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Maintaining HR Compliance During Global Expansion

By August 15, 2017September 20th, 2022No Comments
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Entering new, foreign markets comes with its fair share of challenges, many of which surround managing HR compliance. Before expanding globally, an organization must be prepared to handle the requirements involved with onboarding talent compliantly. Companies should start by gaining a firm understanding of the HR compliance requirements that need to be met in each country. From there, an organization can build a comprehensive strategy for maintaining HR compliance in each country it plans to operate in.

With more companies looking for ways to better manage HR compliance on a global scale, it is important to develop a plan to keep this practice in focus.


Gain Cultural Understanding

Before a company can master HR compliance globally, it needs to invest time learning the imperative and diverse cultural nuances that will affect how it operates in a country. To be successful when going global, members of an organization need to have a thorough understanding of what makes working in a new country unique. One way this can be accomplished is to send team members to the new market to learn the cultural implications and how the company will need to adapt their practices to fit with the culture and expectations in a new country.

Companies can benefit from learning about the language, dress codes, greetings, traditions, and beyond. In India for instance, companies with more than 100 employees are not permitted to terminate employees unless the company receives permission from the government. When familiarizing itself with local culture, a company will begin to see the ways that it plays into HR compliance and better understand what it will take to maintain compliance in each market.

Create a Country-Compliant Handbook

There are many aspects of a business that will likely transfer into a new market, namely the company’s product or service and its brand. One aspect that will likely not translate into new foreign markets, however, is the company handbook.

While there is likely valuable information within a company handbook, such as its values and mission, it needs to be adjusted to include the information necessary to maintain compliance in a new country. There are multiple portions of a company handbook that address local employment requirements that need to be adjusted, including:

  • Code of conduct
  • Communications policy
  • Non-discrimination policy
  • Compensation and benefits
  • Employment laws and termination guidelines

The requirements for employment vary in each country. For example, it is common in the U.S. to hire persons through “at-will” employment. However, many companies based in the U.S. soon discover that this is not a common practice globally, and therefore face issues when the companies neglect to adjust their employee handbook or practices overseas. With different employment laws present in each country across the globe, HR compliance should begin with a thorough understanding of what will and will not translate in the employee handbook from one country to another.

Provide the Right Employee Benefits

In many countries, offering comprehensive health benefits helps companies attract top candidates. However, beyond being used as an effective recruiting tool, healthcare is also a common issue in regards to compliance in foreign markets. Each country has different requirements and rules around providing healthcare for employees.

In most foreign jurisdictions, employers work with single-payer health benefits. This means that the employer contributes money to the government that helps pay for their employees’ health benefits. In the UK for instance, employers contribute to the National Health Service (NHS) — which is a prime example of truly socialized health care. While this system has its advantages and drawbacks for businesses, it is still one that must be adhered to when working in the country.

Employers in any market can offer private insurance benefits to help fill in gaps left by government-mandated healthcare. However, when doing this it is important for businesses to determine which supplemental benefits are commonly provided to employees in order to offer an attractive benefits package.

Maintain a Flexible Approach

International markets put companies face-to-face with obstacles they need to overcome in order to begin business operations. Some of the most common include the time and costs needed to set up a foreign subsidiary. However, the proper attention to detail, preparation, and flexibility can help companies overcome these obstacles in order to get into a new market quickly and efficiently.

Some of the most common issues an organization can face during global expansion include language barriers, tax complications, banking difficulties, company formation, and compliance. Companies need to be proactive in terms of compliance when going global in order to better anticipate potential challenges. Being proactive can be accomplished by entering new markets with a lean, agile approach. Lean, in terms of global expansion, refers to business practices that eliminate wasted time and costs in order to move faster and with a lighter footprint. By staying lean, companies can be more flexible in new markets, which enables them to be proactive and quickly adapt their practices to stay compliant. One of the most common instances of lean expansion is through an International PEO (Professional Employer Organization) which is explained in more detail below.

Partner-Up During International Growth

There are companies that expand into new foreign markets and there are other companies created with the sole purpose of helping companies succeed. These global employment solution providers are in-country experts that companies can lean on to help them expand into new countries. Having an experienced in-country partner can provide proper guidance throughout an international expansion and help maintain HR compliance going forward.

As mentioned above, International PEO is a popular example of a lean expansion practice that enables companies to approach new markets compliantly and in a flexible way. This Employer of Record (EOR) solution manages all of the HR tasks associated with compliance, such as hiring, paying, and terminating international employees, as well as ensuring employees are given the right benefits and compensation. International PEO providers hire a company’s employees directly, thus becoming the team member’s EOR for tax and insurance purposes. The company still maintains day-to-day control over its employees, but the challenge of maintaining HR compliance is managed by the International PEO and its team of experts.

Take charge of your international HR compliance with a proactive global employment solution. Reach out to the experts at Velocity Global to see how our innovative International PEO solution can begin working for your HR team in foreign markets.