer solvency requirements, which may increase costs.

Self‑funded (self‑insured) plans

• Greater control and flexibility – employers can design bespoke benefits, carve out exclusions or add features. Plans can be uniform across countries (subject to local mandates) and aligned with corporate culture.
• Potential cost savings – employers pay claims as they arise. In years with low claims, self‑funded plans may be cheaper than paying insurer margins.
• Financial risk and volatility – large or unexpected claims can create significant liabilities. Stop‑loss insurance (specific and aggregate) can mitigate but not eliminate this risk. Employers must maintain adequate reserves and cashflow.
• Administrative complexity – employers are responsible for claims adjudication, compliance, reporting and vendor management. In multi‑country contexts, local third‑party administrators may be needed to handle claims within local healthcare systems.

Decision tree: choosing a funding model

1. Workforce size and concentration
   - Are there sufficient employees in one jurisdiction (e.g., >200 lives) to justify self-funding?
     → Yes: self-funding may provide economies of scale.
     → No: fully insured is often more practical.
2. Geographical dispersion
   - Is your workforce scattered across many countries with small cohorts?
     → Yes: consider fully insured, possibly with regional pooling or local compliant plans.
     → No (few countries with sizeable groups): self-funding can simplify administration.
3. Risk appetite and cashflow tolerance
   - Can the organisation absorb large claim volatility?
     → Yes: self-funding with appropriate stop-loss may be viable.
     → No: fully insured provides cost certainty.
4. Administrative capacity
   - Do you have systems and people to manage claims, compliance and vendor relationships?
     → Yes: self-funding is feasible with TPA support.
     → No: rely on insurers for administration.
5. Jurisdictional constraints
   - Are self-funded plans permitted and tax-advantaged in the relevant countries?
     → Yes: self-funding can be considered.
     → No: fully insured may be mandatory or more efficient.
6. Governance and oversight
   - Do you have a robust benefits governance framework (e.g., committees, risk management, decision logs)?
     → Yes: self-funding risk management is possible.
     → No: fully insured provides built-in governance via regulated insurers.

Managing cross-border employees (tax & social security)

Cross‑border employment brings opportunities but also considerable compliance challenges. When employees work outside their home country—whether on assignment, as digital nomads or through telework—employers must navigate host‑country labour laws, tax systems and social security schemes.

Tax implications and permanent establishment risks

Remote work across borders can shift tax obligations. Employees may become tax residents of the country where they perform work, subjecting their income to local tax and requiring the employer to register with foreign tax authorities^[10]. If remote work is substantial, tax authorities may deem the employee’s home office to be a permanent establishment of the employer, leading to corporate tax liabilities^[11]. Double taxation treaties may provide relief, but careful structuring is necessary.

Mitigation actions:

• Map the locations where employees work and assess their tax residency status. Obtain tax advice for each jurisdiction, considering thresholds for tax residency (e.g., days of presence).
• Evaluate whether the employer has a permanent establishment risk. Where risk exists, explore alternative structures such as employer of record (EoR) arrangements or local entity registration.
• Adjust employment contracts to reflect host‑country tax withholding obligations and clarify the employee’s responsibility for personal tax filings.

Social security and A1 certificates

In the EU/EEA and Switzerland, social security coordination rules apply. Workers are typically subject to the social security system where they physically work. Under the principle of lex loci laboris, cross‑border telework may trigger coverage shifts. The EU’s 2023 telework framework states that if a worker teleworks less than 25 % of their working time in their state of residence, coverage remains in the employer’s country; between 25 % and 50 % telework, coverage may remain in the employer’s country if both countries are signatories; over 50 % telework, or where states have not signed, coverage shifts to the worker’s residence^[9]. Workers need Portable Document A1 certificates to prove their coverage and avoid double contributions.

For non‑EU contexts, social security rules vary widely. For example, Switzerland requires employers to insure all employees against accidents, including home workers, and employees working at least eight hours per week receive coverage for non‑occupational accidents as well^[6]. In the UAE, details of social security contributions are limited, but employer‑paid health insurance will become mandatory for foreign employees from 2025^[7].

Mitigation actions:

• Determine which country’s social security system applies for each worker. For EU/EEA/Swiss assignments, obtain A1 certificates from the competent authority.
• Monitor cross‑border telework thresholds and adjust work arrangements to maintain desired coverage.
• Engage local payroll providers or EoR services to administer contributions and mandatory benefits in host countries.
• Consider voluntary contributions or private benefits where host‑country coverage is limited or where employees fall through gaps.

