Hiring International Employees: A Complete Guide
Find out how to effectively hire international employees during overseas expansion, as acquiring remote workers or foreign nationals can seem complicated.
What’s Inside this Guide:
Part 1: Hiring Employees During Overseas Business Expansion
Part 2: Employing Remote Overseas Workers
Part 3: Employing Foreign Workers in the US
Part 1: Hiring Employees During Overseas Business Expansion
Expanding into global markets requires hiring a new team of foreign employees.
We understand that that the process of hiring overseas employees is daunting and complex. This is especially true in countries where culture, laws and language are so different to those in the U.S.
It’s not a straightforward process, but there are considerations and resources like this one that can help you get a better understanding of how to proceed and help you get it right.
Typically, it will take at least six months to find a location, learn about employee regulations, and hire your first employee. Give yourself plenty of time to complete this process properly.
Our guide to managing new international employees will give you a sense of the challenges you will face, and offer advice on how to overcome them.
Recruitment: How to Hire International Employees
In order to source and attract top talent in foreign markets, international businesses need to approach recruitment with a clear strategy.
Throughout your entire recruiting process, keep a strong focus on your company culture. You always want to put your current employees first.
In our experience, the best way to hire and keep talent onboard is to create a corporate culture that attracts top talent.
This isn’t a difficult task. By treating employees with respect and giving them a place to thrive, they will want to work for your team.
Define Your Scope
Hiring internationally can be a lengthy and expensive process. This is why a clear definition of your needs is so important.
Developing a list of qualities will make it easier to describe the candidates you’re looking for in job postings.
Having experts in your new market will prove invaluable to recruiting international employees. It’s imperative that you have regional expertise and linguistic skills if you want to find the top local talent.
Build A Relationship
Recruitment is a people business. Establishing firm and lasting partnerships with candidates, agencies, and networks is essential to successfully hiring overseas staff. As you build these relationships, it’s essential to demonstrate trust and authenticity. This is especially true if your business is breaking into a brand-new market.
Trust is, of course, the cornerstone of any relationship. But, don’t take your candidates at face value. Take the time to verify their credentials and past work with independent native speakers.
You will invariably find that qualifications vary from country to country, along with cultural considerations for employment periods, along with many other factors.
Consider sending your existing teams abroad to help recruit talent. One of the most effective methods for hiring new people is through employee recommendations. Let your people establish relationships by networking and your new team members will be more loyal and easier to onboard.
Interviewing International Candidates
The interview is the most important part of any recruitment process. Your recruitment strategy needs to take into account a provision for conducting an interview. There are many options available. There are merits to each approach depending on your business circumstances.
Interview options include flying the candidate out to your head office, visiting the candidate in their home country, or using technology, such as Skype, to conduct a virtual face to face interview.
Alternatively, you can outsource your interview process to a regional third party, who will conduct the interview on your behalf.
IRIS FMP’s Expertise
Overseeing multiple HR departments in multiple languages, combined with the complexities of different legislation in each country, can make coordinating international HR difficult or even unmanageable. Employment procedures and regulations vary greatly in each country. You need advice that will generate an effective, compliant resolution, regardless of the complexity.
That’s where we come in. With a truly global delivery team we can manage the entire process of employing and managing international staff, ensuring your organization can focus on the most important part of expansion, whether that be sales or strategic operation.
Simplified, Accelerated People Performance
Seamlessly, compliantly onboarding your organization and people to rapidly unlock your talent investment by reducing their time to value.
Trusted Excellence in Global Payroll & Benefits
We take the complexity away from local pay & benefits, ensuring your growing global workforce are paid accurately on-time, every time.
Global Expertise, Local Knowledge
Our experienced global payroll and HR specialists work in partnership with you to maximize your global workforce’s full potential with a truly integrated solution.
Solutions That Flex With Your Growth
Flexible people-led pay & HR solutions supporting you across the employee & global expansion lifecycle.
Onboarding International Employees
The challenge of onboarding is much more complex for international employees than domestic ones, but it is vital to your global success. When companies fail to optimize their onboarding process and integrate new hires in the company culture, performance, retention and engagement suffer.
Those with weak onboarding programs lose the confidence of their candidates and are more likely to lose these individuals in the first year.
To help international employees engage with your organization’s values, assign key offshore staff to a U.S.-based mentor. This also helps open up direct contact with your global offices.
Exchanging international workers between locations, both for training and work opportunities, is another way to strengthen links with offshore locations and improve global staff engagement.
