When the COVID-19 pandemic hit the world, almost every organization had to suddenly adopt and adapt to the remote work model. And the shift so far has been successful for most. Earlier, many organizations were reluctant to hire a remote employee. Maybe because hiring and managing a remote talent adds to the workload of the HR team. While it might be true that remote hiring and managing the payroll, taxes and other regulations involved in it can be difficult, especially when the employee and employer are located in different locations, it also has advantages that outweigh the troubles.
Working remotely can make the employees feel more in control, and they can be more productive as they are allowed to work from the location of their choice. The organizations get access to a wider pool of talent if they decide to hire the employees irrespective of their location.
To make remote working feasible for current employees who want to move to another country or to continue hiring people who already reside in another country, we need to make some operational changes. Let’s discuss the challenges involved and the ways to adopt remote working in any organization.
Aware of bad hire costs, companies strictly stick to the practice of background checks as a part of their employee screening program. While for local or national level hiring, employers do have satisfactory provisions for conducting background checks, but when it comes to the hiring of international employees, things get way more critical. But if your company is aiming to expand borders for gaining a strong global foothold, then international hiring is indispensable for your organization. So what is the easiest and effective way of international hiring? Are you aware of the complexities involved in background checks of the international talents that you intend to hire? Does your organization have relevant experience or networking or tools to overcome these complexities?
Things would get a bit more challenging if you wish to continue hiring people who are located in a different country or want to move for a longer-term or permanently. In these cases, things like employment contracts, taxes, and payroll would be affected, and the organization needs to adapt their operations accordingly.
International employment is difficult in many ways; it needs a deep understanding of the local laws, regulations and compliances. For instance, if an organization decides to let their existing employees work from another country, or if they want to hire employees from countries where they do not have a legal entity setup. In such cases, they can adopt these suggested options.
The easiest way to keep employing people from other countries is to avail services of an Employer of Record (EOR). This way, you can seamlessly employ people from any country that the EOR covers. The EOR can employ on your behalf and help you effortlessly build remote technology teams.
The Employer of Record takes care of employment contracts, payroll, taxes, liaising with local authorities, HR compliances, advising on local compliance and regulations, etc. The EORs ease up the process of employing talent from different countries.
Utilizing the services of professional employer organizations as EOR will lower the costs and ensure that you can legally employ people in any country almost immediately. The fee for the EOR services is very less as compared to the time and money you would need to spend on any other way to hire and manage a remote team.
A company can set up a local subsidiary in a country where its employees are residing. This is the easiest route for the employees as they don’t have to take care of any legalities. But setting up a local office can be a time consuming and expensive task for the companies. This involves the following steps:
– Working with local authorities for the registration of the entity.
– Preparing the agreements in vernacular language.
– Put in the needed capital
– Preparing a team to handle the compliances
– Preparing a team to handle HR, payroll, and admin activities for remote employees
– Understanding the local employment and labor laws.
– Learning about the local corporate, employee and employer taxes
The process of setting up an office in one country can take anywhere between 2 to 18 months. It consumes a lot of company resources. With the public offices not working to full capacity yet due to the pandemic, it may take more than 18 months to complete the setup in some countries. Workers can realise this solution completely by using your own resources or by using some intermediaries that can help you find and connect with the local service providers. The introduction of the intermediaries in this process may save some time of your resources, but the process is still lengthy and costly. It is not feasible to become a local employer in every country if you have a presence in many countries, or if the number of employees is small or scattered in different states of that nation.
The most common strategy used by many organizations to work with people in different jurisdictions in the past is to make them work as independent consultants or contractors. This solution makes things easy for the organization. Still, the remote employees have to deal with the registration, taxes and compliances as a corporate entity in the country of their residence. This solution can be used in a few cases, but not suitable to make it a practice, as it adds much burden on the employees. In a few jurisdictions, governments discourage these practices. 1
The process of remote hiring and managing a remote team effectively starts with choosing the right strategy for allowing your employees to shift to other countries or to employ people from other countries. You also need to make sure that your employees don’t feel duped in the process and you or the employees don’t land up in any legal trouble. To ensure that, here are a few things you should keep in mind.
– Make sure that your employee’s net salary remains unaffected by the difference in the tax structure of different countries
– Assist your employees for fulfilling the visa, work permit, requirements, etc.
– Assist your employees in navigating through the employee tax implications
– Document the changes in employment status if the employee is moving from one country to another, or any other relevant updates
When it comes to employing people internationally or allowing your existing employee to work from a different country, it is better to make sure that you understand and can comply with all legal requirements before making the first move. While other solutions might seem cheaper, but in the longer term, it is more reasonable, legitimate and effective to avail EOR services.