Staying in compliance with international employment law

May 9, 2018

International employment law

Hiring employees to work for your organization in countries where you don’t already have an in-country entity is risky, especially if you’re not prepared and aren't aware of the nuances of international employment law.

There are many reasons to hire globally: exploring expansion into a new market, hiring talent that isn’t available where you have an entity, or supporting a specific venture or project. Often, the need for flexibility may outweigh the desire to take the time and expense needed to set up an entity in-country.

The “gig” economy coupled with the ease of communicating across borders allows workers and organizations to work seamlessly from anywhere in the world. However, remaining compliant to international employment laws in all the countries where you want to hire may not be quite as seamless.

3 ways to avoid noncompliance of international employment law

1. Register in-country

Before you hire in a country where you haven’t hired in before, you must set up an in-country entity and register with the local authorities.

By setting up a legal entity before you hire, you will be given a local taxpayer ID and have done the work to set up in-country payroll. This requires careful planning, because it is an investment with considerable up-front expenses, time and resource investment. If you’re testing a new market or setting up for a temporary project or program, be sure to work in the added resources to your plan.

2. Hire independent contractors

Independent contractors may work for a specific type of project, but be aware that the classification of an independent contractor has specific guardrails around the type of work and how much responsibility the worker can carry. If your contractors are going to have set schedules or responsibilities for work outside of a specific project, you (and they) run the risk of employee misclassification and penalties for noncompliance.

3. Engage with an employer of record

An international employer of record service can provide in-country resources to employ your global workers. Employers of record manage the employment contracts, taxes, benefits and social costs, and you manage the work and direction of the employee. With the right employer of record, all your HR and payroll needs are taken care of for you.

Gambling with international employment law in hopes that you are in compliance—or that you won’t be caught if you’re not—can greatly impact your organization.

If you’re looking at moving quickly, you likely have little experience with the international laws that will affect how you hire. If your hiring method misses a step, your project or expansion begins to cost more money, take longer to ramp up, and ultimately can set a strategic plan back.

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