Global employment today is a puzzle. Some pieces are missing, some are swapped around, and some are even upside down or inside out. Whether you are a multinational corporation, an international non-profit, or just a business that operates in more than one country, you have probably had the experience of running into some of the same challenges with global employment.
When hiring a staff to work overseas, some challenges come far beyond the nuts and bolts of finding and vetting candidates. Companies often overlook these challenges when they think only of locally-hired employees, which can have extreme consequences for businesses that employ a workforce internationally.
The employment laws, compliance regulations, legal requirements, and tax implications can be complicated. The laws vary widely by country, making it challenging to structure payroll and employee benefit plans around international operations.
Why is this? Because if you are not careful, you might find yourself unwittingly breaking one employment law regulation or another in your new country. This could lead to fines, other legal issues, and harmful public exposure for your brand. It is not just about being bad for your business, though; it is also about being bad for the people who work in your company.
A global Employer of Record helps solve the global employment puzzle. That’s why companies turn to a global EOR that has experience operating in many countries and can provide expert advice on compliance issues.
1. Local Incorporation Cost and Risk
Different businesses have different strategies for entering and exiting countries. However, ad-hoc strategies are more likely to lead to miscommunication and problems. Businesses must have a fully implemented strategy before entering or exiting countries. By doing more planning and preparation, the process will be more straightforward.
3 Options for Multi-location International Employment
Businesses establishing a global presence face the challenge of managing and scaling an employee base with no common borders or language. To successfully expand abroad, companies have several options for enabling hiring in international markets.
There are six key things to consider when choosing an employment method for your company’s global expansion:
- Budget and time frame
- Tax implications
- Compliance
- Employment liability
- IP protection
- Asset acquisition.
3 Most Common ways of Local Entity Establishment
- Overseas Permanent Establishment (a representative office, a branch, a subsidiary, and other foreign legal entity types )
- Selecting independent contractors to handle tasks remotely.
- Work with a global EOR (Employer of Record) and GEO (Global Professional Employer Organisation) Partner.
You’re expanding your business into new territories with many new challenges. You’re revising your business models to better suit overseas markets, setting up foreign entities to make local hires, and dealing with the tax implications.
Incorporation and payroll registration at the local level are essential. However, the associated costs and time investment required for skilled accounting and legal support can be prohibitive. A Global Employer of Record is the solution that helps you skip the costly and time-consuming tasks of local incorporation and registration. A global EOR ensures compliance without sacrificing flexibility or control of your foreign workforce.
Engaging the services of a global EOR (employer of Record) lets you offload compliance-related concerns and skip the hassle of incorporation.
Skip the paperwork, and skip the hassle. Stop worrying about complex tax rules and legal issues your business faces. Let us help you enter foreign markets with just one payment and a single contract.
2. Employment Taxes
The world is becoming increasingly connected, with people and businesses moving across borders to take advantage of opportunities. However, employment and tax legislation have not kept up with this trend, making it difficult for companies to stay compliant.
Employment taxes can be a significant burden for businesses, especially those that hire internationally.
There are many different types of taxes that businesses have to pay, but employment taxes are one of the most important and ever-evolving. These taxes can vary significantly from country to country and can be a large portion of a monthly salary. Not only are the rates different in each country and state, but the tax filing methods can be highly complicated. So it can be challenging to figure out how much you need to withhold from your employees and how much you owe in taxes.
The problem with international employment taxes is they are often much more complicated than domestic ones and can vary even within one country. For example, there are different laws in the US depending on where you live and if you work for the federal government or a private company. In other countries, the applicable taxes may depend on which industry you work for.
3. In-country Employee Registration
Managing payroll in different countries can be a complex and challenging task. Employees may need to be registered and taxed differently in each country, and other laws must be followed. This can make it very hard to keep track of everything and ensure everything is done correctly. However, it is critical to ensure that employees are appropriately registered with the local authorities before they start work. Failing to do so can result in penalties for both the employee and the employer.
4. Payroll Calculations: Country-specific Requirements
In many countries, payroll calculations vary significantly. For example, employees in some countries may receive a 13th and 14th-month salary halfway through the year or at Christmas as standard. Thus, it’s essential to be aware of the payroll practices in your country of employment.
Understanding how payroll calculations work in your new country is important to avoid surprises. Some countries have different rules when it comes to employment contracts. In some cases, you may be responsible for paying your employees for the entire employment contract duration even if they are not performing as expected or you want to end their employment early. This can be a financial shock to foreign employers who are not used to this practice.
For this reason, it is vital to ensure that you review and understand the terms of the employee’s contract before hiring them so you know what to expect.
