Three Hidden Risks of Study Abroad Programs You Should Know
By John Bostwick, HSP Technical Writer, Higher Education and Non-Profits
Study abroad programs offered by US colleges and universities are varied, ranging from week-long programs run by third-party operators to long-term programs offered at satellite campuses. Higher-education administrators who support these programs must determine what institutional risks they pose and how to mitigate those risks. These tasks are particularly challenging given that institutions must comply with home- and host-country laws.
Some study abroad risk areas—like participant safety and vaccination requirements—are familiar to virtually all administrators. Other risk areas are not so well known and can be real threats to an institution’s reputation and budgets. This post explores three hidden risks of study abroad programs.
1. Partnering with the Wrong Institution
A college or university establishing a study abroad program has good reason to consider partnering or collaborating with another educational institution or with an organization offering programs in the host country. Partnerships provide academic and cultural benefits and tend to reduce program costs and administrative burdens. However, these benefits are offset by a decrease in academic and administrative control. And if after entering a formal relationship you find that your partner doesn’t have the academic credentials, legal standing or compliance standards you had assumed, then your own institution’s finances and reputation could be at risk.
Before agreeing to a collaboration, a college or university should vet the partner using a centralized process involving university stakeholders, internal legal counsel, and (in some cases) external legal counsel from the host country. The process should ensure the bona fides of the partner and its institutional compatibility. Once the partner has been vetted and approved, the institutions should enter into a written agreement before program activities begin. The agreement should clearly state each side’s responsibilities and be binding according to home and host-country laws.
2. Misclassifying Host-Country Workers as Independent Contractors
When establishing a study abroad program, a college or university may need to hire local individuals to support the program. The institution may consider hiring these individuals as independent contractors rather than as employees to provide flexibility and save money. Administrators should bear in mind, however, that employment laws in foreign countries typically favor the worker over the employer. If host-country authorities deem that an employer has incorrectly classified a worker as an independent contractor, and thereby failed to pay required income and social security taxes, severe fines and reputational damage may result.
An institution can protect itself by properly classifying workers according to host-country employment laws and by vigilantly keeping abreast of changes to those laws. An external advisory firm and/or host-country legal counsel can help with both employee classification and the drafting of sound, compliant contracts, which may need to be written in the language of the host country. These contracts do not in themselves typically determine proper status as an independent contractor, but they are likely to be required by local law and represent a good-faith effort on the part of the employer to clearly outline the terms and conditions of the working relationship.
3. Failing to Understand Host-Country Employer and Employee Tax and Immigration Obligations Related to Employees Traveling Abroad
It is common for a US college or university to send a faculty or staff member abroad on a short- or long-term assignment. The employee often remains on the institution’s US payroll and continues to pay US income and social security taxes. A higher-education administrator in this situation may assume incorrectly that the employee will not be liable to pay income or social security taxes to host-country authorities, and may further assume that the institution will not be liable to pay host-country employer taxes.
However, an employee in a host country may be required to pay income taxes under local law. Tax liability is usually determined by the cumulative number of days spent in-country during the tax year, and that number can range from one day to one year. After the threshold is met, the employer may also be required to withhold and remit such taxes and social tax payments to local authorities.
Institutions should also be aware of the host country’s employment immigration requirements, including those related to employment visas. These requirements can in some cases take months to fulfill, and failure to comply can result in fines and other significant penalties to the employer and employee.
To find out how HSP can help support your institution’s study abroad programs, click here.