Webinar recap: How to solve the most common challenges of global employment
Posted on Oct 20, 22 by Dee Coakley
In today’s world, where remote and distributed work is already a reality, more and more CEOs, COOs, HR Managers and People Ops leaders find themselves dealing with a whole new set of tasks and challenges that come with an international workforce.
Learning the ropes of managing an international workforce is worth it because of global employment's value to the business. Opening up to cross-border employment helps attract and retain talent, democratises access to well-paid jobs, fosters the well-being of employees who would like to have the freedom to choose where they do their best work and creates more diverse organisations better fit for a diverse world of buyers.
While the challenges that each company faces with global employment will differ, one thing stays true for all - to make global employment scalable and sustainable, any newly minted internationally remote company will have to put compliance first.
At the end of September, we held a webinar where we spelt out what that means and how to solve some of the most pressing challenges of global employment. Watch a recording of the entire webinar or read below.
1. Global employment is tricky and complex
Companies must comply with the employment and tax laws of the countries where their workers are based. Even if they have employment agreements - or commercial agreements with independent contractors - in their jurisdiction, that piece of paper will not absolve them of their responsibilities in the worker's legal jurisdiction.
Every worker in the world is entitled to the legal protections of the country in which they are based. So, if a company has a worker in Norway, they must comply with Norweigan employment law and ensure that that worker’s payroll is processed in a way that’s compliant with the Norweigan tax system.
There are differences in labour laws and tax regimes. For example, employers in Denmark pay 1.25% of the gross salary in employer taxes. In the UK, people are entitled to 39 weeks of maternity leave. In Estonia, workers are entitled to statutory overtime pay.
2. Choose a compliant and sustainable employment solution
While there are generally four ways of employing people across borders, not all are legal or sensible, especially when looking at all the above-mentioned employment matters. Here is an overview of each way, outlining the potential cons.
HQ country employment & payroll
What it is: While the person may be in a different jurisdiction, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn't legal in the long term. HQ payroll won't be possible if the person is not a tax resident in the HQ country.
Independent contractor agreements
What it is: People are locally registered as sole traders or limited liability company owners and invoice for their work. There is no direct employment relationship.
Cons: In most countries, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.
Direct local employer setup
What it is: The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.
Partnering with a global employment platform (‘Employer of Record’ (EoR) /full-service ‘Professional Employer Organisation’ (PEO))
What it is: Employment is handled by a platform that specialises in employing people on behalf of customer companies.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to help workers understand this relationship.
3. Choose your global employment platform carefully
While an Employer of Record is the best option for international employment, not every existing global platform is created equal, and it’s important to know how to choose the right one for you. Employment is a long-haul business that extends further than the initial setup of employment agreements, tax registration and employee onboarding. The true work begins after that. When evaluating various Employer of Record providers, a good start is to ask the following questions.
Is the Employer of Record you are talking to the direct local employer?
This is a fairly straightforward one. What’s important to understand is whether the Employer of Record wholly owns the infrastructure in the country or they work with a third-party provider. You will want to work with someone who is the direct local employer because that is the fastest and most effective way to offer employment services to you and stay on top of constantly evolving local regulations and tax regimes.
Do they have a firm grasp on the local employment regulations & the right supports?
This stems directly from the previous question. Each country has a set of rules and regulations, which includes the specific local employment model that the Employer of Record will use. For example, not every country allows unlimited employment through an employer-of-record model. Some examples include:
France, where the model is called Portage Salarial, and it can only be applied for 36 months
Germany, where employing someone on behalf of another company requires an AUG licence, which is only valid for 18 months and cannot in any circumstances be prolonged
Norway, where a person can only be employed through another company for project-based work, and once the project is concluded, their fixed-term employment agreements ends
In each of these cases, beyond the specified time, the worker needs to be employed directly through a local entity owned by the employing company. And then there are countries such as Spain where there is no legal model to employ your workers on your behalf past six months.
Questioning the Employer of Record on the country specifics like that is essential.
Are there any hidden fees beyond the price they’re quoting?
Typically, an Employer of Record would charge a flat fee for their service (regardless of the salary they are handling) or a set percentage of the compensation. The cost may be consistent across all countries or differ from territory to territory. These fees would be charged either every month or billed once annually. The price they quote may depend on a specific commitment on your part (timeframe, number of workers, etc.).
Find out if any additional charges will apply. This could be anything from charging for onboarding or offboarding employees, additional activation fees for new countries or monthly transaction fees. It’s always worth being crystal clear on what it is that you’ll be paying.
Boundless was started to solve all these challenges. We began as an Employer of Record and are now becoming a fully-fledged Operating System for global teams. Boundless combines an intuitive employment platform with deep local market and operational expertise to efficiently manage compliance & HR ops for your people, wherever they are.
Boundless wholly owns corporate and employment infrastructure in 24 countries (and counting). This means we take care of employee payroll, taxes, core and Flexi benefits, contracts, and onboarding on behalf of customers, and stay on top of ever-changing local employment regulations, to assure 100% compliance 100% of the time.
If you need help with employing people abroad, you can get in touch with us.You can rewatch the full replay of the webinar here. This month we will be talking about making hybrid work work and have invited a special guest to help us out - John Riordan, Chairman of Grow Remote. Save your spot here and join us on November 8th at 4 pm GMT.
Employ Staff Abroad with Boundless
Talk to us about compliant employment for your remote / international workers.
The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance. You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.
Written by Dee Coakley
Before founding international employment platform, Boundless, Dee Coakley was a three-time COO, having spent 10 years with B2B SaaS businesses (Masabi, Bizimply & Axonista). In her COO roles, she experienced first-hand the operational challenges of setting up employees in new countries, and so set about building a solution.
Boundless handles cross-border HR compliance and payroll for small and mid-size businesses, removing the barriers to growing teams internationally.
All permanent employees expect – and oftentimes are entitled to – benefits from their employer. Employers are obliged to provide certain benefits by law. Others are optional, designed to boost organisations’ recruitment and retention efforts by positioning them as progressive, people-centric employers. Employee benefits straddle many aspects of employees’ lives – rewarding loyalty and impressive […]
Running a global, remote-based organisation carries a raft of HR compliance responsibilities, which derive directly from local employment and labour laws. To make matters even more complicated, many regulations are amended every new calendar year, and companies are expected to stay on top of new rulings. We have rounded up all the key changes and […]
Against the backdrop of an ultra-competitive jobs market, it’s no surprise employers are looking toward what constitutes a progressive employee benefits package as a way to attract and retain staff. And with the pandemic prompting millions of employees to reconsider where they work and what they do, employers are having to think particularly hard about […]
All over the world, Covid-19 has led to what's been dubbed the Great Resignation: millions of people, from frontline workers to senior executives, voluntarily calling time on their jobs. Is location-independent work the antidote?
Considering employing someone in Canada? To do that compliantly, an employer has a lot of obligations they have to fulfil. One comprehensive and important topic is the set of local employee rights a worker residing in Canada is entitled to. What makes things a little more complex in Canada is that those rights differ among […]
The best employers know that focusing on salary alone will only get you so far. You need to provide salary and support to engender loyalty amongst your people. This is why employee benefits matter. They provide the support that impacts all aspects of people’s lives – our health, our happiness, our family, and even our […]