How to hire an international employee

Hiring your first international employee can feel intimidating, and failing to properly comply with international tax and labor laws can place your business at risk and incur significant fines. However, partnering with a global employment solution is the easiest way to ensure that you are globally scaling your team while remaining compliant with international tax and labor laws.

If you wish to hire international employees, you will need to do one of two things:

1. Establish a legal entity in your employee's country of residence
2. Utilize an employer of record (EOR) like Skuad

Learn what each of these routes entails and which one you should consider for your growing business.

Establish a legal entity in your employee's country of residence

The first way to compliantly hire foreign employees is by establishing a legal entity in their country of residence. Every country has regulations when establishing a legal entity, and this process can be lengthy and expensive.

A benefit to establishing a legal entity is that your company has autonomy in the foreign country. However, the expense, risk, and time it takes to establish an entity often outweigh this benefit.

If you establish a legal entity, you can utilize a professional employer organization (PEO) solution in which your company enters a co-employment relationship when hiring foreign employees.

A significant downside to this method is that you must establish a new legal entity in each country you choose to expand to.

Utilize an employer of record (EOR) like Skuad

Alternatively, you can utilize an EOR solution to hire international employees, which means you don't have to establish legal entities in the countries where you hire new employees.

Instead, you outsource your hiring to the legal entities that the EOR has established in the employee's country of residence. While you maintain control over the employee's day-to-day, the EOR assumes legal responsibility for the employee.

Using this method of hiring is hugely beneficial to companies in the following ways:

• Hiring employees is quick and cost-effective compared to establishing a legal entity.
• Your company does not assume legal liability for remaining compliant in the hiring and employment process.
• You are partnered with local experts who can provide clarity on the country's legal system, cultural customs and how to build legally compliant and competitive benefits packages that will appeal to premier local talent
• Employees can be onboarded in their native language.
• You can process payroll from your preferred currency and pay employees in their preferred currency.
• You can seamlessly scale to new countries with the touch of a button.

Benefits of hiring international employees

Consider some of the following benefits associated with hiring employees in foreign countries:

Higher-quality candidates

The most significant benefit of hiring international employees is the quality of candidates you have access to.

Entirely in-person offices are limited to the candidates who live in the area where your offices are located. However, when you hire international employees, you can reach out to candidates from all over the globe, casting a much wider net.

Because you have access to many more qualified candidates, you can place more restrictions on your hiring practices and work toward building the best possible team for your company.

Diverse experiences and perspectives

Hiring an employee from another country gives you a window into the experience of the people living there. Diverse perspectives are essential to ensuring that your company remains current with global market trends and possesses an understanding of and sensitivity toward others.

Not only will growing a globally diverse team bring differing perspectives and foster the best business growth, but it's an excellent way to build a diverse team within your company that respects and values each other's cultural differences.

Globally scaling your business

By hiring global employees using Skuad's EOR services, you can compliantly scale your company to foreign markets in a significantly more timely and cost-effective manner.

While it can take a lot of time and money to establish a legal entity in a foreign country, utilizing Skuad's EOR services means your company doesn't have to. You can span multiple countries in a short period, even if you only hire one employee in each country.

Rather than devoting the internal resources that would typically be necessary to ensure your company remains compliant with all local tax and labor regulations, you can grow your business to international markets and let Skuad worry about ensuring you remain compliant.

Variable employment contracts

Another benefit of hiring from overseas is that you can mix your hiring strategies between full-time employees and independent contractors. While many countries have strict regulations for hiring independent contractors, working together on a contract basis is an excellent way to see if a potential candidate is a good fit for your company.

The rule companies need to follow when partnering with independent contractors is significantly less than when hiring full-time employees, so you can enter a fixed-term partnership with a foreign talent to determine whether you want to hire them as full-time employees.

You must exercise caution when partnering with independent contractors in foreign countries, as misclassifying employees as contractors can carry hefty fines and penalties for companies, even if it's by accident.

Utilizing a global HR solution with local expertise in the country is an easy way to avoid misclassifying employees.

More affordable than companies realize

Working with international talent is significantly more cost-effective than many employers realize. While establishing a legal entity in every country you wish to operate out of can become very expensive, utilizing an employer of record makes this process quick and affordable.

Rather than paying to establish your business in the area, the EOR goes through the legal processes to hire employees on your behalf, which means that you can globally scale your team at the click of a button.

Streamlined onboarding process for remote employees

When hiring employees in your area, it typically falls to your internal HR department to ensure that recruits have all necessary paperwork filed, benefits set up, and other administrative tasks completed.

Consider the following benefits to onboarding international employees through Skuad:

• Drafting legally compliant contracts: When hiring employees in foreign countries, remaining compliant with legal regulations is essential. We can help ensure that the contracts new employees sign are legally compliant.
• Conducting background checks: Because you have to consider legal compliance in multiple countries when you expand globally, hiring employees with verified employment backgrounds is essential.‍
• Employee orientation: New employees will need to be onboarded effectively, including being informed of their salary, overtime pay, benefits packages, paid leave days, and more.

What you need to know before hiring global employees

While hiring international employees comes with a host of benefits, if you don't remain compliant with international tax and labor laws, you can place your company at significant risk.

Consider the following before you grow your team and begin hiring global employees:

• You will need to remain compliant with local tax regulations. Every country has unique tax laws, and you will be expected to comply with foreign tax laws when you hire foreign employees.
• You will need to comply with local labor regulations. Local minimum wage, public holidays, overtime laws, maternity benefits, and more all vary by country. You will need to provide your foreign employee with all the local benefits to which they're entitled.
• Some countries have additional employment costs. Contributing to social security, universal health insurance, and more can significantly increase the amount of money you have to spend when hiring international employees. Therefore, it's beneficial to do research ahead of time so that your budget aligns with how much your total costs will be.
• Regulations are constantly changing. You must remain compliant with foreign regulations when you hire your new employee.

Hiring global employees is a highly complex process that you will need to follow closely if you do not wish to incur penalties for your business.

Growing your global team with Skuad

Hiring international employees is one of the best ways of ensuring your company stays relevant in the global marketplace and gains access to the best talent in the world.

At Skuad, you can hire international employees, and manage payroll compliantly so you can scale business operations with an efficient global team.

Using Skuad’s unified employment platform, your company can compliantly grow your team without hassles. To know more about Skuad, book a demo today.