International staffing is a necessary piece to your global expansion puzzle. Moving into a new market requires hiring local employees or contractors to assist effectively and efficiently with growth. For example, hiring an in-country sales representative boosts sales because that rep understands the market and culture. They also tap into his established client list, which expands your customer base.
While international staffing is usually a requirement, it’s not safe from problems.
The Problem: Appropriate Compensation for International Staff
Financial incentives keep international employees, including expatriates, motivated. Do your research and use a consultant, if necessary, to determine the appropriate pay rate for the work performed. Sometimes it can make sense to do a compensation and benefits review of your target market before assuming you know the correct comp package.
If you have expats in-country, also assist them with taxation concerns because they may be liable for both domestic and host country tax payments.
The Problem: Tax Rates
Understanding the tax laws in the U.S. can be complicated. As a result, it can be nearly impossible to manage international tax regulations as well. These include withholding standards, benefits requirements, termination terms, and varying rates. Hire an expert, or become one yourself, to keep up with the needs to ensure international employees remain compliant.
Expats have another layer of tax requirements. In many countries, they must pay their domestic tax rate along with the local rate. If these payments are not met, there are troubling consequences.
The Problem: Intellectual Property Protection
Determining the difference between contractors and employees affects your intellectual property protection. The “Work Made for Hire” laws are different in each country and it’s important to understand requirements before determining a potential employee’s status. Major market differences are laid out in this article. In the U.S., IP is protected in contractor agreements, but in other countries, this idea isn’t referenced in detail. In some countries, it’s illegal to have an exclusive working agreement with a contractor, opening up risks for your IP protection against competitors.
Team up with an in-country legal expert to nail down these specifics before signing off on an employee’s contract. Taking the necessary steps before a hire can prevent many headaches.
The Problem: Labor Laws, Agreements, and Contracts
Each country has its set of labor laws and you need to fully understand these before confirming a hire. These laws revolve around payroll and taxes, reporting and filing requirements for liabilities, visa and sponsorship requirements, benefits including healthcare, and unemployment liabilities.
Contracts and agreements are also different overseas. Aspects including non-compete agreements and confidentiality are not assumed, and sometimes not allowed, in most countries. Check to see if these points are legal in your new country and spell them out in a solid contract before completing the hiring process.
Hire with an Experienced Partner’s Assistance
Velocity Global’s Employer of Record solution manages these necessary requirements for global expansion and international staffing. As your Employer of Record, we hire the right global talent on your behalf, ensuring compliance with local regulation. Ready to conquer new international markets? Let’s talk.