Onboarding new hires should be a strategic process and last at least a year to ensure high retention. How you handle the first few days and months of a new employee’s experience is crucial.
It takes around six months for an international employee to feel fully settled and invested in a foreign business, so management of those first six months will make all the difference.
The second half of the onboarding experience should involve creating deeper links between your international employees and your brand.
Investing in cultivating a strong and engaging onboarding strategy will save money in the long run. As mentioned, international recruitment is expensive. Replacing talent that leaves can cost as much as twice the annual salary of the person that left.
And it’s not just about money. Culture and job satisfaction is hugely impacted, as well as morale, productivity and lost local knowledge.
“Organizations with a strong onboarding process improve new hire retention by 82% and productivity by over 70%”
Overseas Laws & Regulations
If your business is entering a new market and looking to hire international employees, you will need a legal presence to manage local employment laws and obligations. Of course, these differences vary by country and are complicated. But it’s the small details that matter most.
In China, for example, an employer must make contributions to housing and social care schemes. Legal requirements like this, along with their associated costs, must be accounted for when you expand into new markets.
It’s important to have a firm grasp of local employment law, as this will impact your international employees. If you’re expanding into Europe, you also need to take into account any European Union employment laws that may apply.
Withholding Tax for International Workers
Domestic laws will also impact your international staff. If your foreign-based employee is a non-U.S. citizen and all work will be performed outside the country, your remote worker will need to complete a Form W-8BEN.
Assuming the contractor meets the criteria and properly fills out the form, their wages as non-resident employees won’t be subject to withholding.
In the event that their status can’t be verified, you may need to withhold up to 30% of their earnings for tax purposes.
Remember, when it comes to withholding tax, the location of the work matters. If the contractor does work from within the U.S., the tax requirements for both parties will change.
“Nuances in the law can be easily overlooked and can carry serious consequences”
Protect Employee Data
On May 25th, 2018, the E.U. brought their General Data Protection Regulation (GDPR) into force. This regulation has forced all holders of EU citizen data to take action to ensure that that they can continue processing that data.
Most of the news about the subject has focused on customer data, but employee data is just as important.
The rights protected by the GDPR extend to the people you hire, and they are an essential consideration when moving into a new market.
If you fail to take these rules into consideration, your business could be subject to a hefty fine. There are two tiers of GDPR penalty, but both have the potential to cripple a business:
- Tier 1: Up to €10 million, or 2% annual global turnover – whichever is higher.
- Tier 2: Up to €20 million, or 4% annual global turnover – whichever is higher.
The GDPR lays out several new rules about how you process international employee information and how you make it available.
Your foreign E.U. employees have the right to access this information for their own purposes on request. They also have the right to understand how you intend to use it and they even have the right to be forgotten.
If you’re considering expanding into the lucrative E.U. market, you will need a process that gives employees access to their data as and when they need it. You must also be able to demonstrate how you are processing, storing, and destroying this information in a fully compliant way.
GDPR
What You Need To Know
Came into force
May 25th, 2018
Who does it affect?
Any business, worldwide, that handles personal data of EU citizens
Cost of non-compliance
Tier 1: €10 million, or 2% annual global turnover
Tier 2: €20 million, or 4% annual global turnover
Paying Overseas Employees
When considering the salaries of international employees, it’s important to look at regional salaries and benefits over those at home. All salaries should be determined by local market conditions, benefits regulation, and socially expected norms.
Offering salaries and benefits of the U.S. to locally hired employees can cost you significantly more in the long term. Depending on where you are expanding, it may not be a compliant practice. Salaries should be offered in the local currency of the host country.
Overseas payroll has complexity all of its own, as there are so many compliance regulations and exceptions to consider. Local labor law may require payment of overtime in certain circumstances or for certain positions. Some countries also don’t differentiate between part-time and full-time employees for certain benefits.
Part 2: Employing Remote Overseas Workers
There are a number of reasons why a company might choose to employ a foreign worker even if they live abroad and operate as a remote worker. Depending on the nature of the business, a foreign employee could bring substantial knowledge and expertise. Find out more about the legalities of employing foreign workers overseas.
Why Hire a Remote International Employee
In some cases, it might be appropriate for a company to employ someone who lives abroad and works remotely. This could happen if:
A foreign consultant is required. An example of this would be if your business wants to market to another region, such an American travel company that wants to sell holiday packages to Europeans. In this case it might be necessary to recruit someone in the appropriate region to offer an insight into localising campaigns such as with language, mentality, and idioms.
