Companies looking to expand globally have a world of talent to choose from. But it can also be daunting. With so many possibilities, how do you decide where to focus your talent strategy and recruitment efforts?
Keep in mind that every country is unique in terms of its regulatory environment, legal framework, employment regulations, business taxes, employer costs, and more. For instance, depending on the local laws, some countries may be easier, faster, or cheaper for companies to employ talent thanks to easier compliance requirements, simpler bureaucratic processes, favorable tax treatment, fewer employer obligations, and more.
With that in mind, below is our list of the top five countries with favorable laws for global employers, so you can scale your distributed team with speed and ease.
1. The United States
The United States leads the world in almost every sector and boasts a globally diverse and highly skilled talent pool. Its well-established and transparent legal framework means that companies face fewer bureaucratic hindrances, and the government offers various tax benefits and incentives for businesses, including deductions, credits and exemptions. The U.S. also offers greater access to capital and investment thanks to numerous financial institutions and investment firms.
The U.S. employment system offers employers a much greater degree of flexibility than most other countries due to at-will employment being the norm (except in Montana). This means that either the employer or the employee can end the employment relationship at any time, without notice. An employer can terminate unilaterally for any reason, as long as it’s not due to prohibited reasons such as discrimination based on protected characteristics or retaliation for reporting illegal activities or unsafe workplace practices. There are no requirements regarding notice periods or severance pay, although employers often include some form of severance based on the employee’s tenure.
In general, there are fewer employer obligations for companies hiring in the U.S. For example, while some countries require employers to pay a 13th month’s salary or Christmas bonus, there is no statutory requirement for a bonus in the U.S. unless it’s built into the employment agreement or compensation structure.
When it comes to paid time off, there is no statutory minimum required at the federal or state level, so it’s at the employer’s discretion to decide what to offer. There is also no federal mandate for paid short-term disability benefits or paid sick leave. However, there are mandates in some jurisdictions, such as New York, California, Hawaii, and others.
2. Canada
Canada is a top talent market for global employers thanks to its transparent regulations and supportive business environment. Canada’s corporate tax rates are comparable to other G7 nations, and there are government programs and funding to support businesses. The Canadian workforce is highly educated, and its welcoming immigration policies have also brought in skilled professionals from around the world.
Employment laws in Canada generally allow greater flexibility and choice for employers. For example, employers can choose whether or not to include a probationary period. It’s common for companies to offer private health insurance, but they can choose what to include and what the coverage looks like, depending on their budget, preference, and workforce needs.
For paid vacation, employers typically start with two weeks of paid time off per year, which eventually increases to three weeks after five or more years of service, depending on the province. Canada’s vacation entitlements are lower than that of comparable nations (for example, in Europe), which reduces the financial burden for employers since it limits the amount of unused vacation they need to pay out to departing employees.
Termination of employment in Canada is relatively straightforward because it can be employer-initiated and unilateral, unlike some countries that require an interactive process between the employer and employee. As in the U.S., termination without cause can occur for any reason as long as it’s not for a prohibited reason. The length of the notice period ranges from one to eight weeks, depending on the employee’s tenure and the province, but it’s generally shorter compared to many other developed nations. Employers are not required to offer benefits during the notice period (with Ontario being an exception).
Canada doesn’t require statutory severance, so it’s discretionary and the employer can choose what to offer, unlike in other countries that have very strict severance pay requirements. (The exception is Ontario, where an employee is entitled to severance if they’ve worked for at least five years and the company’s global payroll is at least $2.5 million.) The common practice in Canada is to offer one week of pay for every year of service.
3. The United Kingdom
The United Kingdom has a well-developed legal system, strong financial infrastructure, and transparent regulations. It poses fewer bureaucratic hurdles, especially compared to European countries, and offers tax incentives for companies doing business there.
Employers hiring talent in the U.K. have the flexibility to choose among full-time vs. part-time contracts, as well as permanent vs. temporary contracts. Keep in mind, however, that employers need to have good reasons to justify hiring someone on a temporary contract. The U.K. does not have any legally required probationary period, although it’s common and customary for employment agreements to include a probation period of 3-6 months. The vacation allowance required by law is 20 days per year, but it’s customary for companies to offer 26-30 days.
