Global Hiring Guide

Challenges of Hiring International Employees: How to Solve Them

8
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Challenges of Hiring International Employees: How to Solve Them
Written by
Mayank Bhutoria,
Co-Founder
July 3, 2024

Key Takeaways

  • Hiring international employees requires strict compliance with diverse local labor laws. 
  • Managing payroll for international employees involves complexities like currency conversions, varying tax regulations, and time zone differences. 
  • Handling visa, work permit requirements, and other HR functions can be challenging for global hiring. 
  • Gloroots simplifies these processes, allowing companies to focus on finding the right talent while ensuring compliance and efficiency.

Local talent shortages and the globalization of business demand that employers tap into global talent pools to meet their business needs. Global hiring offers access to diverse skill sets and new market insights, enabling companies to remain competitive in today’s global market.

However, international hiring comes with its set of challenges, from navigating different legal systems to managing diverse cultural expectations.

In this article, we’ll explore the challenges of hiring international employees and show you how to navigate them by partnering with Employer of Record (EOR) companies like Gloroots. 

Complying With Local Labor Laws

One of the biggest challenges of hiring international employees is complying with the local labor laws and regulations of countries you’re hiring from. 

These laws vary greatly across countries, making compliance a complex task for global employers. 

For example, when hiring from India:

  • You must adhere to the Minimum Wages Act 1949, which sets minimum wages for various categories of employees across industries and mandates payments within seven days from the end of the wage period. 
  • You must also contribute on behalf of the employee or in addition to the employee’s contribution,such as the Provident Fund. 

Violation of these acts and labor laws can bring serious consequences for the employer. For example, violation of the Minimum Wage Act comes under the Central Act as an offense, and under Section 22 of the Act, there is a penalty of five years of imprisonment along with a fine. 

Similarly, if you’re hiring in Australia, you need to abide by the Fair Work Act 2009. The Act sets out terms and conditions for employment and defines the rights and responsibilities of both employers and employees. Breaches to the Act can lead to compliance notices followed by court proceedings. 

The Labour Standards Act governs employment law in South Korea. It safeguards an employee’s working hours, minimum age for employment, overtime, and other various aspects of employment. Violating employment law is a criminal offense that may result in imprisonment or a fine. 

In the past, the court has taken strong stances against CEOs who have violated the employment law where they were sentenced to imprisonment

Common legal pitfalls in hiring international employees include misclassifying employees as independent contractors, not providing mandatory benefits and social security contributions, neglecting working hours and overtime requirements, and failing to provide required leave entitlements.

Drafting compliant employment contracts for international employees is a particularly challenging aspect as this requires thorough knowledge of local labor laws and regulations. 

This is where partnering with a global EOR like Gloroots comes in handy. As an EOR, Gloroots ensures compliance with local labor laws by generating employment contracts that comply with those laws. 

Paying Employees on Time and Accurately

Ensuring accurate and timely payments to international employees is crucial for maintaining employee satisfaction, legal compliance, and the overall success of global operations. 

However, managing payroll across multiple countries introduces significant complexities that can challenge even the most experienced HR and finance teams. 

Here are some factors that make it difficult for companies to pay international employees accurately and on time:

1.Distinct payroll and tax regulations

Countries have different payment frequencies, mandatory deductions or contributions, withholding taxes, reporting requirements, etc. 

2.Currency conversion and fluctuations

Each country has its currency, and the conversion rate fluctuates regularly. So, the pay an employee receives depends on that day’s conversion rate. This can create a lot of complexity and confusion. 

3.Time zone differences

Time zone differences also creates a problem with paying cross-border employees on time. 

4.Reliance on manual payroll

A manual payroll system doesn’t work in a cross-border transaction, a complex procedure involving various taxes, currency conversions, etc. 

Partnering with a global EOR like Gloroots can help you pay your international employees promptly and accurately as Gloroots has a multi-currency payroll platform that automates currency conversions and disburses payments in local currencies. Additionally, the platform is configured with up-to-date payroll, tax, and labor laws, that ensures compliance.

For example, Sketchnote, a project management software provider, was able to seamlessly pay 15 workers across multiple countries after partnering with Gloroots. As a result, the time spent on payroll fell by 87% while achieving 100% compliance with Indian, Spanish, Pakistani, and Californian employment laws. 

Alt text: Gloroots customer testimonial 

Read the complete case study here.

Finding the Right Global Hiring Partners

When hiring international employees, employers need to manage numerous tasks such as processing visas, ensuring compliance with local laws, providing employment contracts, managing payroll and benefits, and other HR functions. 

This becomes especially challenging when the company grows and needs to hire rapidly while retaining control of selecting the right candidates. 

Partnering with a global EOR platform can help solve all these challenges. For example, when PriceLabs, a pricing tool provider for a hospitality business, was going through a growth spurt and needed to hire for their international operations, they decided to partner with Gloroots.

