The potential for HR managers to make mistakes grows as an organization expands internationally. Why? Foreign labor laws, cultural differences and cross-border communication (to name a few) add significant complexity to the job and create more opportunity for things to go wrong.
If you’re planning to expand your business to new markets and are worried about HR risk, make sure to keep these common mistakes in mind.
1. Misunderstanding local labor laws
For HR professional, understanding all the different laws that regulate employment conditions, like work hours, compensation, pension and severance, is critical for ensuring compliance and protecting the company from potential litigation.
But employment laws change frequently and vary from country to country, so keeping up with local legislation (especially in multiple regions) can be a huge undertaking for your HR team.
Consider working with in-country legal and HR experts to help your team navigate compliance risk and avoid unintentional mistakes in new markets.
2. Expecting the same work week
Related to the above, you may run into some issues if you expect the same work week for every employee. While workers in the U.S. are familiar with the 40-hour week, other countries do not share that same expectation. For example, in Australia and France full-time employees work 38 and 35 hours per week, respectively. Of course, you can ask workers to extend working hours on certain weeks as necessary, but keep in mind you may have to pay overtime (which can add up quickly).
In addition to local regulations, HR teams will need to consider cultural influences that may impact employee work hours, as some countries maintain variable hours throughout the year. In Spain, for example, working days are typically shortened during hot summer months and lengthened in the cooler winter months.
3. Not being aware of national and regional public holidays
This can seem obvious, but you would be surprised how many organizations and HR professionals overlook non-American holidays—a mistake that can lead to complications when scheduling paid time off, filling in timesheets or planning company-wide meetings.
From days for marking seasonal harvests to celebrations for patron saints to independence days, you can expect some sort of holiday at any time of the year. And while some employees may be fine working through holidays, keep in mind that you may be required to pay extra wages. For example, if employees in Mexico work on a national holiday, they are paid triple their daily wages.
Additionally, whether a holiday is cultural or faith-based, they fill important roles in people’s lives beyond work, so not acknowledging holidays (even unintentionally) could impact employee performance and job satisfaction.
4. Neglecting time zone differences
In the U.S. alone, factoring in time zones can be difficult if the organization runs a bicoastal operation. Now imagine how much more challenging that gets when you expand to global time zones.
At a practical level, forgetting to factoring in time zones can result in missed due dates or problems with receiving time-sensitive projects. And when scheduling company-wide meetings, the onus is on HR to plan accordingly, as some workers may be clocking out for the day while others are just waking up.
5. Using different formats for numbers and measurements
The U.S. is one of the few countries that does not use standard metric units, which can contribute to some confusion if you need to discuss measurements of any kind with global team members. In addition to measurements, there are other numerical formats that you need to keep in mind. For example, “zip codes” are common in the U.S., but in the U.K. they are better known as postcodes.
How dates are formatted can also cause confusion. The U.S. has made standard the month-day-year (mm/dd/yyyy) format for dates, but nearly all other countries use the day-month-year (dd/mm/yyyy) format. That can get confusing if, for example, you ask for a project to be completed by 2/12 (and mean February 12), but a non-U.S. employee reads it as December 2.
6. Not looking into multiple leave entitlement policies
In the U.S. and U.K., workers usually only have one paid time off plan with some slight variations on how it accrues. The U.K. also has separate paid sick leave entitlements, which some businesses in the U.S. are adopting. However, most other countries have other forms of paid leave, usually in relation to length of service.
Other countries also tend to have more robust laws for leave related to bereavement and parental responsibilities. Employers are obligated to encourage their workers to take these leave plans, or they can pay out the amounts.
These different leave policies can accrue in different ways. Developing an internal strategy that allows for multiple different types of absence and leave allows for greater flexibility to accommodate the needs of a global workforce.
7. Not considering multiple currencies
Your HR system already has to handle and record information for payroll, including reports on salaries, benefits, bonuses, pensions and all the other components of employee compensation. But when you work with a global workforce, your system has to do all of that while also converting those numbers into a foreign currency.
Staying on top of workforce spend is integral to business operations, so make sure your HR or payroll system is robust enough to track compensation beyond dollars and cents.
8. Not meeting visa or immigration requirements
This mainly applies to employees that are expatriates, but you are responsible for providing expat workers with necessary work visas and permits. Even if they work for you but reside elsewhere, you are the entity in charge of complying with local immigration regulations. You will have to sponsor the employee’s visa with a legal entity in their country of residence.
An expat working on a tourist visa or even a business visa would be out of compliance, resulting in penalties and deportation, and those penalties would most likely fall on you as the employer and liable party.
9. Not prioritizing employee data protection
Many countries are enforcing more stringent regulations to protect employee data privacy, like General Data Privacy Regulation (GDPR ) in the European Union. HR teams that are responsible for collecting, using, sharing and storing sensitive data about their international workforce will need to prioritize data protection, especially when it comes to highly sensitive payroll data.
Not doing so can risk severe legal penalties and damage to employee trust.
10. Misclassifying international employees
There are several differences between independent contractors vs. employees. Contractors are exempt from traditional employer-employee relations, meaning contractors typically accomplish a task with little instruction, while employees operate with more oversight from an employer (and are often afforded more benefits).
HR must understand how the local government defines employees in order to avoid unintentionally misclassifying them—a violation that can lead to severe penalties.
How to avoid international HR mistakes
Mistakes are bound to happen within any HR team, especially those that are new to managing an international workforce. One way to support human resource activity as your company expands into new global markets is to work with local experts that can fill gaps in legal and cultural knowledge.
Ready to learn more? Contact us today to speak with a global solutions advisor about how GEO can protect your business from HR risk.