Host‑country labour law and mandatory benefits

Employment law generally applies where the work is performed. Remote workers may gain rights to local holiday entitlements, notice periods and statutory benefits. Employment contracts must be adapted to host‑country law, and employers may need to register with local authorities^[10]. For example:

• Working time and leave: The EU Working Time Directive caps the average working week at 48 hours, requires rest breaks, daily rest of 11 consecutive hours and four weeks of paid annual leave^[12]. Other countries have different limits (e.g., maximum 45‑hour week in Switzerland, shorter or longer annual leave requirements in APAC).
• Mandatory insurance: Switzerland’s accident insurance law covers employees (including home workers) for occupational and, if working ≥8 hours/week, non‑occupational accidents^[6]. The UAE will require employers across all emirates to provide health insurance to foreign employees from 2025^[7]. In the US, Applicable Large Employers must provide health coverage meeting minimum essential coverage and affordability standards^[14].
• Termination protections: Notice periods, severance pay and dismissal rules vary widely. In some countries, probation periods restrict termination flexibility; others require works council consultation.

Mitigation actions:

• Conduct labour‑law analyses when entering a new country. Identify mandatory benefits and incorporate them into employment contracts and benefits design.
• Provide clear policies for teleworkers, specifying working hours, health and safety obligations and equipment provision. EU employers must assess risks in home offices and provide necessary equipment^[10].
• Where remote work triggers local employer obligations that are impracticable, consider alternative arrangements, such as limiting remote days to stay below social security thresholds or using EoR services.

Data privacy and medical confidentiality

Handling health‑related data responsibly is both a legal requirement and an ethical imperative. Employee medical information is particularly sensitive and mismanagement can result in severe penalties.

Do’s and don’ts for HR teams

Do:

• Limit collection to what is necessary. Under GDPR, employers must have a lawful basis for processing health data and can only collect what is strictly necessary for the purpose^[3]. Document why each data element is needed.
• Use medical professionals where possible. The European Data Protection Supervisor recommends that health data be handled by medical professionals who are bound by secrecy, with HR receiving only administrative information necessary for employment decisions^[4].
• Implement privacy by design and default. In Switzerland, the nFADP requires privacy by design/default, meaning that systems must be configured to protect personal data from the outset^[5]. Apply similar principles to HR systems (e.g., encryption, limited access, default minimisation).
• Maintain data registers and breach protocols. Keep a register of processing activities and document how health data is stored, shared and retained. Prepare breach response plans and notify the competent authority promptly if a breach occurs.
• Ensure cross‑border transfer safeguards. Before transferring employee data to another country, verify that appropriate safeguards are in place (e.g., EU Standard Contractual Clauses, Binding Corporate Rules or, in Australia, reasonable steps to ensure the overseas recipient meets privacy obligations^[15]). In jurisdictions that restrict transfers or require local storage, consult local counsel.

Don’t:

• Don’t mix medical and HR files. Separate medical records from general HR files to reduce unauthorised access and maintain confidentiality.
• Don’t retain data longer than necessary. Set retention periods aligned with legal requirements; the ICO advises that employers should destroy health data when it is no longer needed^[3].
• Don’t rely on one legal framework. APAC privacy laws vary widely; some do not recognise legitimate interest and impose strict consent requirements^[15]. Do not assume GDPR compliance alone is sufficient outside the EU.

Working with brokers and legal advisers

Navigating international benefits requires collaboration with professionals who understand local regulations and can provide practical solutions. Brokers and legal advisers play complementary roles.

What to ask your broker or adviser

1. Licensing and regulatory status. Are you licensed to distribute insurance products in each jurisdiction where our employees reside? Under IDD and equivalent UK rules, intermediaries must be registered and disclose their status and remuneration^[1][2].
2. Product oversight and governance. How do you ensure that the benefits recommended meet our employees’ needs? Do you provide Insurance Product Information Documents and conduct product suitability assessments? What due diligence do you perform on insurers (e.g., financial strength, claims handling)?
3. Cross‑border expertise. Can you support social security coordination, obtain A1 certificates, and advise on telework thresholds? Do you have experience designing benefits compliant with multiple jurisdictions, including APAC and GCC? How do you stay abreast of regulatory changes?
4. Data protection practices. How do you handle sensitive employee data? Do you have privacy by design practices? Can you support cross‑border data transfers (e.g., through anonymisation, use of approved processors, local storage)?
5. Remuneration and conflicts of interest. How are you paid (commission, fee, or hybrid)? Do you receive incentives from insurers that could influence recommendations? IDD and FCA rules require transparency^[1].
6. Governance support. Do you provide documentation templates (e.g., benefit summary, decision logs, checklist for renewals)? Will you assist in audit requests or regulatory inquiries?

Collaborating with legal advisers

Legal advisers complement brokers by interpreting jurisdiction‑specific laws, preparing employment contracts and advising on tax and social security implications. Engage counsel in:

• Drafting compliant employment contracts that address host‑country rights, benefits and data‑privacy terms.
• Assessing corporate tax and permanent establishment risks for remote workers and designing structures to mitigate them^[11].
• Reviewing data‑processing agreements to ensure cross‑border transfers meet legal requirements and advising on data‑localisation laws in APAC and GCC.

