How to relocate an employee internationally

While remote work certainly existed before the pandemic started, the rapid shift from in-office work to work-from-home positions left businesses and employees alike shocked at the scale of what can be accomplished remotely. In key industries like professional services and finance, for example, over 39 percent of the workforce was remote in 2021, up from less than 17 percent in 2019. 

Newly remote workers are reporting higher satisfaction and productivity than ever, and data from 2019-2022 shows that the increase in remote work correlated with a 1.1 percentage-point increase in industry-level TFP (Total Factor Productivity). Many would rather leave their current job for new opportunities than return to the office. Perhaps unsurprisingly, then, the world is seeing unprecedented rates of international employee relocation. Adapting to this surge of relocation requests may be challenging for many companies, but it will also be crucial to their bottom line going forward.

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What Is International Employee Relocation?

At its most basic, international employee relocation is the process a business goes through when an employee changes from working domestically to working in another country. This process can be initiated by the employer requesting that the employee move abroad, such as when the company is opening a new office or expanding operations into new territories. Or the employee may directly request relocation, oftentimes to be closer to family, to travel, or to simply be somewhere new.

In today's world of remote work, flexible hours, and independent responsibilities, workers across the globe are packing up and moving to new locations. The increasing prevalence of moving abroad while working remotely is present in all industries.

Some sectors are seeing massive pushes toward decentralized work. In fact, in industries like computer systems design, data processing, and insurance, the majority of workers—between 50.2% and 62.5%—were already working from home in 2021. For example, in a recent survey, 81% of respondents in the information technology industry reported that they would move if it wouldn't negatively impact their job prospects.

The future of work is clearly remote for many industries. Businesses that want to stay competitive need to prioritize remote options or risk falling behind.

But here's the thing: international employee relocation isn't as simple as approving a request. There are many laws that need to be followed to the letter to make this option viable.

The Step-By-Step Employee Relocation Process

So, how do you actually relocate an employee internationally? Breaking it down into manageable steps brings clarity and ensures compliance. Here's the typical path to follow:

1. Create a relocation policy: Define your company's approach to relocation requests, including who is eligible, what costs are covered, and how compensation is handled.
2. Assess legal and immigration needs: Work with experts to determine the correct visa and work permit requirements for the destination country. This is the most critical step for ensuring compliance.
3. Adjust the employment agreement: Draft a new, locally compliant employment contract that reflects the host country's labor laws, statutory benefits, and tax requirements.
4. Coordinate logistics and support: Assist the employee with the practical aspects of the move, such as travel arrangements, temporary housing, and understanding the new culture.
5. Onboard in the new country: Ensure payroll is correctly set up, benefits are enrolled, and the employee feels supported as they transition into their new work environment.

What Do You Need To Bear In Mind When You Relocate Employees?

Local laws

Each locality—whether it's a city, state, or country—will have its own labor laws that you need to follow to stay compliant as an employer, and it may be challenging to navigate them. These laws often include:

• Minimum vacation allotments: Statutory time off requirements
• Minimum wages: Local pay standards and overtime rules
• Required benefits: Mandatory health, pension, and social contributions

These changes may mean pay adjustments, working hour modifications, and drafting an entirely new employment contract.

Labor laws aren't the only rules that can get complicated when employing someone working in a different country. You'll also need to navigate the changes in tax and payroll laws. Some countries may have specific guidelines for how direct deposits can be processed, and you'll need to ensure your payroll team is making the proper deductions to stay compliant with all relevant tax laws.

Salary details

When transitioning to a remote-friendly business model, you'll need to develop a consistent policy regarding salary, particularly since research suggests pandemic-era productivity gains were often not passed along to workers via increased hourly compensation. What constitutes a living wage depends on local cost of living, taxes, and retirement support.

You have two main approaches:

• Localized wages: Determine salaries based on the cost of living where employees reside, guaranteeing a specified quality of life regardless of location
• Location-agnostic policy: Pay all employees of the same level or role the same wage globally

Both choices have benefits and drawbacks, but what's most important is defining a policy and sticking to it. This transparency helps talent make informed decisions about their relocation options.

Visa requirements

As an employer, you'll be at least partially responsible for ensuring that your employees are legally authorized to do their work wherever they move to. This often means applying for a work visa and keeping it updated for as long as they are abroad. The specific visa requirements employees need to meet depend on the country of residence, length of stay, and type of work.

If you have an employee who wants to travel while working, they will likely need to meet different requirements than those setting up long-term residence. It's important to be thorough about the visa process and guarantee that you and your employee stay compliant at all times. If an employee ever needs to relocate urgently, it's crucial to know your options for supporting them.

Understanding The Costs Of International Employee Relocation

Budgeting for an international move requires looking beyond just the plane ticket. Understanding the full scope of costs helps you make informed decisions and avoid surprises. Key expenses often include:

• Immigration and legal fees: Costs for visa applications, legal consultations, and document processing.
• Relocation logistics: Expenses for flights, shipping personal belongings, and temporary housing.
• Tax and compliance support: Fees for tax advisors to ensure both the company and employee meet their obligations in both countries.
• Compensation adjustments: Potential salary changes to align with local market rates and cost of living.
• Administrative overhead: The internal time your People and Finance teams spend managing the process.

Employment Options For Relocating Employees

When an employee moves to a country where you don't have a legal entity, you have two main paths forward:

• Establish your own local entity: Gives you full control but involves slow, expensive legal setup, bank accounts, and local registrations. Best for large teams.
• Partner with an Employer of Record (EOR): The EOR acts as the legal employer, handling compliant payroll, benefits, and taxes. Faster setup without entity burden.

The right choice depends on your long-term strategy and appetite for complexity.

Best Practices For Successful Employee Relocation

A smooth relocation is about more than just paperwork. It's a human experience that can build loyalty or create frustration. Here are a few practices to get it right:

• Communicate with empathy and clarity: Keep your employee informed at every stage. Be transparent about timelines, responsibilities, and what they can expect.
• Lean on expert guidance: Don't try to navigate immigration and tax law alone. Partnering with experts mitigates risk and saves your team from costly mistakes.
• Provide cultural and practical support: Help your employee acclimate to their new home. This could include language resources, cultural briefings, or simply connecting them with other team members in that time zone.
• Formalize your process: A clear, documented policy ensures fairness and consistency for all employees, and it gives your team a playbook to follow.

Supporting Your Global Team With The Right Partner

Here's the reality: for many small and medium businesses, maintaining all the resources needed to support employees abroad isn't feasible. Between legal teams, payroll intricacies, and HR complexities, international employee relocation can be costly.

But it can also be costly to not allow international remote work.

Oyster is a global employment platform that can provide assistance in relocating employees globally as well as handle the sticky details for you and help you support your employees abroad with ease. From employee relocation and payroll to localized benefits and legal compliance, Oyster offers the services your business needs to thrive in the world of remote work.

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.