So you’ve decided to expand your hiring efforts and go global. Like many other firms, your decision might be driven by a shortage of candidates in your home country. Perhaps you’re thinking about developing new markets and need local expertise. Whatever the reason, locating and hiring talent overseas isn’t as simple as posting a job ad online. All countries have nuances, and the rules and customs governing global labor markets are no exception.
To implement a successful recruiting strategy in a different nation, you need plenty of knowledge and skill on your side. It’s not just employment laws your HR department has to navigate, but also local candidates’ expectations. Before you take your talent acquisition efforts overseas, here are some tips to consider.
1. Research worker classification laws
In many countries, you may have the option of recruiting direct employees or independent contractors. Organizations that don’t have a local office or legal entity sometimes find it easier to work with contractors. It’s a lower-risk strategy that lets companies get their feet wet in an international market. Work assignments and labor costs can fluctuate with demand, and you don’t always have to make a long-term commitment.
Other reasons businesses choose to hire contractors abroad include short-term project needs and trying out someone’s skills. Firms might need to gain market insights and require the firsthand perspectives only a local can provide. Contractors also don’t usually require benefits or payroll tax expenses. Your main costs are the fees they charge for each project or assignment.
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While hiring freelancers may be the ideal strategy for your company, classification laws may be different where your candidates live. Research the country’s regulations about what work arrangements are appropriate for contractors versus employees. Structuring a contractor’s performance obligations in ways that mimic expectations for an employee could get you into hot water. Controlling or stipulating what hours consultants can work is just one example.
Because of the complexities involved with classification laws, especially in EU countries, many companies seek advice from an employment lawyer. They can help draft contracts and determine whether it’s possible to hire freelancers. If you plan on recruiting contractors from more than one country, employment lawyers can alert you about any potential complications.
2. Work with an Employer of Record (EOR) service
Some companies would rather hire employees, and for good reason. These firms may have concerns about contractors’ commitment levels and want to retain more control over intellectual property. The problem is that most nations require companies to establish legal entities to hire locals. Moving past the red tape can take months that a lot of businesses don’t have to spare.
Establishing legal entities can also become expensive, which isn’t justifiable if you’re only hiring a handful of employees. Working with an employer of record service (EOR) lets your business avoid the paperwork, cost, and waiting game. An EOR already has those legal entities in place and hires global employees to work for you. The EOR serves as your workers’ legal employer, but you get to control who comes on board.
While you also determine work assignments, timelines, and quality standards, EORs ensure your company stays in compliance. Administrative responsibilities, such as benefits and payroll taxes, are taken care of. EORs distribute paychecks to your international employees and make required contributions to national health insurance programs. Employers of record services also stay on top of changes in payroll and employment contract laws so you don’t have to.
An EOR is the best choice if you don’t have an entity in the country you want to hire from. But if your company does have a local presence, consider working with a professional employer organization (PEO). These organizations handle the administrative side of things, including payroll and benefits. The difference is a PEO does not become your global employees’ legal employer. That means your company will need to make sure you’re following all local labor regulations.
3. Become aware of hiring practices
Hiring practices and customs in global labor markets may not be what you’re used to seeing. Outside the U.S., “employment at will” is not standard practice, meaning grounds for dismissal must fit stricter requirements. You may need to draft employment contracts instead of offer letters for candidates. Working conditions and agreements, including schedules, national holidays, and vacation time, might need to be spelled out in the contract.
Other screening tools, including personality tests and interview questions, can differ. Your company could have more flexibility with giving European candidates personality tests or asking them personal questions. On the other hand, workers in some nations might not respond to open job advertisements posted by a firm. They may expect and prefer to go through a talent specialist or a recruiting agency.
Executive positions in other countries, such as China, might require establishing referral networks. Reaching out to chambers of commerce and universities in the countries you’re targeting can help you navigate local hiring practices. Your business could also work with executive headhunters and staffing agencies in the area. If you’re unfamiliar with the job market and candidates’ preferences, your usual recruiting strategies may not work.
Businesses should also research the competition. Some overseas labor markets are as competitive (if not more so) as those in the U.S. You may be going up against big tech firms and employers with solid reputations. Expectations for incentives, wages, and employment conditions might be higher or on the rise in some countries.
Diversifying your options
With tightening U.S. labor markets and concerns over the Great Resignation, businesses are looking to fill positions with global talent. While overseas candidates can help close the gap, hiring international contractors and employees isn’t the same as employing domestic workers.
Regulations, cultural differences, and working relationship standards can easily turn into minefields. Researching classification laws, engaging an EOR, and mastering international hiring practices will help your business remain compliant while locating the help it needs.