A coordinated approach involving HR, brokers and legal advisers ensures that compliance is integrated into business decisions rather than retrofitted later.

Checklist for HR teams

This checklist synthesises the key actions HR teams should undertake when launching or renewing an international benefits plan. Adapt it to your organisation and add country‑specific tasks.

Pre‑implementation

• Identify jurisdictions – list all countries where employees live and/or physically work. Map remote‑work arrangements and time spent in each location.
• Assess labour law requirements – research mandatory benefits, working‑time limits, leave entitlements, termination rules and health and safety obligations for each jurisdiction^[10][12].
• Review insurance and health‑care mandates – determine whether local law requires employers to provide health insurance (e.g., UAE requirement from 2025^[7], Swiss accident insurance^[6]) or other coverages (disability, pension). Check whether self‑funded plans are permitted.
• Determine tax and social security obligations – identify where employees will pay income tax and social security contributions. Obtain A1 certificates for EU/EEA teleworkers if applicable^[8][9]. Engage tax advisers on permanent establishment risks^[11].
• Select funding model – use the decision tree to evaluate whether fully insured, self‑funded or hybrid models are appropriate. Document reasoning and obtain approvals.
• Conduct broker and insurer due diligence – verify licensing, financial strength, claims processes and data‑privacy practices^[1].
• Establish governance and processes – assign roles, set up a compliance committee, create decision logs and define escalation procedures. Ensure there is a process for monitoring regulatory changes.

During implementation

• Draft or update employment contracts to reflect host‑country benefits, tax and social security obligations. Include telework provisions, working‑time requirements and data‑privacy clauses.
• Collect employee data lawfully – obtain consent where required, inform employees about how their data will be used and stored, and limit collection to necessary information^[3].
• Implement systems and controls – configure HRIS and benefits platforms to enforce privacy by design, restrict access to health data, and record processing activities^[5].
• Communicate benefits clearly – provide employees with simple explanations of their coverage, including any differences by country. Include links to IDD‑compliant Insurance Product Information Documents when available.
• Coordinate with payroll and tax – ensure correct tax withholding and social security contributions are remitted to the right authorities. Monitor telework hours to manage A1 certificate eligibility.

Renewal and ongoing compliance

• Monitor regulatory changes – schedule quarterly or annual reviews of labour laws, insurance mandates and data‑privacy regulations. Use legal and broker updates.
• Review claims and utilisation – analyse claims patterns to identify cost drivers, assess plan design and determine whether self‑funded arrangements remain viable.
• Audit vendors – review insurer and third‑party administrator performance, data‑security measures and compliance with service-level agreements. Renew or change providers as needed.
• Refresh A1 certificates and tax assessments – confirm social security certificates are still valid; reassess tax residency for employees who move or change their work patterns.
• Update documentation – maintain decision logs, audit trails and policy documents. Record any changes to benefits design and ensure employees are notified.

By following this checklist, HR teams can systematise compliance and reduce the risk of oversights.

Get Started

Designing a compliant international benefits plan is not a one‑time event; it is an ongoing process that balances legal requirements, employee wellbeing and business objectives. If you are reviewing your multinational benefits strategy or preparing to expand into new markets, we can help. Our team at BIG Insurance Brokers works with businesses and groups of all sizes to design tailored solutions that respect local regulations and support your people. Learn more about our services for businesses & groups and explore our comprehensive FAQ section for answers to common questions. Ready to discuss your needs? Request a quote and speak to our specialists.

For further reading, we recommend our guides on Choosing the Right Insurer for International Health Insurance and Understanding International Health Insurance.

Points to verify

• Labour law requirements – confirm minimum benefits, working‑time limits, leave entitlements and termination rules for each jurisdiction and employee category (local hire, secondee, teleworker).
• Mandatory insurance coverages – check whether employers must provide health, accident, disability or pension insurance (e.g., UAE health insurance from 2025, Swiss accident insurance) and whether self‑funded arrangements are allowed.
• Licensing and distribution rules – verify that insurers and brokers are authorised in each jurisdiction; some countries prohibit cross‑border insurance without local licensing.
• Tax treatment – confirm how benefits premiums and claims are taxed, whether employer contributions are deductible, and whether benefits are taxable to employees.
• Social security coordination – obtain A1 certificates and check telework thresholds; determine whether host‑country contributions are required.
• Remote‑work rules and health & safety – review telework regulations (e.g., equipment, health and safety assessments, employer liability) and ensure contracts and policies reflect them.
• Data‑transfer mechanisms – validate that cross‑border data transfers use appropriate safeguards (e.g., Standard Contractual Clauses, adequacy decisions, consent) and that local laws do not require data localisation.
• Retention periods and destruction – establish retention periods for medical and benefits data consistent with local law and ensure secure destruction when no longer needed.