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4 Tips for Hiring Employees No Matter Where They're Located
Managing employees overseas can be complicated. These tips can help you do it right without sacrificing productivity.
With remote work surging in the wake of the Covid-19 health crisis, professionals all over the world have grown to expect the ability to work from home—no matter where home is located. This has its advantages for business owners as well. Instead of being restricted to hiring people only within commuting distance to a physical office, you can potentially hire the best person for the job regardless of their location.
"It opens your business up to a much wider pool of talent," says Ann Ellis, co-founder and CEO of Mauve Group, a global organization that supports businesses in expanding and employing people overseas. "Getting that breadth of international skill into a company gives it a greater competitive edge."
International hiring also gives owners or small and large businesses alike a foothold in another country. "If your business wants to dip a toe into a new international market, having local staff on-the-ground can make the process easier," Ellis says. "Logistically, it can give you a strategic hub in an overseas location without the need to set up a costly permanent entity."
So how does a U.S.-based company get started hiring or relocating employees overseas? As it turns out, it can be a tricky process when not done properly. Every country has its own rules, and every employment scenario is unique. There is rarely a template to apply to every situation.
Here, Ellis shares several important tips for businesses that are ready to start hiring employees anywhere in the world.
1. Don't assume the rules that apply at home will apply overseas.
This could be in terms of vacation entitlement, sick pay, taxation, compensation and benefits. "You will need to check your standard employment contract and terms to ensure it's compliant in the new country," Ellis says.
If attempting to navigate this on your own, start by checking basic labor code information on the country's labor department website or by calling governmental offices. Ellis suggests reviewing this information side-by-side with your standard employment contract to see what needs to be added. To fill the gaps, you can engage attorneys and accountants in the country in question to obtain more detailed contract and payroll/taxation information.
For complex or time-consuming employment law or HR situations, it may be better to seek a third-party organization like Mauve Group. As an Employer of Record, Mauve can employ and pay a company's staff for them in global locations where they may not have an entity of their own set up.
"We've developed a carefully vetted network of partners in every country where we operate, as well as having our own in-house legal, tax, and compliance experts—so you do not have to dedicate time to finding the information yourself and worry that it is inaccurate," Ellis says. "We have agreed preferential rates with all partners, too, so you won't be stung by high costs."
2. Assess your risk of permanent establishment.
The term permanent establishment (PE) refers to activity by a multinational company that creates a sufficient presence in a foreign country to make it liable for local corporate taxes or value added tax (VAT). In other words, countries can tax businesses that are generating revenue through local operations, even if they maintain their principal headquarters in their home country.
While working with a third-party like Mauve Group cannot insulate a company from PE taxation in every scenario, it can in many and offers a greater level of compliance with corporate tax rules within the country. "Another option is to obtain a Risk Assessment prior to engaging your overseas worker, which can flag permanent establishment risks based on your unique proposed local activities," Ellis says.
3. Don't skimp on overseas benefits.
Good benefits policies should be maintained when an employee is relocating overseas or if you're hiring internationally. Look at your current benefits policies and investigate what the local standard is in the new country of work, Ellis suggests. The long-term implications should be considered before any agreement.
"Is cost of living higher in the new country of work? Do you need to adjust the package to account for this? Bear in mind that this may raise your employee's salary and benefits expectations," Ellis says. "If their package amount has been increased by 50 percent and they later return to the original country, they may expect you to guarantee the same package value at home. Once again, clear policies and transparent communications with the worker are vital in avoiding disputes and inefficiency."
4. Prioritize the employee and listen to what they want.
Whether it's a new overseas employee, an existing employee wanting a move for themselves, or a worker you are hoping to mobilize to a new location, considering what they want out of the scenario is a vital part of the planning. "If this isn't considered, once engaged in their new location they might feel isolated, disillusioned, and unmotivated to make a success of their work," Ellis warns.
Employers should prioritize conversations with the worker and keep them updated at every stage of the planning process for your overseas project/employment. Determine expectations from both sides and conduct regular check-ins to help ensure the person is happy, adjusted, and productive.
An Employer of Record can help your business prioritize communications between all parties in the agreement, making sure everyone is on the same page. Most will provide a range of additional global services that you can build into a package, such as assessing any corporate or HR risks in country, applying for visas, managing relocation, and guiding you through entity set-up if you do decide you want a base in-country.
At Mauve Group, their dedicated client liaison teams maintain regular check-in contact over video call and email, escalating, and counselling on any issues employees might experience. "The Employer of Record will take on all local HR responsibilities, payroll and employment duties, leaving you free to concentrate on your employee's day-to-day activities," Ellis says.
Click here to learn more about Mauve Group's full menu of global HR and business solutions, including Employer of Record, risk assessments, company set-up, visa and immigration and more.