While it won’t happen to every venture, there are many startups that sail through the seed stage and look towards overseas expansion, making ambitious plans to enter new markets. It’s the natural next step for many founders and entrepreneurs, but taking your product or service to unfamiliar overseas markets comes with a host of challenges and complexities to understand. If part of your expansion plan involves hiring personnel overseas, then it’s inevitable that you’ll come up against employment laws that might differ slightly from what you’re accustomed to.
We’ve created this guide to serve as a starting point for founders and HR professionals within startups, detailing some key aspects of international employment laws; as well as outlining how working with a trusted international EOR provider can help you to not only enter, but succeed in new markets.
Tailoring your strategy to the landscape
There’s a wealth of diversity in global employment laws, and different countries take their own approach when it comes to governing aspects such as hiring, contracts, working hours, benefits and termination. For startups pursuing international expansion, the diversity in different types of employment regulations can pose some significant challenges. Take these examples into consideration:
Employee benefits
Many countries take different approaches to employee benefits packages, and often socio-economic and cultural factors dictate what is and isn’t catered to. Providing employee benefits is a key part of attracting talent, but they need to account for this type of diversity too.
Mandatory benefits
Some countries mandate benefits into their employment laws such as healthcare and insurance, paid leave and parental leave. For instance, many European nations have robust social welfare systems that require employers to contribute to health insurance and pension schemes, but in other parts of the world this isn’t the case.
Your global benefits program needs to meet minimum standards in the territory that you’re hiring in, so understanding mandatory requirements is a must.
Voluntary benefits
Going beyond mandatory benefits, startups could also consider offering voluntary benefits. This tends to be more focused on wellness and accessibility; some examples include childcare schemes, access to mental health support, discounted/free gym memberships or professional development opportunities. Voluntary benefits can be an asset to overseas employment where startups may be targeting a highly competitive job market, and they serve to build a sense of culture within dispersed workforces.
Cultural expectations
Understanding cultural norms regarding work-life balance and employee expectations is vital. For example, in some countries, employees may prioritise vacation days over monetary bonuses, while in others, the reverse may be true.
The ability of your startup to resonate with international talent is dependent on the localization efforts that you make, so familiarising yourself with this is fundamental. Look at international and cultural holidays, working practices and ethical standards in the territory that you’re hiring in, and find ways to ensure your offering caters to this.
How leveraging Employer of Record (EOR) solutions can help
One of the most effective strategies for startups pursuing global expansion is to utilize an Employer of Record (EOR) service. Here at Agility EOR, as an Employer Of Record we enable businesses to hire employees in different countries without needing to establish a local entity.
When you choose the EOR route to embark on an overseas market venture, you’ll benefit from simplified compliance when it comes to navigating international employment laws. Here’s how:
Expert opinion
Scott Winter
From what I have seen, employment contracts vary greatly between countries. For example, the United States of America regularly practices employment at will, whereas many European countries demand specific clauses and have strict termination policies. Contracts need to be compliant with local legislation if a company wants to avoid legal problems.
Benefits administration
Our EOR service also includes devising strategic employee benefits packages. We take the necessary steps to ensure that local minimum standards are met through the provision of mandatory benefits, and we can tailor your offering from here to ensure it appeals to the talent you’d like to hire for your overseas team.
Payroll managementPayroll is another aspect that falls within the remit of our EOR service. We offer global payroll solutions, tailored to the jurisdiction you’re expanding into. From paying employees in their local currency, managing applicable deductions from salaries and meeting statutory filing requirements; Agility helps you to operate a borderless payroll system.
How to be compliant with international employment laws
The best way to stay compliant with international employment laws is to do plenty of research prior to pursuing your expansion plans into a specific country. We’re always happy to advise founders and HR teams on the type of areas that should be considered, and these findings should be documented. Laws are also susceptible to change, so your business has a duty to stay up to date with any developments that might affect any existing active overseas employment contracts.
Take your startup business into new markets with a trusted EOR
We approach our EOR service with enough diligence and consideration to allow you to focus on what matters the most; powering your business to expand and enter new markets seamlessly. To arrange an initial consultation with one of our experts, simply contact us today, or find out more about how we can support your business objectives with our leading EOR service here.
