Understanding Host-Based Salary Plans

The question describes a scenario where an employee transferred internationally receives a salary determined by the local pay scale of the destination country (the country where they will work). This approach is known as a host-based salary plan.

• Host-Based Plan Definition: In this system, the employer sets the employee's salary based on the prevailing compensation rates and market standards in the host country for the specific role. The goal is to ensure the compensation is competitive and equitable within the local context.
• Scenario Alignment: The employee's salary is based on the "base salary for that position in the country where he will work," directly matching the definition of a host-based plan.

Evaluating Other Options

• Home-Based Salary Plan: This plan anchors the salary to the compensation structure of the employee's home country, which is contrary to the scenario described.
• Transfer Salary Plan: This is not a standard, distinct salary plan category. While a transfer involves salary adjustments, the *basis* for that adjustment defines the plan type (e.g., host-based).
• Cost-of-Living (COL) Adjustment: While COL considerations can be *part* of an international compensation package (and sometimes integrated into host-based or balance sheet approaches), the core definition provided focuses on the local market salary, not solely on COL differences. A purely COL-adjusted salary might differ from the local base salary.

Therefore, the employer has used a host-based salary plan.