Photo by Corinne Kutz on Unsplash
Expanding businesses to international markets is common practice for enterprise companies. However, with this comes the challenge of complying with diverse regulations and laws across different countries, many of which pertain to tax, hiring, and protecting sensitive data.
Lack of compliance can lead to severe consequences such as hefty fines, legal proceedings, reputation damage, license revocation, and market access restrictions. Therefore, prioritizing cross-border compliance is vital for enterprise companies to thrive globally.
In this article, we’ll highlight seven common cross-border compliance concerns that companies should be aware of and how to avoid them.
Hiring workers across borders without establishing a foreign subsidiary in the new hire’s country exposes companies to permanent establishment risk, potentially triggering corporate tax liabilities with the local tax authorities in the respective country.
Businesses can opt for an employer-of-record (EOR) solution to help mitigate this risk, allowing them to engage local talent without the associated legal complexities or the need to establish a foreign subsidiary as a preliminary step when entering a new international market.
EOR providers operate established entities in numerous countries worldwide, enabling them to legally engage and pay employees to provide services to your company.
While manually drafting contracts may suffice for local hiring, crafting tailored agreements encompassing various aspects such as work hours, breaks, payment terms, termination conditions, severance pay, statutory benefits, and bonuses when hiring across multiple global jurisdictions presents a more intricate challenge.
Companies can simplify the process of creating internationally compliant employment contracts using a global HR platform with a built-in contract generation workflow that guides you through each aspect of the contract, providing specific directions per country requirements. Hence, you get it right from the start every time.
Look for a global HR platform with intuitive contract workflow that supports localized contract creation during the new hires’ onboarding process. Ideally, you should also have the option to add additional contract elements like company-supplied equipment, workspace memberships, healthcare coverage, and stock options to keep everything stored in a single place.
Lastly, to ensure the contracts adhere to the latest compliance standards, your provider should have local legal experts review and update the templates at least quarterly. When it comes to storing documents and sensitive employee data, you want your provider to adhere to the highest global security standards.
Companies that desire more short-term arrangements and greater flexibility when exploring new cross-border markets can hire international contractors. However, creating contractor agreements that comply with classification laws across jurisdictions can be challenging.
If the work agreement doesn’t accurately define the relationship, use the correct terminology, or comply with local laws impacting contractors, your company could face allegations of misclassification, resulting in tax violation fines, federal law violation fines, and reputational damage.
Companies can help manage misclassification risks by ensuring that every contractor agreement complies with that jurisdiction’s unique laws and regulations. To simplify the process of creating internationally compliant contractor agreements, use a global HR platform with a built-in contractor agreement generation workflow.
For most businesses, global hiring platform’s contract generation tools and advanced compliance features are a must when hiring contractors locally and abroad.
Click for full article