The hiring landscape is almost unrecognizable from that of a decade ago. Whether driven by technology, skill gapsgeographic expansion, lifestyle choices, or a pandemic, more companies than ever before are bringing global talent into their organizations.
In a recent report82% of employers said they expect their foreign national headcount to increase or stay the same in the next year, and 59% expect it to explicitly increase, compared to 53% of employers in 2020.
The benefits of hiring globally are clear. In addition to an expanded global talent pool, you may find that a willingness or ability to send workers to international destinations is highly beneficial. A PwC study indicated that 71% of millennials want or expect an overseas position at some point in their career, suggesting that global expansion can also reap benefits domestically.
And the inherent diversity that follows is good for your company, your customers, and goes beyond the minimum efforts demonstrated by many of your competitors. Hiring global talent reflects your commitment to diversity, not only in race or culture but in perspective. Employees who value diversity, equality, and inclusion – backed up by actions and not just words – will be more attracted to your business, and the varied perspectives your global employees offer help with engagement, both internally and with your customers.
But hiring a global workforce is a complex process, and compliance can be a big hurdle when it comes to making sure you have comprehensive policies in place to allow flexibility while protecting your business from any unwanted liabilities. Whether local labor laws or income tax implications, it’s crucial to ensure no regulatory stone is left unturned.
And while having a clear understanding of employment laws, taxes, visas, and other prominent regulatory issues are evident to many, there are some less apparent areas you must focus on, such as changes in how and when you can communicate with your distributed workers.
Make Sure You Understand Your Local Labor Laws
When hiring globally, HR must be aware of all aspects of hiring. This means ensuring you provide all legally required items, such as health insurance, social security benefits, adherence to the country’s disabilities acts, as well as an understanding of the cultural differences in each geography.
In Europe, for example, hiring from a different EU state comes with very few limitations. The only requirement is that employers advertise their jobs in the same way they would locally. There is no restriction on hiring EU employees and no need to pay into social security.
But hiring in Asia brings with it a different set of challenges. For example, in Singapore’s Workforce Development Act, employers must ensure that a valid work pass is held for all employees before hiring them. Once that work pass has been issued, the employer must ensure that employees retain it for as long as they are employed. In China, hiring employees requires a written contract, and there must be a probationary period of 30 days before hiring an individual full-time.
Understand Local Income Tax Implications
It is essential to research payment practices for hiring international freelancers, contractors, and employees. Many countries have laws concerning who is responsible for withholding income tax from an employee’s paycheck. In some cases, the hiring company must withhold a percentage of income tax from each payment made to a contractor or employee in that country.
The complexity increases depending on whether you’re hiring local talent in a foreign country or relocating employees to that office. Using Singapore as an example once more, the Not Ordinarily Resident Scheme allows foreign entrepreneurs to benefit from paying only the income tax that correlates with the number of days they are in Singapore, which may positively impact those team members that have significant amounts of travel included in their role.
Allow Digital Flexibility While Protecting Your Business
Traditional definitions of what is meant by having an “office” in other countries are being challenged in the digital age. New criteria are being applied, seemingly every month, to e-commerce and other digital-only companies based on their virtual presence in a territory, and the complexities of your team working virtually from various locations compound your liability exposure.
Any international businesses that believe they can avoid taxes, regulations, and other mandatory commitments through limited time in a country may be surprised to find that – depending on the location – communicating and doing business over virtual channels is sufficient to meet local “permanent establishment”. requirements, exposing them to the same commitments as any other company in that territory.
Utilize PEO / EOR solutions as a way of on-the-ground support setting up local bank accounts, settling into the location, and by way of administering payments if their accounts for any reason can’t be accessed anymore. Show support as a company by encouraging global employees to help donate resources to Ukrainian volunteer organizations and humanitarian aid.
Don’t Forget Communication and Data Regulations
Did you know that in the Philippines, employees have the “right to disconnect?” Under this law, an employee cannot be reprimanded, punished, or otherwise subjected to disciplinary action if they disregard work-related communications sent after work hours. And in Portugal, employers can be fined for contacting employees after their work hours. They will also be liable to pay for the increased gas and electricity bills incurred due to working from home.
In addition to managing when you are allowed to message employees (and please pay attention to time zone differences when doing so!), You will also need to comply with how you can communicate with them and how you store and manage their data.
From Europe’s GDPR to Brazil’s Lei Geral de Proteçao de Dados (LGPD), China’s Personal Data Protection Law (PDPL) to Japan’s Act on Protection of Personal Information, it is imperative that your employees’ data is handled with the same attention to detail and policy that customer information is.
How to Support Your Remote Employees from Ukraine Now
As the full-scale war started by Russia continues in Ukraine, there are several things you could do in case you have Ukrainian remote workers. It is difficult to work and handle uncertain circumstances for those in Ukraine and the people out of the country who have families in danger. Organize and support the evacuation and relocation of your employees and their families to other countries to make sure they are safe.
Sponsor the visa process, and immigration lawyers, if needed, handle all travel expenses. Some people fleeing Ukraine might need counseling and psychological support, so it would be humble to sponsor therapy for your employees and their families to help them cope with the situation and continue living their lives and work.
Hiring global talent has many benefits, including attracting the best candidates, improving the idea and knowledge pool, increased customer engagement, the revenue increases that follow moving into new geographies, and much more. Staying on top of the complexities involved in expanding to new countries or relocating existing staff to those locations is imperative because getting it wrong can wipe out all the positives in a heartbeat.