How To Handle International Employee Relocation

How To Handle International Employee Relocation

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Introduction

Companies expanding globally must decide how their new foreign subsidiary will be staffed. They can do this in several ways: choose to staff new employees in the new country, relocate current employees to the new country, or do a combination of the two. Before companies relocate employees, they should know about the different types of employee relocation, the legal and immigration requirements, and other challenges they may face.

There are other purposes for relocating an employee besides the company opening a new location in a foreign country. Some employees may consider themselves digital nomads, who are location-independent remote workers. Remote work has opened the possibility for workers everywhere to settle in almost anywhere around the world.

Other individuals may simply enjoy location flexibility, being able to pack up and go to any other country. Flexibility may allow these employees to move to other areas when it makes financial sense for them to move. These employees can do this as long as their company approves and assists with the move and as long as they can legally get government approval through an extended work visa.

Whether setting up a new location for the company or allowing their employees to relocate on their own, employers can help these relocating employees adjust to the new culture. Companies can encourage employees to learn the local customs and language and help to take care of legal issues such as applying for visas.

Unique Relocation Challenges With Remote Work

Companies have to face certain challenges regarding relocating their remote employees.

  • To have employees in most foreign countries, companies must either have a local legal entity, such as a corporation, or partner with an employer of record that owns a local entity.
  • Employees have to be approved for visas before relocating.
  • Local labor laws need to be followed, including leave entitlements; minimum wages; overtime; and new laws regarding remote work, which may require providing employees with equipment to do the work and a safe work location.

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Different Types of International Relocation

There are several reasons why employees will relocate to another country. One reason is the relocation of a business function to another country. In this case, a company may open a new subsidiary in a foreign country and need some of its executives to go and work in the new subsidiary.

Opening a permanent branch and having an employee move to the country would be a long-term relocation. It is also a long-term relocation when an employee permanently moves to a new country and can work remotely. In either case, the employee would need to eventually become a resident of the new country after their visa has expired.

Another type of relocation is a travel or short-term relocation. Employees traveling for work can sometimes apply for a tourist visa, allowing them to enter and work in the country for a short time. A business visa is another visa that will enable employees to work in a country temporarily. Some countries have digital nomad visas designed to attract travelers and not have to pay income taxes.

What To Know When Your Employee Wants To Relocate

Immigration and Visa Requirements

For a person to live and work in a country, the government must provide permission in the form of a work permit or work visa. This is different from a tourist visa, which is permission from the government for a visitor to enter the country on a short-term basis. Each country has its unique visa and immigration requirements for relocating employees there. Before relocation, employees must apply and be approved for a visa, which may take weeks or longer.

Understanding International Taxation

International taxation involves several aspects, all of which differ by country. Learning the tax regulations in each country where your company operates and recruiting is essential. In each country, there are several types of taxes that include:

  • Payroll taxes that companies pay, including employer contributions
  • Personal income taxes withheld from employee paychecks and remitted to the local tax authority
  • Corporate taxes paid by companies deemed to be permanent establishments in a country

Some countries will have tax treaties with your company’s home country that allow your company to operate and hire within that country without having to pay additional corporate taxes. In countries without such a tax treaty, certain practices increase the risk of being deemed a permanent establishment and having to pay corporate tax rates. These practices include having a permanent presence in the country, producing a sizable amount of sales revenue, or having management meetings there.

Compliance With Local Employment Laws

Every country has a unique set of employment laws, also known as labor laws or labor codes. These laws regulate how employers treat their employees and spell out workers' rights. Employment laws differ by country and, in some aspects, by region or state.

Companies expanding into other countries must comply with the labor laws in every country where they have employees. Compliance risks can be minimized when companies partner with employers of record, such as Skuad.

The following are some examples included in labor laws around the world. Labor laws may consist of the following:

  • Nondiscrimination for a list of protected classes, which differ by country
  • A nationally or regionally mandated minimum wage, which may vary by job class, region, or industry
  • A minimum standard for workplace safety, which may include home offices for remote workers
  • The rights of workers to unionize and negotiate collective bargaining agreements
  • Rules for overtime and a predetermined compensation rate for any hours worked over the standard weekly hours
  • National or regional holidays, on which employees may either have to be given time off or overtime compensation
  • Leave entitlements may include annual leave, sick leave, maternity leave, paternity leave, adoption leave, study leave, bereavement leave, marriage leave, care leave, and other types of leave.
  • Termination rules, including a minimum notice period and potentially severance pay and compensation for unused annual leave
  • Prohibitions against wrongful terminations

The above list is just a list of examples that may be found in countries' labor laws worldwide. The country where your employees are relocating may have more or fewer labor laws.

Conclusion

The relocation of employees can be quick and seamless for companies that know the law and have policies in place to help their staff acquire visas and acclimate appropriately to the new culture. Certain aspects of compliance will need to be addressed, including establishing compliance with the new country’s initial immigration requirements and continuing compliance with the new country’s labor laws and tax laws.

Hiring remote teams is easy with the help of global hiring solutions such as an international employer of record like Skuad. An employer of record can handle human resources tasks such as:

  • The hiring and onboarding of new employees
  • Drafting legally compliant contracts
  • Taking care of payroll and taxes
  • Compliance with labor laws and regulations

To easily hire remote employees and contractors, partner with an international employer of record such as Skuad. Contact us for a demo today.

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