However, by addressing some key challenges and partnering with a Global PEO, organizations can ensure compliant, accurate, and timely payments.
5. End of Financial Year Reporting
The financial year for many countries ends in March, and companies with a presence in more than one country need to produce financial reports for each country and send them to the relevant government bodies. With the end of the financial year approaching, accountants are busy preparing reports, some of which can be complex and difficult to navigate as they may be on foreign websites with little or no English language support. You must get these reports lodged on time, as it could result in late payment penalties.
Many of these reports need to be completed in the local language, so it is recommended that you use an accountant specializing in the country you are based in to ensure compliance before lodgement deadlines.
If your company plans to do business in multiple countries, clearly understanding each jurisdiction’s employment and tax laws is essential. Compliance with these laws can be complex and time-consuming, so many businesses outsource payroll management and other HR functions to a global Professional Employer Organisation (PEO). A reputable Global PEO will have experts on staff who are familiar with the specific requirements in each country where you plan to operate.
6. Local Employment Contracts Compliance
As an employer, you need to have local employment contracts that comply with the law of the jurisdiction where your employees work. These contracts should be provided in both English and the local language. Do not simply copy and paste your existing contract template from your home country – this could result in non-compliance and serious legal consequences.
When recruiting employees for your business, it is critical to ensure their employment contract is appropriate for the country where they will be working. A UK employment contract may not be valid in the United States because they are both English-speaking countries.
The language of the employment contract is a crucial detail to keep in mind during the recruitment process, as non-compliance to target country employment laws or any mistakes with the paperwork could cost you money, time, and potentially your business.
7. Compliant Employment Contract Termination
The employment termination process can be just as necessary as the hiring process. This part of employment should not be taken lightly as it can have many implications and consequences, both for the employer and the employee. Therefore, it is essential to consider all aspects of the situation before deciding.
The start of termination process begins when the employee signs the employment contract. If the termination guidelines are clear and precise from the outset, then terminating an employee will be much smoother.
When setting out the terms of employment, you must be clear about the notice period (making sure it’s compliant with the country-specific regulations) and what is expected in terms of returning company equipment, knowledge transfer, and a credit card or cash float balance. Non-compete clauses protecting your intellectual property are also important considerations. Doing so will help avoid misunderstandings and potential legal problems down the road.
If an employer does not have clear procedures for the termination of their employment contract, they may face litigation. Employees who feel mistreated may become disgruntled and legally contest the termination. This can be costly and challenging, especially if the dispute is in another country with a different time zone and language.
Employ to Expand: How to Put Together a Hard Puzzle with Acumen International Employer of Record
Many things can go wrong when you try to find employment overseas. Acumen International can help you navigate these challenges. Still, it is essential to know the potential obstacles you may face because if candidates are unhappy at any stage, the whole arrangement can fail.
As a Global Employer of Record, Acumen International enables organizations to quickly and compliantly hire employees in any country. We take care of all the employment-related details so our clients can focus on their business goals.
When deciding to move abroad for work, your selected candidates consider several factors. The visa and work permit process complexities, currency fluctuations, lifestyle choices, and family considerations can all impact their final decision.
As a global PEO and EOR, we understand that you must put your employees first when expanding your business globally. Considering this move’s impact on their lives, it is crucial to think outside the box and ensure they are comfortable and supported at every step.
It has become critical for organizations to understand applicable laws and regulations concerning issues such as minimum wages and benefits, employment standards, immigration, and labor relations in each location. A Global PEO and EOR can play an essential role in helping organizations navigate this complex global employment landscape by offering reliable and country-specific solutions and expert advice on compliance-related matters.
Global Employer of Record Services by Acumen International
- Global payroll management;
- Compliance with local tax rules (file & deposit) of the country where the EOR company is located;
- Handling compliant employment contracts:
- Background, education, and other checks;
- Compliant onboarding and termination processes, as well as employee compensation;
- Arranging visas and work permits for employees;
- Ensuring the working process is organized under local labor laws;
- Processing workers’ insurance and other benefits (day-offs, bonuses, and more);
- Global employment process maps, employment guides, and other documentation.
A Comprehensive Global Employment Solution & a Single Point of Contact
Managing the employment side of your business can be a full-time job in and of itself. There are many options to consider when it comes to finding help, from payroll companies and tax and immigration advisors to employee benefits brokers to human resource consultants.
One alternative to working with numerous vendors is partnering with a Global Employer of Record. A Global EOR can manage all aspects of your business HR resources, from benefits and payroll to unemployment management and safety training. This can free up your time to focus on running your business.
A global Employer of Record can provide a full suite of services to help you replace the following multiple vendors.
