5 HR mistakes to avoid when hiring employees in another country

To combat recruiting challenges and gain access to top performers, many companies are expanding their talent searches internationally and hiring remote employees, freelancers, contractors or other types of contingent labor.

Hiring remote employees in other countries can be a challenge, however, as employers have to navigate significant complexity to ensure workers are legally employed, culturally included and professionally supported within their organization.

As global companies begin managing, onboarding and hiring international employees to work remotely, here are five common mistakes HR should avoid:

When looking to attract top international talent, companies need to be mindful about how and how often they communicate their culture and values to the outside world. A company too reserved, unclear or inconsistent with its public communications could be sending the wrong impression to potential new hires. Remote workers can be especially sensitive to poor brand communication, for they are often unable to learn about a company’s workplace culture through referrals or word of mouth.

To present a good first impression to these workers, employers will need to demonstrate their credibility and trustworthiness by conveying a consistent, strong voice. Publicly highlighting company values can be a great way to showcase workplace culture to potential candidates. An informative website and careers page establishes credibility and helps candidates visualize themselves as a contributing member of the team. Beyond a simple list of values, employers can share stories, anecdotes and specific examples to describe how their values show up in day-to-day operations.

Companies who communicate about themselves openly and honestly are better able to attract like-minded people, no matter where they are in the world.

HR managers often assume that offering global workers the same benefits as their employees in the U.S. is both generous and fair, but there are many instances where these benefits are not appropriate for international remote workers. As an example, most countries offer state-provided health care coverage that is more than adequate, so offering a private health plan to foreign workers as is custom in the U.S. is often not necessary. Managers need to continually take local laws and customs into account before crafting an international benefits plan, ideally tailoring country-specific benefits while still offering relevant components of their company’s benefits scheme.

Since a company’s benefits package can often be a competitive advantage when attracting and retaining remote workers, going beyond the minimum statutory requirements is ideal. Employers can research the international benefits plans their competitors are offering to compare themselves with industry leaders. And, to gain a greater competitive edge, companies can find ways to differentiate themselves by offering more specific perks, like monthly coffee shop allowances, that will appeal directly to the flexible workforce.

Day one on the job can be quite different for a remote worker versus someone working in-office. With no office structure or co-workers nearby to guide their behavior, figuring out how to get started is often more challenging. The onus is on employers to design a thorough onboarding process to alleviate employees’ uncertainty and help them feel more supported from the start.

By leveraging early and consistent communication, a “pre-boarding” process can help new hires quickly become familiar with their role-specific tasks and responsibilities. Right after an offer letter is signed, managers can begin sharing their training schedule and onboarding plan and connecting them with new team members. Also, providing clarity around tools, platforms and systems is especially helpful for those who have never worked remotely before.

Many remote-based companies have found the most ideal time to onboard a new worker is right before a company-wide event so they can meet the entire team in person. Even though a company event can help someone new instantly feel like part of the team, the timing may not always work out. When in-person connection is not possible, virtual tools like video calls are also helpful for creating face-to-face meetings and bringing people together for the first time.

Additionally, as companies work to get their new hires acclimated and set up for success, they could be overlooking regulations that dictate how and when international workers should be registered with the government. For example, Mexico has a statutory requirement demanding new hires are registered with the government within a five-day window—so employers will need to plan accordingly for special cases like these when they onboard international workers. An HR team with localized expertise will be able to advise on these and other legislative nuances.

Companies looking to enter new markets typically need to hire remote talent quickly, especially when new business opportunities come up. But creating a compliant employee agreement or contract requires detailed attention to local employment laws. Before engaging with a remote worker, especially internationally, employers need to carefully consider the legal implications that could affect their new hire, whether they are an independent contractor or a direct hire.

Hiring remote employees as independent contractors can make a lot of sense for a growing company. But employers need to be cautious and thorough when outlining the scope of work their contractor will be performing, because the legal definition for an independent contractor vs. employee varies by country.

In order to avoid liability for worker misclassification, HR managers need to clearly understand their contractor’s role, including expectations and responsibilities, and confirm that their work requirements will be legally accepted as contract work in their country of residence. As an example, some local employment laws restrict contract workers from using company resources and tools to execute their projects. Restrictions like these can make hiring contractors for remote work more challenging.

Beyond employee classification discrepancies that can put employers at risk, there are also many different financial and tax laws to navigate when hiring remote employees in other countries. Employers should never assume they can add a new remote employee directly to payroll when they are not located in the same country as the rest of the company.

Even within the U.S., there are state laws that dictate how often residents can legally receive pay. As an example, Ohio wage law requires that employees are paid at least twice a month—a regulation that could be easily overlooked if a company has never had an employee living in Ohio.

When paying remote workers internationally, employers face even more legislative complexity. Some employers might be tempted to pay their international workers through an international money transfer, but doing so could mean noncompliance with government regulations and employment laws. There are also reporting requirements that can easily be overlooked when hiring remote employees in other countries like Uruguay , Argentina and Chile. In these countries, payroll managers are required to have employees sign their payslips upon receipt.

With every country and region defining their own legal requirements for employee classification, wages, pay schedules, taxes and withholdings, compliantly employing remote workers can become a daunting task. But detailed attention to local employment laws, as well as accurate documentation, can protect both the company and worker. Employers will benefit from taking the time to consult with employment or legal experts from different regions to ensure they’re compliant and have all the necessary paperwork completed.

Many companies believe they have the appropriate resources and processes in place to support a remote workforce, but 57% of hiring managers do not have a remote work policy.

Virtual tools and congruent processes are important, but they can only be as effective as the people working with them. Adequately supporting remote workers, including work-from-home employees, requires expectation and boundary setting through policy and proper documentation. Guidelines for working off- site should be specific, describing the types of job positions that qualify for remote work and setting clear performance measures to monitor team collaboration.

A well-designed and thoughtful remote work policy also addresses any cultural inconsistencies and provides clarity for why some jobs may not be eligible for off-site work. As an example, employees who are responsible for safeguarding sensitive information might be ineligible for remote work because of certain data protection and security laws.

Documenting job-specific restrictions and expectations around remote work can help provide clarity for employees, but managers also need to make sure their policy is communicated and enforced with consistency, otherwise workers will question its fairness and validity. By creating a flexible company policy and openly communicating how it will be enforced, managers can keep employees in the loop while they continue to adjust the rules that work best for their remote teams.

Some employers may choose to avoid hiring remote employees in other countries because they feel overwhelmed by the complexity. But companies who neglect to meet the demands of the modern workforce, including remote workers, are at a disadvantage in the global market—especially as employee expansion becomes a competitive imperative for international growth.

Avoiding these common HR mistakes, like noncompliant employment terms, doesn’t have to require constant cross-checking. An employer of record for international employees, like Global Employment Outsourcing (GEO) , can help employers navigate all local tax and labor laws, regulations and benefits, so managers can focus on the strategic initiatives that will ensure remote workers are culturally included and professionally supported within their organization.

Contact us today to speak with a global solutions advisor and learn more about outsourcing global employment.