When it comes to termination of employment, the U.K. is a low-risk country for employers. During the first two years of service, an employer can terminate an employee with one week’s notice, unless otherwise agreed upon in the employment agreement. During the first two years, employers aren’t required to give any specific reason for termination, but they are still required to have a fair reason, comply with the employment agreement terms, and not discriminate. After two years, employees have the right to request the reason in writing. Employees with less than two years of service can’t claim unfair dismissal (as long as they weren’t dismissed for unfair reasons such as discrimination). There is no legal requirement for severance in the U.K., except when an employee with over two years of service is made redundant, in which case they’re entitled to statutory redundancy pay.
4. Ireland
The Republic of Ireland is an attractive jurisdiction for businesses seeking a favorable environment for growth and expansion. It’s one of the most efficient places for a company to set up operations. While it can take weeks or months in other European countries, Ireland allows businesses to establish an entity within three to five business days through a fairly straightforward process. The island nation is considered a low-bureaucracy jurisdiction that doesn’t require excessive paperwork.
Ireland allows both permanent and temporary contracts. For the latter, there is no particular length specified by law. However, if someone is employed using two or more fixed-term contracts in a row, and the overall length is four years or more, the contract is automatically considered permanent. The statutory time off required is 20 days per year, but competitive employers often provide 25 days.
Thanks to Ireland’s public healthcare system, there is no statutory requirement for employers to provide private health insurance. But many employers choose to offer employer-sponsored health coverage in order to attract top talent.
If an employer needs to part ways with an employee, Ireland is considered a medium-risk country. In general, an employer can terminate employment unilaterally in the first year of service as long it’s not a protected employee. If the employee’s tenure is longer than one year or there are other risks involved, the recommended approach is to terminate via mutual agreement. The required notice period ranges from one to eight weeks depending on the length of service. Ireland allows both garden leave and payment in lieu of notice (PILON).
In case of redundancy, there is no statutory minimum amount required for severance if the employee has worked for less than two years. After two years of service, the statutory redundancy rate is two weeks’ pay for every year of service, plus one additional week of pay. In case of a mutual termination agreement (beyond one year of service) or in cases where there are risks involved, at least one month’s salary plus notice should be offered, although market practice is two to three months of salary, depending on the employee’s tenure.
5. Australia
With a strong economy and a skilled workforce, Australia is a great choice for companies expanding internationally because its government fosters a welcoming environment for business. It also attracts international talent from around the world, particularly in sectors like healthcare, IT, engineering, and education.
The Australian employment system is subject to government requirements at the federal, state and territory level. The central elements of the Australian employment system include a set of national standards of employment for all Australian employees, occupational health and safety regulations, and superannuation (pension) payments.
Employment contracts can be full-time or part-time, as well as temporary or permanent. Australia allows fixed-term contracts of up to two years, which is quite long compared to other countries and hence advantageous for employers looking to fill temporary roles. There is no statutory probation period, but it’s customary for employment agreements to include a probation period of 3-6 months. It is advisable for employers to set up longer probation periods for more senior positions.
Employees in Australia are entitled to four weeks of paid annual leave as well as eight public holidays per year. When it comes to statutory benefits, employers are not required to offer private health insurance since Australia provides universal public health care to its citizens.
With regard to termination, Australia is considered a medium-risk country. If an employee is terminated during the probation period, there is no need to provide a reason or offer severance, so the process is quite straightforward. Beyond the probation period, terminations must be justified by a valid reason, such as capacity, performance, misconduct, or redundancy. In all cases, the dismissal must be fair, i.e., an employee can’t be dismissed on the basis of a protected attribute or as a retaliation for exercising their workplace rights. As for the cost of dismissal, severance payment is required only if the employee’s role has been made redundant and the most common approach is by mutual agreement. Severance pay is based on tenure, ranging from a minimum of four weeks’ wages for one year of service to a maximum of 16 weeks’ wages for 10 years or more.
Hire confidently with Oyster
If you’re trying to decide where to expand next, the above countries are a good place to start. But once you’ve found talent you want to bring on board, you can save yourself the hassle and expense of setting up entities by partnering with an employer of record (EOR) like Oyster.
Oyster’s EOR service enables companies to compliantly onboard talent in 120+ countries around the world. As your EOR partner, Oyster handles contracts, compliance, payroll, and benefits, so you can focus on growing your team.
Reach out today to learn how Oyster can be a strategic partner in achieving your global expansion goals.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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