- Payroll Company
- Employee Benefits Broker
- HR Consultants
- Background Checks Vendors
- IP Attorney
- Tax Advisor
- Translation service
- Legal Advisor
- Immigration Advisor
- HR Compliance Advisor.
Global Payroll Calculator: Instant and Accurate Global Employment Cost Estimation
When hiring employees and contractors across the globe, you may not choose the most cost-effective and business-friendly country.
- Do you know which country is the most cost-effective place to hire employees?
- What are the costs of entity establishment and legal representation?
- What are the payroll costs and management fees?
- What are your ongoing annual tax compliance costs?
- Are you fully aware of banking implications?
- Did you know that labor laws and hidden costs could make your company less efficient when choosing a country to run your business?
- Did you know that there could be a more cost-effective country to hire employees in and save up to 50%?
If you are a business with a global footprint, you probably need help to keep up with the intricacies and uncertainties of managing a globally distributed hybrid workforce. This is because countries have different labor laws, compliance, and tax regulations. You need guidance on tax and compliance. You must understand how foreign employment taxes impact your company and its global employees. Most organizations with a worldwide footprint struggle to calculate employment tax because they fear uncertainty and may need access to up-to-date intelligence.
What if, instead of limiting your company’s international expansion by cutting through the jungle of local regulatory compliance, tax, labor, and immigration requirements, you could have all the information of 190 countries at your fingertips?
Global Payroll Calculator: Tax and Compliance Intelligence at Your Fingertips
That’s where we come in. Acumen International is an innovative global employment solutions provider that has created solutions that help businesses like yours navigate the complexities of calculating employment taxes while optimizing their hire cost and avoiding the costs and risks associated with not doing so.
Acumen International offers the Global Payroll Calculator to help businesses understand the tax rates and compliance requirements for hiring a local and foreign workforce. Acumen’s expert team tracks developments in 190 countries around the globe. It provides up-to-date data on local regulations related to tax, payroll regulations, benefits, hiring practices, compliance requirements, and other labor-related factors that impact an employer’s bottom line. This valuable information makes the Global Payroll Calculator an invaluable tool for businesses looking to expand internationally.
Global Payroll Calculator: A Wealth of Capabilities for Payroll 2023 Budgeting
We have automated routine processes so that you can speed up data collection, gain valuable insights into the global talent market, make informed decisions about talent acquisition, get the complete picture of the latest tax benchmarks, labor market trends, compliance trends—and much more!
With us, you will be able to plan global mobility programs; explore pay practices in the global marketplace; gain guidance on what to pay your top talent while maintaining a diverse workforce; simplify & streamline payroll planning, and attract and retain talent in a competitive marketplace.
Global Payroll Calculator helps companies reduce labor costs by providing up-to-date information on hiring, compensation, and tax requirements. It is also an ideal tool for quickly locating employees in any country.
Global EOR (Employer of Record) Services: Save Up to 75% of New Market Expansion Cost
Acumen International Employ to Expand Program is the perfect opportunity for you if you are trying to reach new markets, expand your workforce, and grow your business.
Want to reach emerging markets? Hire a high-performing team focused on productivity and profitability. We make hiring, onboarding, and payrolling your hybrid workforce easy. You get the support you need to manage, reward, and your global workforce with one accountable Global Employer of Record partner across 190 countries.
Our Tiered Pricing Model provides flexible options for international growth with lightweight investment.
Our Global Payroll Calculator automates employer and employee tax calculations worldwide.
The indisputable advantages of partnering with Acumen Global Employer of Record are demonstrated below:
| Average Cost & Time | Our Solution * | |
|---|---|---|
| Time to Market | 10+ weeks | 72 hours |
| Legal Advisors Fees | $ 10 000 + | …………. |
| Official Employment & Benefits | $ 20 000 + | …………. |
| Incorporation & Liquidation Costs | $ 11 000 + | …………. |
| Bank Account Setup | $ 2 000 + | …………. |
| Maintenance costs, in-house staff to manage the foreign entity, payroll, taxes, and benefits administration. | $ 25 000+ | …………. |
| The approximate total cost of new market entry** | $ 74 000 + | $ 15 000 |
* Per one Employee
** Costs vary from country to country
Acumen Global Employer of Record can help you solve the complex puzzle of global employment. As a Global EOR partner, we help businesses meet all their HR needs while handling compliance issues in the international arena. By offering comprehensive global employment solutions and reality checks about the compliance aspects of employing staff across the globe, we can be an essential resource for your in-house HR and Management teams.
Contact us to discuss your quick and compliant global employment journey.