The worker was previously employed locally. Sometimes a company may already employ a foreign worker locally (whether or not they are a local resident) and said worker has chosen to return to their home country. When this happens, both parties might wish to continue the employment on a remote-worker basis.
Law & Logistics
There are various administrative matters to consider when employing overseas workers. On a day-to-day, practical basis this includes things like time zones and language barriers. Both of these need to be taken into account in companywide communication; for instance if an announcement is planned at 9am EST, remember that this is 1am in parts of Australia and 2pm in the UK.
It’s important to know everything involved with paying overseas employees, and also about what legislation might affect the employment. Factors to think about include:
Tax laws
It’s important to thoroughly understand the income tax legislation in both the company and the employee’s country. In the US, the IRS states “wages earned by non-resident aliens for services performed outside of the US for any employer are foreign source income and therefore not subject to reporting and withholding of U.S. federal income tax”. This essentially means that US tax laws do not apply when employing foreign workers overseas.
If the overseas employee is a resident in another country, but they are on your payroll, the tax laws in their country must be taken into account. Find out more about international tax laws with our in-country guides.
Employee rights
Another important aspect is that of employee rights. While many US states don’t have laws pertaining to annual leave and statutory sick leave, for example, the majority of other countries do. In such cases, the law in the employee’s residential country apply.
As an example, if a US-based company hires a British remote-worker, that worker is entitled to 20 days of paid annual leave under British employment law.
Part 3: Employing Foreign Workers in the US
Many US-based companies find that they want to hire employees who are – or will soon be – an immigrant in the company’s home nation. Regardless of the reason why, the bureaucracy involved can often be enough to dissuade many potential employers. Find out more about the aspects involved with employing foreign workers locally.
Why Hire a Foreign Employee in the US?
Many companies hire immigrant employees in the US for a wide array of different reasons. These will most likely relate to the person’s suitability for the job – for example if they have a specialist skill or knowledge that is required for the role.
When employing foreign workers in the US, the United States Department of Labor asks that the employer prove that ‘there are insufficient available, qualified, and willing U.S. workers to fill the position being offered at the prevailing wage’ and that ‘hiring a foreign worker will not adversely affect the wages and working conditions of similarly employed U.S. workers’.
Law & Logistics
US-based companies that wish to employ foreigners to work on US soil need to navigate decidedly more complex legislation than those hiring remote workers. To legally employ a foreign worker in the US, companies must guarantee compliance with the regulations set out by the United States Customs and Immigration Services. To achieve this, the following must be considered:
Visas
The US offers a number of visa programs designed to facilitate the employment of foreign workers. The programs might apply to various situations such as relating to length of employment, job role, and if they are from a country that has a treaty in place with the US. Visa types are:
- Student Exchange & Visitor Programs
- National Interest Waiver
- Extraordinary Ability
- H-1B Visa Sponsorship
- J-1 Visa
- L-1A and L-1B Visas
Before applying for any kind of visa, to employ a foreign worker in the US Foreign Labor Certification from the Department of Labor must first be obtained.
Citizenship
Applying for citizenship in the United States can be a lengthy process, yet for foreign employees who wish to work and live in the US permanently, it’s likely to be worthwhile. Foreign workers can obtain a Green Card – or a ‘Permanent Resident Card’ – if they meet certain criteria as an employee (much like in the case of the aforementioned visas).
Those who have obtained a green card through employment must have one for at least five years before applying for citizenship, and those who have a green card through marriage must wait for three years. There is a ten-step process to go through in order to obtain US citizenship, including a Naturalization Test and personal interview.
Employee rights & legislation
When employing foreign workers from overseas it’s important to ensure that they are fully aware of employment laws in the country where they will be working.
Because employment law in the US is considerably different to that of many other countries, it is necessary to adequately explain the local legislation that will apply to foreign workers. This includes matters such as tax, maternity leave, sick pay, and annual leave.
Employing foreign workers – whether remotely or within the company’s home nation – is certainly not without complication. There are local and foreign laws to contend with, as well as the patience and compassion that might be necessary in cases where employees have left their birth country. It’s vital that all relevant legislation is complied with; a feat which can cause undue stress for some. For help in this area, speak to the team at IRIS FMP. Our experts are adept at navigating international HR and employment law, and will provide all the advice you need in even the most complex circumstances when employing foreign workers.
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