Why should you be a compliant remote employer? 5 critical reasons to avoid legal risks

We have spent the last few weeks exploring how companies can structure their international teams effectively as they expand across borders. Different engagement models, including employment and contractor arrangements, serve different needs depending on how work is organised.

In this post, we outline five clear reasons why building a compliant remote employment setup can support consistency, clarity, and long-term scale.

There are various laws and regulations that employers need to comply with in each country where their team is based. As companies expand internationally, it becomes important to ensure that working arrangements are aligned with local requirements. When working with people in different jurisdictions, responsibilities may extend beyond the country where the company is headquartered and apply in the worker’s country as well.

This means companies need to consider how their employment or contractor arrangements translate across different legal frameworks. The absence of a local entity does not remove the need to align with local employment and tax requirements.

To illustrate how this can play out in practice, consider a case from France.

When his contract was eventually terminated, the nature of the working relationship was reviewed under French law. The court assessed the arrangement based on how the work was structured in practice and determined that certain employment-related obligations applied.

As a result, the company was required to address a range of employment-related considerations, including:

• The lump-sum compensation for concealed work
• Paid holidays
• Compensation for non-compliance with the dismissal procedure
• Compensatory payment for related notice and paid leave
• Statutory dismissal indemnity
• Indemnity for dismissal without real and severe cause
• Payment for the damage linked to the absence of employer contributions
• Precariousness indemnity
• Salary reminders for the year 2014 and related paid holidays
• Damages for the lack of financial compensation for the non-competition clause, which had been drafted according to the standards of American law.

In the words of Mr D’s solicitor, Marc Powell-Smith, “the total of these requests was high and constituted an unforeseen expense for his American employer.” This highlights how local employment frameworks can apply based on where work is carried out, regardless of where a company is based.

Remote comes with a higher degree of autonomy for individuals, which is among its biggest benefits. However, that means that, as their employer, you don’t know when they are working and when they aren’t. This carries a significant risk that people will work too much.

The blurring of work and home life is happening as is, and with remote work, there is a greater danger in that. Burnout, which was officially labelled as an occupational phenomenon disease by the World Health Organisation in 2019, is the obvious worry to have; however, in some countries, overwork can have legal consequences too.

Working remotely is often governed by requiring the delivery of specific work by a given deadline, instead of doing so within set working hours. While this gives a lot of freedom for remote workers in terms of organising their time and doing things that office-based employees may not be able to, it exposes the company to risk around not providing the break and rest periods stipulated by the law.

In the EU, for example, as an employer, you must ensure that your staff does not work more than 48 hours per week on average (including overtime), over a reference period of up to 4 months. Your employees must be given at least 11 consecutive hours of daily rest and at least 24 hours of uninterrupted weekly rest. To ensure these regulations are implemented, countries like France have passed the “Right to disconnect law”, which governs this even more stringently.

On the flipside of remote workers putting in too much time is the fact that they may also be balancing work across multiple engagements, particularly in contractor arrangements. Depending on how the relationship is structured, this can influence availability and focus.

Independent contractors often work across different clients, which provides flexibility but may mean their time is distributed across multiple commitments.

Where a role requires dedicated time and long-term focus, companies may choose to structure the engagement as employment to ensure alignment with how the work is carried out.

Instead of reimbursing expenses after they have been incurred, companies may opt to give company credit cards to remote workers. The use of such a card can be clearly defined within an employment contract.

In contractor arrangements, financial processes are typically governed by the terms of the commercial agreement. This may require clearer policies and controls around how expenses are managed and approved.

Establishing well-defined processes upfront helps ensure that both the company and the individual understand how expenses should be handled in practice.

Working across multiple countries comes with a level of responsibility that goes beyond day-to-day operations. Ensuring that people are engaged in a way that aligns with local requirements and that payroll, taxes, and benefits are handled correctly brings a greater sense of confidence and stability.

Having clear structures in place helps reduce uncertainty, both for the company and for the individuals they work with. Whether through employment or well-defined contractor arrangements, clarity in how people are engaged and supported plays an important role in building a sustainable remote team.