Recruiting international talent can boost the caliber of your staff and expand your company’s knowledge. Global workers bring a wider range of viewpoints to the table and provide an understanding of foreign markets. The rise of remote work and the technology that facilitates it are leading to broader recruitment efforts. More businesses are searching for and considering overseas talent, in addition to locally based candidates.
While global recruiting opens up HR’s options for filling vacant positions, it presents onboarding and payroll dilemmas. Companies don’t always — or even often — have a subsidiary located in the country a potential employee lives in. Employee classification, payroll tax, and benefits laws also vary between countries.
Despite these hurdles, you can find ways to recruit international employees and stay compliant with local regulations. Consider the practices outlined below.
Work With a Global Payroll Service
A professional employer organization (PEO) or employer of record (EOR) service can ensure international employees get paid in their local currencies. Such services also handle allocating the correct amount of taxes, deductions, and contributions to retirement plans for the employer and employee. For instance, deductions for universal healthcare services and employer pension plan contributions could differ between countries.
These mandatory deductions and contributions might not exist in the employer’s home country. A PEO or EOR helps companies abide by regulations like these that may be unfamiliar. For example, if you’re a U.S.-based business, you need to know how to pay your UK remote workers locally. It’s easier to miss deductions for the United Kingdom’s National Health Service and employer contributions to employee pension funds.
PEOs are often a viable option for employers that have established legal entities in the countries they’re recruiting from. EORs, on the other hand, are the better choice for businesses that don’t have established local, legal entities. While EORs typically offer the services PEOs do, not all PEOs are capable of serving as employers of record. With an EOR service, your business still recruits and manages global employees, but the service becomes the employer on paper.
Use Outsourcing or Staffing Agencies
Contracting with business process outsourcing companies and international staffing agencies gives your company the advantages of working with global talent. However, in most cases, you won’t be recruiting the employees directly. Instead, your business will temporarily lease workers from the staffing agency or have an outsourcer work on your behalf. For instance, you might contract with an outsourcing company to handle your software development or marketing campaigns.
In either case, the outsourcer or global staffing agency is responsible for recruitment, HR, and payroll. Your business pays a fee to the other entity, and they determine the workers’ employment terms. The agency or outsourcer sets the hourly pay rate or salary, in addition to any benefits according to local laws. Your company may never meet the workers the agency or outsourcer hires. Exceptions include site visits, training sessions, and video calls.
Business process outsourcing companies and international staffing agencies are ways for firms to test out a market. They’re also suitable solutions for businesses that might find international recruiting too formidable. A global staffing agency acts as an intermediary and is already familiar with local customs, languages, and labor markets. Outsourcing companies are also sometimes better positioned to serve locally based customers.
Go the DIY Route
Perhaps relying on third parties doesn’t appeal. Or maybe you intend to launch a major foray into a particular country. If so, you can choose to establish a legal entity in the country where you wish to recruit from.
This approach involves registration paperwork, setting up a local bank account and payroll systems, and consulting with lawyers and financial specialists. These advisors are also usually based locally or have extensive expertise in the country’s payroll and labor regulations.
Setting up a separate legal entity means it will take more time before you can start recruiting. Some businesses also find it’s more expensive to take this route than other options. Establishing separate entities may not make fiscal sense if you want to recruit one or two employees from different countries. But if you foresee your company establishing a long-term presence in a certain market, the DIY route might pay off.
This option requires additional research since classification laws vary between countries. You don’t want to hire workers under freelance agreements only to get fined for not properly classifying them as employees.
You can typically hire independent contractors as long as you don’t dictate how and when the work gets done. Your business may have a say in the work’s quality, scope, and ultimate deadline, however. The contractors acquire supplies and determine their own work schedule. You can pay them through digital wallets, wire transfers, or invoicing services.
Some companies rely on invoicing services to make direct deposits to independent contractors’ bank accounts. Others use systems that track project deliverables for regularly scheduled pay periods. A freelancer’s fees for each assignment then get sent to their digital wallet account.
Other companies use a combination of both since digital wallet services can give account holders invoicing capabilities. These types of electronic payment services can involve fees, which are usually absorbed by the payee.
Recruiting individuals from outside your company’s home country can allow you to find suitable talent faster and augment internal expertise. But finding ways to pay workers and remain in compliance with local labor and payroll laws sometimes holds businesses back. Fortunately, there are several methods for you to expand your candidate pool and stay in compliance. With research, legal assistance, and technology, you can make your next new hire from anywhere.