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Globalisation has paved the way for borderless employment, and companies around the world are grabbing the opportunity!
Aside from cultural diversity, having a mix of international employees helps attain various skill sets. But before diving head first into the global talent pool, a host of compliance boxes need to be checked to ensure that you are on the right track from the get-go!
Hiring International Employees: What you Need to Know
1. Obtaining certification
If you are based in certain countries like the US, you would need to apply for certification from the United States Department of Labor which states there are insufficient qualified local talent to perform a specific job function at the prevailing wage.
2. Advertise the Job Vacancy
To hire compliantly in certain countries, you must meet specific employment regulations. This may be subject to race, gender, and location. Therefore, it is wise to research the countries you are looking to hire in before starting the interviewing process.
3. Don’t forget the tax man
The saying is true - the tax man never sleeps, and hiring internationally means that companies must comply with country-specific taxation laws. Therefore, tax implications on foreign-sourced income must be planned for. While a company will likely be taxed on profits in its home country, additional taxes will typically be owed to the foreign country you are operating in.
One challenge in tax planning and PE is that every country has the power to create unique standards and criteria for PE. In most cases, an international entity is liable for double taxation on their profits and employee tax.
Tax treaties and foreign tax credits are sometimes made available to soften the blow, but this depends on the country of business operation and headquarters tax policies.
4. Visa Applications
If you require a candidate to relocate, bear in mind that some new hires will need time to clear immigration issues and apply for visas. Due to the Covid-19 pandemic, many emigration offices across several countries are working against a backlog - meaning that it could take months to successfully obtain a visa.
5. Get in Tune with Salary Increases and Employee Benefits
In America, for example, salary increases are mandated. However, some countries like Canada do not mandate salary increases.
In Brazil, union agreements dictate salary changes, while increases are needed only for employees making the minimum wage in Colombia.
Most Asia-Pacific countries do not insist on salary increases. Indonesia, Thailand, and India are among these countries.
Other benefits include things such as the following.
- Additional cash allowances for transportation, meals, or holidays.
- Profit sharing: in Mexico, profit sharing is a requirement.
- Transportation allowances are also expected for employee benefits in Brazil, Chile, and Colombia but not in the US or Canada.
Why is Compliance Important when Hiring International Employees?
There's no doubt that employing and managing international teams is challenging.
Regulatory pitfalls and employee classification are not the only boxes to check when employing international talent. Businesses hiring overseas also need to prepare for:
- Working across different time zones
- Payment and exchange rates
- Employee Contracts
- Statutory regulations
Hiring internationally demands more than just compliance knowledge. You must also understand local cultures, politics, and languages to achieve employee satisfaction, especially for remote work. But, let's face it; it's time-consuming and difficult to gain these insights for every country you choose to hire in!
If reading this makes hiring internationally feel increasingly out of reach, take comfort in that most of these challenges can be significantly smoothed out by partnering with an Employer of Record like Playroll.
How an Employer of Record Can Help you Hire Internationally
An Employer of Record partner absorbs all legal responsibility for the international talent you hire and relocate, effectively acting as the legal employer (at least on paper).
EOR partners are responsible for:
- Employment contracts
- Processing multinational payroll,
- Ensuring you are compliant in each country,
- Managing tax and contributions
- Taking care of termination and legal support
- Paying bonuses and managing increases
Expanding your recruitment strategy internationally opens the door to attracting talented international employees who could help your business reach new heights. However, when doing so, it is important to comply with local and international hiring laws ensuring that both the company and your new talent are kept happy (and compliant!) in the long run!
Globalisation has paved the way for borderless employment, and companies around the world are grabbing the opportunity!
Aside from cultural diversity, having a mix of international employees helps attain various skill sets. But before diving head first into the global talent pool, a host of compliance boxes need to be checked to ensure that you are on the right track from the get-go!
Hiring International Employees: What you Need to Know
1. Obtaining certification
If you are based in certain countries like the US, you would need to apply for certification from the United States Department of Labor which states there are insufficient qualified local talent to perform a specific job function at the prevailing wage.
2. Advertise the Job Vacancy
To hire compliantly in certain countries, you must meet specific employment regulations. This may be subject to race, gender, and location. Therefore, it is wise to research the countries you are looking to hire in before starting the interviewing process.
3. Don’t forget the tax man
The saying is true - the tax man never sleeps, and hiring internationally means that companies must comply with country-specific taxation laws. Therefore, tax implications on foreign-sourced income must be planned for. While a company will likely be taxed on profits in its home country, additional taxes will typically be owed to the foreign country you are operating in.
One challenge in tax planning and PE is that every country has the power to create unique standards and criteria for PE. In most cases, an international entity is liable for double taxation on their profits and employee tax.
Tax treaties and foreign tax credits are sometimes made available to soften the blow, but this depends on the country of business operation and headquarters tax policies.
4. Visa Applications
If you require a candidate to relocate, bear in mind that some new hires will need time to clear immigration issues and apply for visas. Due to the Covid-19 pandemic, many emigration offices across several countries are working against a backlog - meaning that it could take months to successfully obtain a visa.
5. Get in Tune with Salary Increases and Employee Benefits
In America, for example, salary increases are mandated. However, some countries like Canada do not mandate salary increases.
In Brazil, union agreements dictate salary changes, while increases are needed only for employees making the minimum wage in Colombia.
Most Asia-Pacific countries do not insist on salary increases. Indonesia, Thailand, and India are among these countries.
Other benefits include things such as the following.
- Additional cash allowances for transportation, meals, or holidays.
- Profit sharing: in Mexico, profit sharing is a requirement.
- Transportation allowances are also expected for employee benefits in Brazil, Chile, and Colombia but not in the US or Canada.
Why is Compliance Important when Hiring International Employees?
There's no doubt that employing and managing international teams is challenging.
Regulatory pitfalls and employee classification are not the only boxes to check when employing international talent. Businesses hiring overseas also need to prepare for:
- Working across different time zones
- Payment and exchange rates
- Employee Contracts
- Statutory regulations
Hiring internationally demands more than just compliance knowledge. You must also understand local cultures, politics, and languages to achieve employee satisfaction, especially for remote work. But, let's face it; it's time-consuming and difficult to gain these insights for every country you choose to hire in!
If reading this makes hiring internationally feel increasingly out of reach, take comfort in that most of these challenges can be significantly smoothed out by partnering with an Employer of Record like Playroll.
How an Employer of Record Can Help you Hire Internationally
An Employer of Record partner absorbs all legal responsibility for the international talent you hire and relocate, effectively acting as the legal employer (at least on paper).
EOR partners are responsible for:
- Employment contracts
- Processing multinational payroll,
- Ensuring you are compliant in each country,
- Managing tax and contributions
- Taking care of termination and legal support
- Paying bonuses and managing increases
Expanding your recruitment strategy internationally opens the door to attracting talented international employees who could help your business reach new heights. However, when doing so, it is important to comply with local and international hiring laws ensuring that both the company and your new talent are kept happy (and compliant!) in the long run!
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