As a result, the company’s Indian team grew from 5 to 80 employees within 1.5 years. Gloroots saves PriceLabs a minimum of 250 hours per week.   Gloroots also streamlined the processes and saved PriceLabs nearly 250 person-hours monthly. 

Administering Benefits

Offering competitive and compliant employee benefits packages is an effective strategy for attracting and retaining top talent. However, this becomes challenging when hiring international employees from multiple countries. 

A one-size-fits-all package won’t resonate with a diverse workforce because cultural expectations and legal requirements vary widely across countries. Moreover, international employees seek robust benefits that cater to their personal priorities, family structures, and life stages. 

Gloroots provides customizable benefits packages, enabling companies to design and administer benefits attractive to global talent and compliant with local regulations. 

Whether it's flexible healthcare options, retirement plans, or other benefits, Gloroots ensures a competitive package that will help build loyalty. 

Additionally, Gloroots’ user-friendly platform streamlines tasks like enrollment, eligibility checks, claims processing, and compliance management, reducing the administrative burden on your team and enhancing the employee experience. 

 Currency Exchange

Alt text: Paying global teams in multiple currencies

Source: https://unsplash.com/photos/10-and-20-us-dollar-bill-ROQzKIAdY78

Paying international employees in their local currencies is another challenge employers often face. Constant currency fluctuations can affect the final payment a contractor/employee receives, not to mention the high cross-border transaction fees associated with it. 

Gloroots’ global payroll software solves this problem effectively. It streamlines payroll processing for a multi-country and multi-currency workforce, ensuring that all cross-border payments are handled with precision and compliance and minimally affected by currency exchange and fluctuations. 

Gloroots integrates various payroll aspects into a unified, user-friendly interface, making cross-border payroll management efficient and error-free. It helps mitigate currency exchange risks and ensure financial stability for employers and employees.

Time Zone Differences

Managing a remote team is no easy job; when the team members are dispersed across different time zones, it becomes further challenging. As real-time synchronous communication becomes difficult, you must have a strong communication system to help your remote team collaborate and communicate with each other rather than working in silos. 

Alt text: Time zone difference of global teams

Source: https://unsplash.com/photos/black-and-white-round-analog-wall-clock-G1lR5-cMdAQ

To navigate issues arising due to time zone differences:

  • Build a practice of asynchronous communication
  • Educate employees to respect each other's time
  • Invest in communication, productivity, and time management tools to help your team overcome barriers and collaborate effectively

Technology and Infrastructure Costs for Global Teams

Alt text: Technology and infrastructure for remote teams

Source: https://unsplash.com/photos/turned-on-gray-laptop-computer-XJXWbfSo2f0

Managing a dispersed, international workforce requires significant investment in technology and infrastructure such as:

  • Communication platforms
  • Project management tools
  • Time tracking and productivity software 
  • Remote work setup (laptops, headsets, Internet, Internet expenses )
  • Subscription fees, hardware costs, and IT support can increase operating costs.

While all these can make remote working seamless, all these can significantly increase operational costs. 

However, you can minimize the cost by:

  • Budget planning before the financial year and adhering to it
  • Vendor negotiations to get the best deals
  • Regularly reviewing the tech stack to eliminate redundant or underutilized tools.

Navigating Visa and Work Permit Requirements

Source: https://unsplash.com/photos/2-men-in-yellow-and-black-suit-action-figures-ivG8LkDrtjs

Alt text: Visa processing for international employees 

Employers looking to sponsor international employees must secure the appropriate visas, work permits, and other required documentation before onboarding them. 

This process can be complex because different countries have varying rules and procedures governing work visas and permits, and immigration laws are often subject to change. For example, Philippine law requires employers sponsoring foreign employees to submit a letter of invitation and accompanying evidence for visa applications
Additionally, visa and work permit applications can take weeks or even months to process, potentially delaying start dates and project timelines.

Failure to comply with legal requireme

nts can result in hefty fines, revocation of sponsorship license or other business privileges, and reputational damage.  

Partnering with an EOR service like Gloroots means onboarding your employees hassle-free; Gloroots takes care of all the documentation needed to stay compliant. As an EOR, Gloroots can assist you with acquiring work permits and visas for your international employees.

Hire Globally, Easily & Risk-free with Gloroots

Hiring international employees offers numerous benefits, including access to a wider talent pool, cost savings, cultural diversity, and improved business flexibility. However, the challenges of global hiring can be nerve-wracking for any experienced hiring professional or business leader.

Fortunately, partnering with a global EOR and global employee management platform like Gloroots can help you overcome these challenges. From a single platform, you can onboard remote employees, generate compliant employment contracts, perform multi-currency transactions with one click, get real-time access to payroll data across countries, and streamline overall operations. 

With our services, you can confidently expand beyond borders and harness the power of a diverse, global workforce. 

Contact us today to book a demo.

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