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When entering a foreign country, some cultural differences are front and center — from new languages and foods to different styles of architecture and unfamiliar currency. But discerning how to hire employees can take a bit of legwork, especially on the part of a business owner who is setting up shop abroad.
When staffing up overseas, it’s easy to make assumptions about employment laws based on one’s home country. But just as the sights and sounds of each country are different, so too are the laws that govern their employment practices.
Here are some tips to help business owners get familiar with employment laws when running an international business.
— Donald C. Dowling, Jr., an international employment attorney and partner with White & Case
Before venturing into the international hiring waters for the first time, it’s wise to build a base level of knowledge by consulting online resources. This is what Jon Tucker, a senior strategist, did before hiring four international contractors for Compete Marketing Group, a San Diego-based online marketing agency.
“The biggest [thing we did] was some online research on our end,” Tucker says, “and then confirming a lot of that online research with your typical advisers — your accountant, lawyers.” When focusing on international employment laws, one of the most helpful research outlets businesses can look into is the International Labour Organization, an arm of the United Nations that focuses on labor practices across international boundaries. The ILO website includes rich information on a variety of topics, such as the regulation of working time around the globe.
It’s also a good idea to consult with an international human resources (HR) firm, which can advise business owners on issues such as compensation and benefits, says Shan Nair, an expert in international expansion and co-founder of Nair & Co., a global professional services consultancy based in Singapore.
In matters of compensation, it can also be helpful to work with an online foreign exchange service to pay international employees on a one-time or ongoing basis. These online currency services typically allow businesses to store employees’ information, making future payments quick and easy. Plus, online foreign exchange services often enable businesses to retain and access payment histories for bookkeeping and reference purposes.
By employing strategies ahead of time, business owners can take steps to keep currency fluctuations from eroding the value of their regular employee payments.
Small business owners are often motivated to save time and money, and sometimes, they look for shortcuts in the international hiring process, says Donald C. Dowling, Jr., an international employment attorney and partner with White & Case, a law firm based in New York.
Instead, to be compliant, Dowling advises that business owners consult a professional — in this case, a lawyer or accountant or payroll provider familiar with the laws of the nation where they are looking to hire. “The employment laws — including the payroll laws of every country — are territorial, meaning they apply by where the person works,” he says.
Compared to the U.S., Canada and the U.K. tend to have more employee-protective employment laws, Dowling says. “To an employer, the labor laws are much more strict in most all other countries outside the U.S., although perhaps not significantly stricter in a handful of countries like Nigeria, Switzerland and Singapore.”
That’s because the U.S. operates on the basis of at-will employment, meaning that an employer can fire an employee (or an employee can quit) for any non-discriminatory reason. Consequently, Dowling says, it’s very difficult to do a “Donald Trump-style” firing in a country like the U.K.
“An employer is constrained from changing their job terms and demoting them and cutting their pay under the outside-U.S. employment law concept of ‘vested’ or ‘acquired’ rights,” he says. “In the U.K. and France, for example, an employer has to set up meetings and jump through hoops to fire people.” To find qualified legal counsel who can convey the labor standards of a particular country, business owners can seek out legal organizations, such as the International Bar Association, to search for local attorneys by region.
To avoid risky situations when setting up a business overseas, small business owners need to know what they are getting into before bringing new team members into the fold. By doing a little research on their own and tapping into the expertise of others, business owners can gain a better grasp of the employment laws in each country where they do business.
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