Hiring International Employees: Tips for Expansion or Start-ups for Employing Staff Overseas
When your company is starting up or expanding overseas, one of the first challenges is hiring and managing quality employees. Regardless of which type of worker your company hires, there is one key point to remember when hiring international employees; you must run a local payroll and either incorporate a corporate entity or use a GEO service to be compliant.
When your company is starting up or expanding overseas, one of the first challenges is hiring and managing quality employees. There are very real differences when you hire staff abroad, and this article will cover the topics to look out for as you recruit and onboard your employees.
International employees fall into three categories:
- Expats that are sent on assignment from the home country
- Foreign workers that reside in the new market and are hired to support local operations
- Remote employees hired for their skills and ability to work independently
Regardless of which type of worker your company hires, there is one key point to remember for hiring international employees; you must run a local payroll and either incorporate a corporate entity or use a GEO service to be compliant.
Consider Local Employment, Immigration and Payroll Laws
Every country has its own laws for employment, immigration, taxation, pensions and benefits, and in some cases the rules are different for locals than for expats. Even if the laws in your home country are more lenient, the host country rules will take precedence because you are running payroll there and your employees are entitled to all local worker protections and benefits.
Payroll and Compensation Compliance
While expat workers may be satisfied with compensation arrangements made in the home country, foreign workers will want to ensure that their local benefits and payroll conform to the laws of the host country.
For example, unlike the US, countries such as Australia have a mandatory employer contribution to pension, so that has to be factored in to the cost of hiring. Social security contributions may also be higher than you expect, like in France where the employer portion can be as a high as 50% of salary.
If you are assigning expats abroad, work permits and visas will be required in almost every country. The exception to this is when an EU resident travels to another EU country to work, then no permit is needed.
Sometimes there is a special work visa available between countries, such as the US and Canada, but most of the time your expat employee will need a standard work permit sponsored by a legal entity. In the UK, a work permit for a non-EU citizen is only available if you have legal branch or entity in place.
Statutory Entitlement Compliance
Entitlements for overseas employees can include annual leave, sick leave, health insurance and severance upon termination. In Singapore, maternity leave is a minimum of 12 weeks (16 weeks for locals with 50% government funded), while India mandates 12-26 weeks of fully paid leave.
China’s annual leave (for vacation) depends on how many years of service, but not just to the current employer, but cumulatively to all employers in China. It starts at five days per year for service of 1-10 years, which is in sharp contrast to countries like the UK and Italy which offer four weeks of annual leave.
These wide differences in leave amounts can bring issues of balancing compensation between countries, as well as maintaining a comparable work load for all employees.
Be Aware of Cultural Practices and Language Barriers Overseas
Whether your company is managing foreign workers or asking expats to integrate into a new country, both language and culture can present challenges. For expats, some language ability will help smooth the transition, as well as cultural training in the business practices and social customs of the host country.
Due to cultural differences, foreign workers may have different expectations from their employer or work duties, and contracts should be explained, and responsibilities outlined in the local language.
Identify Relevant Work Experience in Candidates
Some types of work experience may not be transferrable depending on the nature of the position, and you will have to assess the new employee’s skill set, and their ability to communicate and self-manage remotely. Recruiting and interviewing takes on a new dimension of importance with foreign workers, with the added challenge of time differences and using virtual communication.
Probation and Termination Policy Compliance
Often, the rules governing probationary or trial work periods will be established by the laws of the host country, and are to protect the employer. Those are often not mandatory, and for example in Netherlands can be waived if both employer and employee agree.
Termination of employees may have legal restrictions that are new for the human resources department that is accustomed to ‘at-will’ employment as is customary in the US, and local protections for workers may prevent termination in some situations, or offer long notice periods and severance pay.
As an example, Australia requires one month notice and severance to be paid if employed longer than one year. France takes worker protections seriously and if you can show cause, the notice period is three months, with mandatory severance. Germany uses an unusual formula for notice based on length of service by the employee...read more
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