How to hire international talent while staying compliant
International hiring has become increasingly popular for businesses looking to expand their operations and tap into the global talent pool.
With the rise of remote working, the prospect of hiring talent from around the world has never been more accessible.
However, navigating the complex and ever-changing immigration regulations in different countries can be daunting for companies.
According to Upwork, 73% of all departments are expected to have remote workers in the next five years. As companies look to leverage this trend, it's essential to prioritise compliance when hiring internationally. By doing so, businesses can avoid risks such as significant financial penalties, reputational damage, and legal liabilities.
So, how can business owners ensure compliance with international hiring regulations?
Properly classify your talent
When it comes to hiring international workers, one crucial step that businesses must take is properly classifying them as employees or independent contractors. But unfortunately, many businesses make the costly mistake of misclassifying workers, often resulting in significant financial penalties, tax fines and legal liabilities. Take Uber, for example, which had to pay a settlement fee of more than US$10 billion for misclassifying drivers.
The Internal Revenue Service (IRS) estimates that employers have misclassified millions of workers as independent contractors, resulting in billions of dollars in lost revenue for the government. And it's not just the government that pays the price for misclassification mistakes. Workers can also suffer when they're denied benefits they are entitled to, such as health insurance, retirement plans and paid time off.
Understand the laws in the country of hire
Understanding the laws in the country of hire is a critical aspect of international hiring compliance that cannot be overlooked. Many businesses assume that employment regulations are universal, which can lead to costly mistakes and legal liabilities.
For example, France has some of the most protective labour laws in the world. In 2023, businesses looking to hire in France should be aware of the country's strict regulations on working hours, which limit the number of hours an employee can work per day and per week. They should also be mindful of the country's rules on vacation days and paid time off, which are among the highest in Europe. France also has strict regulations on the termination of employment, which can make it challenging for businesses to lay off employees.
In addition to these country-specific regulations, businesses must also be aware of broader employment laws that apply to international hiring, such as the International Labour Organization's (ILO) conventions on labour rights and the United Nations' Guiding Principles on Business and Human Rights. These guidelines establish universal standards for fair labour practices and human rights in the workplace, which businesses must comply with regardless of the country they are hiring in.
Obtain work visas or permits
When hiring international workers, obtaining the appropriate work visas or permits is often a necessary step in ensuring compliance with local employment regulations. The specific visa or permit required will vary depending on the country and the individual circumstances of the worker is hired.
In the US, hiring international workers typically requires applying for employment visas through the Department of US Citizenship and Immigration Services (USCIS) and sometimes the Department of Labour. For example, the H-1B visa allows US employers to temporarily hire foreign workers in specialty occupations. Similarly, in Singapore, foreign workers must obtain a valid employment pass before they can work in the country. The Ministry of Manpower (MOM) in Singapore has specific eligibility requirements for foreign workers, and the process for obtaining an employment pass can vary depending on the worker's skills and qualifications. Some workers may need to undergo medical examinations or provide additional documentation to meet the MOM's requirements.
Overall, obtaining the proper work visas or permits is essential for international hiring compliance. Businesses must thoroughly research the visa or permit requirements for each country they're hiring in and ensure they meet all eligibility requirements before bringing international workers on board. Failure to obtain the appropriate work visas or permits can result in severe consequences, such as fines, legal liabilities and reputational damage.
Pay international employees accurately and on time
Another crucial aspect of international hiring compliance is global payroll. Businesses must ensure they're meeting the payroll requirements for each country they're hiring in, which can be a complex and time-consuming task. Some of the challenges businesses face when it comes to global payroll include currency conversion, tax regulations and compliance with local labour laws.
To ensure compliance with global payroll regulations, businesses should consider partnering with a global payroll provider. These providers can help businesses navigate the complex payroll regulations in different countries, ensuring they meet all legal requirements and avoid costly mistakes.
In addition to payroll compliance, businesses must also ensure they are complying with all tax requirements in the countries they're hiring in. This includes understanding tax rates, filing requirements and compliance with local tax laws.
Partnering with a global tax and accounting firm can help businesses ensure compliance with all these tax requirements. These firms can provide guidance on tax regulations and help businesses file tax returns in each country they're hiring.
Hiring international talent is an excellent way to bring diversity and expertise to your business, but it's essential to prioritise compliance when doing so. Understanding the laws in the country of hire, properly classifying workers and ensuring compliance with global payroll and tax regulations are critical aspects of international hiring.
To ensure compliance with international hiring regulations, businesses must take the time to research and understand the specific laws and regulations in the countries they're hiring in. It's also important to partner with experts in global compliance, such as immigration lawyers and global payroll providers, to ensure that businesses meet all legal requirements and avoid costly mistakes.
By following these best practices, businesses can successfully hire international talent while staying compliant with local laws and regulations.
Jamie Haerewa is co-founder and Managing Director of Agile HRO
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