Entering an international market presents plenty of opportunities, along with multiple risks. These risks include complexities surrounding work permits for your employees. It’s common to hear about mistakes made by businesses during their global expansion. We want to prevent your company from falling into those traps. Below are five international work permit mistakes businesses make and how to prevent them.
1. Businesses Cannot Sponsor an Independent Contractor for a Work Permit
One risk many business owners face when expanding overseas is working with independent contractors. On the surface, independent contractors seem like a logical option because you don’t have to pay for benefits and mess with tax withholdings. Unfortunately, there are many risks involved with contract workers, revolving around their status of employment.
In regards to work permits, a business cannot sponsor an independent contractor. The process of applying for a work permit typically starts when an employee receives a job offer. There are two important parts to this case that involve the words “employee” and “job offer.” An independent contractor is not an employee. If they are treated as an employee, they must receive all of the entitlements associated with that type of employment. Basically, if you sponsor an independent contractor to get a work permit, they will become an employee.
If you have questions about this process, team up with an international consultant to understand the risks involved with working with contractors overseas.
2. Companies Forget to Track the Work Permit Expiration Date
Unfortunately, like most permits, a work permit comes with a strict expiration date. As the employer, it’s your responsibility to manage re-applications and extensions for your team.
In Brazil, for example, foreign employees may obtain a temporary work visa that lasts up to two years. Employees, with the help of their employer, can extend their permit for another two years but this request needs to be made no later than 30 days before the visa’s expiration. After four years in Brazil, the company may apply for a permanent work visa for their employees.
3. Businesses Disregard Lead Time
If you’ve found talent from a country outside your jurisdiction that you want to onboard quickly, you may be delayed due to the work permit lead time. Acquiring a work permit is typically a lengthy process. Like most regulations, the lead time varies per country, but expect to wait multiple weeks for a confirmation.
To give you an example of a rather simple work permit application process, applying for a Canadian work permit from the US takes about nine weeks to pass through to approval.
4. There are Re-Entry Time Restraints After a Work Permit Expires
If an employee maxes out their allotted years with a work permit, many countries require that that employee goes back to their home country for an allotted time before re-entry. For example, in Canada, a work permit is valid for a maximum of four years, which includes an extension. After the four year mark, employees must return to their home country or work in another foreign country. They are not eligible to work in Canada again for four more years.
Before employees are eligible to work in Canada again, they need to either leave Canada for four consecutive years or stay in Canada but not work. After the four year period is complete, they can re-apply for a Canadian work permit. This is referred to as the cumulative duration rule.
Another example of re-entry restraints is employees working in the UK can hold a visa for a maximum of five years and 14 days. An extension can keep an employee in the UK for a maximum of six years. Similar to Canada, employees must leave the UK or stop working for an allotted period of time before re-applying for a work permit.
5. Countries Require a Minimum Proportion of Local National Employees to Expats
This rule is important when hiring international employees. Many countries require businesses to hire a minimum number of locally-based employees, i.e., citizens of their own country, based upon the number of hired expats. Typically, you cannot have more expats on your team than local nationals. Each country varies on this regulation, so we suggest working with an in-country expert to learn about these requirements.
In the Middle East, recent legislations strive to boost the employment of local nationals in countries like Saudi Arabia, Kuwait, and Oman. These regulations also aim to crack down on illegal workers. As a result, it’s difficult for companies to employ expats if they do not have a sufficient amount of local nationals onboard.
In general, countries want to protect their local workforce by creating equal opportunities. In Australia, some visas specifically state the need for a minimum number of local staff. Pay attention to these requirements when entering a new market.
We’re here to help! Obtaining work permits and entering overseas markets is not easy. We work with companies in more than 185 countries and can help you navigate the complexities of international labor laws. Give us a call today!