One of the most common questions we receive from our clients is – How do we manage HR compliance overseas? It’s a valid concern given the amount of requirements and labor regulations in each country.
To help you manage international HR compliance, we put together five best practices to help you achieve success in your new market. Let’s get started.
1. Stay Flexible
When your company expands into international markets, you’ll face many barriers to entry. As a result, it’s critical that your team keeps an open mind and stays flexible. As an HR leader, you have the power to encourage agility and keep processes flowing during market entry.
Typical issues you’ll run into during international expansion include:
- Language Barriers
- Tax Complications
- Unreliable Banking Systems
- Unfamiliar Cultural Nuances
- Time Consuming & Expensive Foreign Subsidiary Formation
By staying flexible, you’ll successfully navigate difficult situations like the ones mentioned above and be more likely to succeed. You can also entrust an agile global expansion option like Foreign Subsidiary as a Service (FSaaS) to help manage compliance and create a legal entity without the traditional hassles.
2. Use Local Resources
One of the greatest resources in your new market is the people. Your company can – and should – tap into the local talent to help navigate HR compliance. When collaborating with your current HR team, local professionals will help you manage all the barrier to entry listed above along with employment law, payroll requirements, and required entitlements.
Local HR teams can also help you recruit international employees by tapping into their established network.
3. Understand Entitlements
Before your company expands overseas, start to learn about the required entitlements for employees in your target country. A majority of foreign countries require employers to provide team members with benefits including:
- Paid Time Off
- Sick Days
- Maternity Leave
- 13th Month Pay
Many of our clients tell us that one of the largest hurdles to overseas expansion is managing HR compliance and employment requirements. Each country has different requirements surrounding entitlements, for example, and it’s absolutely mandatory that employers meet those needs.
You can use services like Foreign Subsidiary as a Service (FSaaS) to remove the guesswork from international HR compliance by getting companies fully operational in target countries and receiving help with navigating these requirements.
4. Learn the Culture
This tip seems like common sense, but it’s a very important part of your global expansion strategy. HR teams onboard new employees and are champions of company culture. As a result, they need to dive into the culture of their new country.
HR teams should learn the language, dress codes, greetings, and traditions.
For example, if you’re expanding into Tokyo, there are a number of customs and traditions in this Japanese culture. For instance, if you’re invited to someone’s home, you must always bring a gift. The gift should also be elaborately wrapped with ornate ornaments and ribbons.
The next tip will really help you learn the culture.
5. Work with an In-Country Partner
Learn about customs and best practices from an in-country partner whom you trust to give you proper guidance throughout your company’s international expansion. In addition, you can supplement your international HR team with employer of record (EOR) services like International Professional Employer Organization (PEO), which manages all of the admin tasks associated with hiring, paying, and firing international employees.
International PEO accomplishes these tasks by hiring your company’s employees, thus becoming the team member’s EOR for tax and insurance purposes. Essentially, it removes the risks from your team and still allows you to manage daily activities.
It’s our goal to help you succeed during international expansion. If you have questions about HR compliance in your target market, give us a call.