Hiring International Workforce: How To Onboard, Payroll, and Provide Global Employee Benefits?
Nothing is more exciting than growing and expanding your business into new markets, especially when you’re ready to go global. Venturing into new frontiers holds infinite prospects for growth and profits. But no matter how eager you are to join the global business community, there remains the challenge of international hiring and compensating your foreign workforce.
Getting Ready to Go Global
Before you hang out your shingle in foreign lands and begin recruiting local talent, you should take adequate time to set yourself up for success. For each new market, you need to identify your target audience, conduct research on local employment regulations and compliance with tax laws, and understand the complexities of payroll processing and employee benefits provision.
If you plan on establishing a company representative to sell company products in a foreign country you should also take into account the red tape of arranging payroll for local citizens or obtaining work permits and visas for expats. In some countries, the application and decision-making processes can take several weeks, but more often – months.
Simply put, the international hiring process cannot be rushed, but more often than not – it has to be. Even though doing it on your own, using your company’s resources can seem like a wiser way to go, it will not save you time, money and headaches down the road. Only when you fully understand the ins and outs of hiring a local citizen in a foreign country should you actually begin the recruitment process. Unless you’re a staffing agency, you probably will lack expertise in local legislation procedures, tax regulations as well as other local employment practices (severance pay, 13th salary, etc.).
The Challenges of Foreign Employee Benefits Provision
An important part of attracting top talent (and retaining too) is offering an enticing benefits package. It is crucial for your local staff and even more so with regard to your global talent. In competitive markets, benefits sweeten the pot, and for a highly skilled prospect, a well-thought-out benefits package can be the deciding factor making them choose your company over your competitors.
Foreign employee benefit provisions fall under one of two categories:
Statutory benefits, also called statutory entitlements, are mandated by local governments. Providing them is not optional when you are hiring a local citizen in a foreign country.
Depending on the country, statutory benefits may include:
- Paid vacation time
- Medical leave
- Maternity and/or paternity leave (partially or fully paid)
- Health insurance
- Severance in case of termination
Statutory benefits can vary widely from one country to the next. If you are expanding into multiple regions, juggling the nuances of local statutes can be a nightmare for human resources. Not only will your HR team need to learn the mandates of each country, but they will have to keep current with changes in local laws. The inequity imposed by statutory benefits can also be a source of contention among home employees, who may feel their foreign counterparts are given unfair advantages. This can create morale issues that poison your corporate culture and undermine productivity.
Voluntary benefits are those you offer in addition to statutory benefits. They are the icing on the cake that can make your offer of employment more attractive to potential candidates. They may also be a key element for employee retention, saving you from the high cost of turnover. You may choose to award voluntary benefits on a case-by-case basis, or offer them to all employees across the board.
Voluntary benefits may include bonuses like:
- Discounts on goods and services
- Equipment provision and maintenance
- Education expenses for family members
- Travel expenses
- Retirement plans
- Income tax equalization.
It is important to note that even though these benefits are “voluntary,” if other companies in your niche routinely provide them to foreign employees, it is in your best interest to offer them as well.
Solutions for International Hiring and Payroll Services
Clearly, the process of international hiring is more complicated than hiring employees close to home. Rather than overtaxing their human resources departments, many companies turn to third parties to manage their international employees and operations on their behalf.
Third party companies that serve as intermediaries fall under one of three categories:
- EOR (employer of record): An EOR takes on the legal and regulatory requirements concerning foreign employees, like benefits, taxes and payroll. It can be an enormous help in recruiting, but it does not make company decisions concerning the employee’s work duties; the (f)actual employer does. An EOR company however arranges employee payroll and termination. The global EOR serves as the employee’s registered employer, but has no managerial responsibilities.
- FSaaS (foreign subsidiary as a service): This entity is set up by a larger company whose headquarters are located in another country. A foreign subsidiary is incorporated according to the laws of the country where it is located, and conducts business according to local laws.
- PEO (professional employer organization): A global PEO manages payroll services and benefits provision to your foreign workforce, along with other responsibilities like tax administration and regulatory compliance. A PEO lets you establish your business much faster than if you set up a foreign subsidiary, which can take several months.
Advantages of Using an International PEO/EOR Solution
There are numerous advantages to entrusting your overseas HR management responsibilities to a third party entity:
- Ensure you are legally compliant with the laws of different countries.
- Pay your employees in local currency without worrying about exchange rates.
- Accurately distribute statutory and voluntary benefits to employees in different countries.
- Make sure local taxes are paid accurately and on time.
- Stay up to date with changes in local laws.
Establishing your business in a foreign country can pose many challenges that your HR department is not equipped to handle. By using a third-party entity like Acumen International as your global PEO/EOR, you can get your overseas operations up and running quickly, with minimal stress about local laws and customs.
Acumen International Your Global PEO
If you are ready to expand overseas, Acumen International can help you hire and compensate your foreign workers in over 190 countries. Save money upfront and shave months off your setup time as Acumen helps you navigate the nuances of labor legislation of each country.
Partner with Acumen a global PEO provider for that. Ask Acumen International a question today to get answers.