Recruitment is usually one of the biggest issues when a company is trying to expand. This is also the case when investors try to start a venture in a foreign country. Understanding employment laws at home is already tough as it is, so you can only imagine how complex things can get in a completely different jurisdiction. Finding top talent can also be a challenge when you have little understanding of the local job market and culture. Let’s take a look at some of the potential issues you might face when hiring overseas employees.
- Tax and Corporate Considerations
The first thing you’ll have to pay attention to before hiring overseas is local regulations as far as tax and corporate structures go. Some countries will allow you as a foreign entity to bring people in without having to create a corporate entity in the country, but this is not always the case. Things might get a bit more difficult in places like Malaysia, for instance. In this case, it would be wise to work with a Malaysia PEO like New Horizons. They will be able to represent your interests in Malaysia and handle the recruitment and HR for you as well as act as a corporate presence. They also have lots of information for potential investors who want to learn more about the employment laws in the country at nhglobalpartners.com. Having a team like them in your corner is essential for compliance and to facilitate the hiring process.
- Look at Alternative Employment Options
Another dilemma you will have to face is whether it would be more advantageous to hire someone or work with subcontractors. You will not only have to consider the cost savings, but also the logistical issues of working with a contractor without being able to closely monitor them and their work. There are some cases when it could be better to have someone you trust on payroll for safety issues even if you know you won’t be able to employ them 100%.
- Payroll and Benefits
No matter where you set up your business, you will need to start thinking about payroll as well as withholding taxes. This will be a requirement in almost every jurisdiction and will incur additional and sometimes significant costs. This is also where working with a good PEO could help.
The good news here is that benefits schemes tend to be much less elaborate in other jurisdictions as statutory welfare systems will have many provisions that are not as common as the US. However, some countries will require that employees contribute to specific pension funds or receive a set pay increase every year. Countries like France or Brazil are just two examples.
- Employment Policies and Agreements
Don’t make the mistake of thinking that US employment policies will automatically transfer overseas. As a matter of fact, very few countries have “at-will” employment and most will require a solid employment agreement that needs to be written down on paper. Not only that, but you will usually need solid grounds to fire a person. Issues like redundancy, performance, or misconduct have to be documented in detail. You will also need to be aware of severance packages and other provisions.
These are all examples of challenges you can expect to face when hiring employees overseas. Make sure that you are well aware of them and that you are thoroughly prepared before starting the recruitment process.
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