When to consider international employee leasing for your expansion

September 14, 2020

international employee leasing

For companies entering new global markets, employee leasing can alleviate hiring and labor law complexity

When a U.S. company begins evaluating overseas expansion, hiring might not be the first priority—especially if it’s trying to figure out its financing, building, logistics or technology needs.

But because the right talent can play a crucial role in an organization’s expansion success, how it goes about adding workers—especially when there are unfamiliar local employment laws and customs—shouldn’t be overlooked.

Fortunately, there is an employment option that frees companies from the burden of HR and payroll complexities and allows them to focus on the other strategic considerations of expansion. It’s called international employee leasing.

What is international employee leasing?

International employee leasing is a hiring approach that allows organizations to secure labor in other countries by leasing employees from third-party companies. A company that provides international employee leasing is a global employer of record, or sometimes referred to as a global or international PEO.

The employer of record legally hires the workers, taking on the responsibility of handling payroll, benefits and compliance with local employment and tax laws, then leases the employee back to the client company. The client company is responsible for managing the employees’ day-to-day contributions and performance.

Leasing an international employee

Leasing international employees offers plenty of upsides to companies entering new global markets. Here’s when to consider this employment option as part of your international expansion:

When you need speed and flexibility. Leasing an international employee from an employer of record can be completed in as little as a couple of weeks. For a company just starting out with expansion, there’s not a need to take on the often extensive timeframes required for establishing the legal entity in order to hire employees internally. Because an employer of record already has in-country entities, it can hire workers on the client company’s behalf in a fraction of the time. An employer of record with service in various countries also gives companies greater flexibility in hiring, allowing them to test new global markets as the need arises.

When you’re unsure about employment compliance. With a leased international employee, a company working with an employer of record is secure in the knowledge that the worker is in full compliance with local labor laws. As part of its offering, an employer of record should have local expertise required to understand and comply with all HR, payroll and tax regulations in the foreign countries it serves. In addition to legal compliance, the employer of record ensures contracts meet cultural and other local employment customs.

When you’re seeking lower-cost options. By leasing international employees, a company is likely to save money via lower administration costs. Because the employer of record handles all the HR and payroll, the company doesn’t have to take on additional in-country HR and payroll expertise to support these new global workers. Additionally, using a third party to lease employees frees a company from costly undertaking of establishing an entity to hire employees directly.

When attracting great talent is a priority. With the ability to hire international employees through a leasing provider, a company can seek out talent virtually anywhere in the world (or anywhere an employee leasing company offers service). A leasing partner like an employer of record can enable a company to promote a remote-first culture and flexible work environment, giving the company an advantage to attracting and retaining the best talent available.

What to look for when choosing a partner for international employee leasing

For companies looking to lease international employees as part of their global expansion, it’s important to keep a few things in mind as they evaluate employer of record providers.

Pricing terms. How does the leasing partner price its services, and what’s included in the cost of an employee contract? Make sure you understand any and all fees, and whether the cost of the lease agreement includes local tax payment and other requirements. Additionally, it’s important to understand whether the employment provider pays employees in the local currency and how that may affect your company’s cost.

Direct in-country expertise. What is the leasing partner’s status in the country you’re seeking to employ in? Make sure you understand whether the provider has a direct entity with in-country staff or is relying on a local partner to carry out services. How it operates in a country, including how long it has offered services there, is a good indicator of the provider’s level of expertise in all matters of HR, payroll and employment tax compliance.

Customer service. Beyond providing legal employment to your international workers, what kind of service can you expect from your leasing partner? It’s important to understand whether you—and your in-country workers—have a direct point of contact when there any questions about local employment. Additionally, find out what SLAs—if any—are included in your international employee leasing contract.

International employee leasing can play an important role in helping your organization meet its global growth goals. Learn more about how our first-to-market employer of record solution, Global Employment Outsourcing (GEO), can help your company hire quickly and compliantly around the world by speaking to a global solutions advisor. Contact us today.

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