Let’s face it – how we work has changed excessively over the past couple of years. Now, we can throw meetings on Zoom, attend virtual events, and design new products from anywhere in the world.
There is one big issue though! Tools for paying and hiring global employees have not kept up in all countries. Things can get really messy when hiring globally. With complicated taxes, confusing local laws along with hefty fines if you don’t get it right.
HR managers can often assume that providing global talent with the same benefits as those in their home country is fair, but there are many instances where these are not appropriate for global employees. Managers must continuously review the local laws and customs before creating an international pay package.
Hiring remote workers globally can be a daunting task. HR managers may think it’s fair to offer the same benefits to global employees as those in their home country, but there are many instances where this could backfire. Different countries have different regulations and taxes that must be taken into consideration when hiring remote workers.
By taking these extra steps, employers can ensure a successful remote hiring experience for both themselves and retain remote employees.
What to Avoid When Hiring Internationally
Neglecting onboarding requirements
Getting started in a remote jobs, role can be challenging. There is no office space or structure or co-workers nearby to guide one’s behaviour, so figuring out how to get started can be challenging. In order to alleviate employees’ uncertainty and make them feel more supported from the beginning, employers must design a comprehensive onboarding process.
Hiring remotely and remote working, disconnects employees geographically and cracks the world open for companies to have access to an endless worldwide talent pool.
It is possible that companies overlook regulations that dictate how and when international employees must be registered with the government as they work to get their new employees prepared and set up for success. Onboarding international talent will require employers to plan for special circumstances that could suit each unique remote jobs profile and location where the employee will be operating.
When entering a new market, companies usually hire remote talent quickly, especially when a new business opportunity presents itself. But creating a compliant employee agreement or contract requires detailed attention to local laws.
Regardless of whether they are an independent contractor or direct hiring of remote workers, employers need to carefully consider the legal implications of engaging a remote worker, especially if they are doing so internationally.
A growing company can benefit greatly from remote hiring workers as independent contractors. Legal definitions of independent contractors differ by country, therefore employers must be thorough and cautious when classifying the scope of the contractors’ remote work.
To avoid liability for employee misclassification, the hiring manager must clearly understand their contractor’s role, including expectations and responsibilities, and ensure that their work requirements will be legally recognised as contract work in the country they are situated.
Aside from the differences in identifying employee classifications that could put employers at risk, there are also a variety of different financial and tax laws to navigate when hiring employees in other countries.
When a remote employee isn’t located in the same country as the rest of the company, employers should never assume they can add them directly to the payroll.
Even more complex legislation exists when employers pay remote workers internationally. Employers might be tempted to pay international workers through international money transfers, but this could result in non-compliance with employment legalities and government regulations.
Complying with the legislation requirements for each job profile of every employee, their pay schedules, wages, and taxes in each country can become difficult. Both the company and the employee can be protected when local employment laws are followed and accurate documentation is provided. To ensure compliance you will need a hiring process when you hiring the right remote employees and to ensure all the necessary paperwork is completed, employers will benefit from consulting with employment or legal experts from different around the globe.
Having virtual tools and a hiring process in place when is important, but they can only be as effective as the people using them. Adequate support to remote employees, including those working from home, requires setting expectations and boundaries.
The guidelines for working remotely must be specific, with clear job description outlining different types of work profiles that qualify for remote work and clear performance measures to monitor employee compliance would need to be set up.
A thoughtful and well-designed remote working policy also provides clarity and addresses any cultural inconsistencies when hiring remotely.
Risk of permanent establishment
When companies decide to hire international employees, one must be mindful of permanent establishment risk, which occurs when a foreign company establishes a taxable presence in a foreign country due to its employees activities.
This risk can arise when employees work remotely in a foreign country for an extended period. If the company doesn’t comply with the local tax regulations, it may face penalties and fines.
To mitigate this risk, companies should consult with tax experts to understand the local tax laws and regulations and ensure compliance with them.
They should also monitor their employees activities and work locations to ensure they are not inadvertently establishing a taxable presence in a foreign country.
The solution for hiring remote employees in other countries
Onboarding internationally can be tricky when you hire remote workers to work remotely, but when done correctly, the benefits of remote work are greater than the challenges posed during the onboarding phase. These common HR mistakes, such as non-compliant employment terms, can be easily avoided when you have the right partner in your corner for remote work.
By partnering with an EOR for remote hiring, employers can ensure a smooth onboarding and interview process and provide their remote employees with the same level of support as their in office employees.
An employer of record (EOR) for international employees, like Playroll Global Solutions, helps navigate employers through all regulations, local labour and tax laws, and benefits, giving managers time to focus on ensuring their remote workers are professionally supported and included within the company culture.
Contact us today to speak with a global solutions advisor and learn more about outsourcing global employment and begin your remote hiring.