Hiring talent internationally can have a very positive impact on a business—from access to a larger talent pool to increased diversity, expanded time zone coverage, and greater economic resilience.
However, it’s important to be aware of the risks that come with cross-border hiring, especially if you go into it without sufficient knowledge of local employment laws in the countries where you’re hiring. Each country has its own unique and complex labor laws and tax regulations, and even unintentional noncompliance can lead to significant financial and legal risk.
Staying compliant is an ongoing process. It involves adhering to legal requirements and regulations around hiring practices, wage and hour laws, employee benefits, workplace safety, anti-discrimination policies, and more. The specific laws vary from one country to another, but they have a common goal: to protect both employees and employers by maintaining a fair, safe, and ethical workplace.
So, if you’re scaling your team beyond borders and hiring talent in other countries, you’ll need to be compliant with local labor laws at every stage of the employment relationship. Let’s take a closer look at what it means to be compliant throughout the employee life cycle, from recruiting to offboarding.
1. Recruitment and hiring
When you’re recruiting talent in another country, there are compliance requirements covering everything from advertising the role to making the offer. You must follow national regulations around job postings, nondiscrimination and equal opportunity, pay transparency, background checks, recordkeeping, data privacy, medical exams, and more.
For example, the pay transparency laws in a particular country or jurisdiction might require you to include a salary range in the job description. Anti-discrimination requirements mean that employers can’t discriminate based on race, gender, age, religion, and more. Data privacy laws may limit what kinds of information you collect from candidates and how you use it. These laws ensure fair and ethical hiring practices for all candidates.
2. Contracts and onboarding
An employment agreement is an important legal document since it formalizes the employment relationship. Compliant contracts that respect labor laws and regulations protect both the employer and the employee from legal risk, administrative penalties, and potential disputes.
An employment contract should cover all the basics such as the start date, job title, working hours and schedule, wages, vacation allowance, contract duration, probationary period, and more. It should also include company policies or internal rules to keep both parties aligned.
Every element of the contract must respect local regulations. For instance, the labor code in Spain requires at least 30 days of annual vacation, so a contract that offers less than that will not be legally valid in Spain since it doesn’t meet the minimum vacation entitlement required by law.
3. Compensation and payroll
When it comes to paying employees, you must ensure compliance with local laws and regulations concerning minimum wage, overtime pay, payroll cycles, tax withholding, pay equity, recordkeeping, and more.
For example, in Canada the overtime hours must be compensated with at least 150% of the regular pay rate; in Mexico employees must be paid a 13th-month salary in the form of a Christmas bonus; and in the United States, individual states have final paycheck laws governing when a departing employee’s last paycheck must be issued. This is why having a clear understanding of local employment laws is essential for fostering trust and fairness with international teams.
4. Benefits
Employee benefits are necessary for ensuring the health and well-being of your workforce. Regulations vary widely, but every country has its own set of statutory benefits that are mandatory for employers to provide. These include paid time off, maternity leave, health insurance, pension plans, and more. For example, employers in Spain must provide 17 weeks of paid maternity and paternity leave, and employers in Australia must contribute to a mandatory pension scheme called superannuation.
Keep in mind that statutory benefits are the minimum required by law to guarantee a certain level of financial security and protection for employees. But many employers also offer supplemental benefits on top of the statutory minimum in order to attract and retain top talent.
5. Termination
Terminating an employment relationship is a complex and sensitive process that needs to be handled in compliance with country-specific requirements regarding notice periods, acceptable grounds for termination, severance pay, issuance of final paychecks, and more. The process will also vary based on the particular circumstances of each case.
It is essential to understand the unique laws and regulations of each country and the specific case to ensure compliance and minimize the risk of legal action. For example, the United Kingdom tends to be more flexible regarding termination, but France has very strict rules around termination, so dismissals must be handled with extreme care.
Stay compliant around the world with Oyster
Employment legislation is constantly changing, so maintaining compliance requires staying up to date on local laws in all the countries and jurisdictions where you employ team members. You can stay informed by subscribing to legal updates, attending seminars, and signing up for compliance trainings. It is essential to understand which labor laws affect your business and perform regular audits of internal policies practices to identify and correct any compliance gaps.
For busy HR teams, these compliance requirements can be overwhelming. The good news is that you don’t have to handle it alone. An employer of record (EOR) service like Oyster can help you employ talent around the world while taking full responsibility of ensuring compliance across the employee life cycle, from contracts and onboarding to payroll, benefits, and offboarding. Oyster’s knowledge and expertise helps you hire, pay, and manage talent compliantly without having to research labor regulations on your own.
Reach out today to learn how Oyster can help you scale your team globally while keeping you compliant at every step.
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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