Top HR compliance mistakes companies make when hiring abroad

Global hiring looks straightforward until it isn’t. You find the right candidate in Berlin or Bordeaux, agree on a salary, and assume the rest is paperwork. Then you discover that German contracts require specific written terms, French dismissals need formal procedures with mandated waiting periods, and the “simple” hire you planned has become a compliance problem.

HR compliance mistakes happen because employment law is stubbornly local. Every country has spent decades building its own rules around contracts, termination, benefits, and worker protections. What’s standard in London can be illegal in Lyon. What works in New York won’t always be compliant in the Netherlands.

Most companies don’t fail at international hiring because they’re careless. They fail because they underestimate just how different the rules actually are.

In the US, at-will employment means you can generally part ways without cause or notice. Try that in the Netherlands, and you’ll need approval from the Dutch Employment Agency or a court before you can dismiss anyone. In France, even a justified termination requires formal meetings, waiting periods, and documentation that would make most US HR teams blink.

These aren’t edge cases or unusual circumstances. They’re everyday employment law, and the compliance challenges for HR multiply with every new market you enter.

The trap most companies fall into is treating compliance as a one-time setup: get the contract signed, sort the payroll, move on. But employment law shifts constantly with new tax thresholds, updated statutory minimums, and revised leave entitlements. A contract that was compliant two years ago might not be today. That’s why an effective HR compliance risk assessment isn’t something you do once and file away. It’s an ongoing discipline that needs attention throughout the employment relationship.

Here’s a scenario we see a lot. A company wants to hire someone in Germany but doesn’t want the hassle of proper employment, so they engage them as a contractor instead. Same work, same hours, same reporting structure. Just a different label on the paperwork.

Tax authorities aren’t fooled by this. If someone works exclusively for you, follows your direction, and integrates into your operations, most countries will treat them as an employee regardless of what the contract says. When authorities reclassify a worker, you owe back taxes, social contributions, penalties, and potentially years of benefits the worker was denied.

Employee misclassification is one of the most expensive HR compliance mistakes you can make. Australia recently fined a company $197,000 for exactly this kind of arrangement. The workers received protections for minimum wage, overtime, and sick leave. The company received a bill.

The principle is straightforward. If someone is doing ongoing, core work for your business, employ them properly. The shortcut costs more in the end. We’ve written more on this in our guide to common global hiring mistakes.

A contract that holds up in the UK won’t necessarily work in Germany. German law requires written contracts with specific terms covering job duties, salary, working hours, notice periods, and holiday entitlement. Miss something and the contract may not be enforceable when you need it most.

France adds another layer of complexity. Contracts often need to reference the applicable collective bargaining agreement, which can impose obligations around pay scales and benefits that your template knows nothing about.

Some countries require contracts in the local language. Others have mandatory clauses around probation or termination. Using a generic template or adapting your home-country version is asking for trouble down the line.

Every international hire needs a contract reviewed against local requirements. Our country guides cover what’s required in each market.

Global payroll compliance means more than paying people the right amount on time. Each country has specific rules around tax withholding, social contributions, reporting deadlines, and payment frequency.

The UK requires real-time reporting to HMRC every time you run payroll. France mandates detailed payslips that break down every deduction and contribution, often running to multiple pages. Some countries require 13th or 14th month payments. Others have specific rules about when commissions must be paid.

Get this wrong, and you face penalties from tax authorities, frustrated employees, and compounding errors across every pay cycle. Our employment cost calculator helps you understand the full picture before you commit to a hire.

The EU mandates at least four weeks of paid annual leave. Sick pay, parental leave, and pension contributions all have local rules that must be followed. Ireland’s recent auto-enrolment pension scheme means employers must now automatically enrol eligible workers and match their contributions from day one.

The HR compliance risk here is straightforward. Underpay statutory entitlements and employees have claims against you. Miscalculate holiday accrual or skip required pension contributions, and you’re exposed to enforcement action.

Beyond the legal minimums, there are market expectations to consider. A benefits package that’s competitive in one country may be underwhelming in another, making it harder to attract the people you actually want.

Ending employment is heavily regulated almost everywhere outside the US.

In the Netherlands, you generally cannot dismiss someone without approval from the UWV or a court. France requires formal meetings, waiting periods, and specific documentation before any termination takes effect.

Companies accustomed to at-will employment routinely underestimate these requirements. The cost of a mishandled termination, both financial and reputational, can far exceed what a proper process would have taken.

Employment law is too jurisdiction-specific for generalist advice to be reliable. For every country you hire in, you need people who understand the local rules properly: contracts, terminations, and anything else with legal risk attached.

An Employer of Record can provide this as part of the service. At Boundless, our in-country teams handle compliance locally, drawing on specialists who work with these rules every day.

Local expertise needs coordination. Someone in your organisation should own global HR compliance, tracking what’s happening in each market and ensuring standards hold across the board.

This doesn’t mean centralised decision-making. Local teams and partners handle the details. But you need clear escalation paths and accountability so nothing falls through the gaps.

HR compliance touches legal, finance, and operations. When you hire in a new country, legal should review the contract, finance should understand the cost structure, and HR should coordinate the onboarding. When you terminate someone, the same coordination applies.

Define workflows for key events and document them clearly. Make sure everyone knows their role and where the handoffs happen.

Laws change. Your workforce changes. Contracts signed three years ago may no longer meet current requirements.

Regular audits catch problems before they escalate. Review contracts against current law. Check that payroll calculations reflect the latest rates and thresholds. Verify that benefits still meet statutory minimums. Our legislative updates guide for 2026 covers the key changes HR teams need to track this year.