International employment is a prime opportunity for companies looking to
achieve a more diverse and innovative workforce. And now, with the rise of
remote work and virtual teams , it’s given employers incentive to look beyond
their local markets for the best talent.
But each country has different laws and regulations that govern local
employment, and your HR team may not be familiar with how to manage the
nuances of international benefits and compensation. As you can imagine, these
challenges in international business staffing
can
be a hindrance in your expansion plans but they can be avoided.
As you look to hire workers internationally , here are some considerations to keep in mind, so
you can ensure your global talent receives a competitive employee agreement
that’s compliant with the local law.
Considerations for managing international benefits and compensation
Here’s why understanding local requirements and cultural expectations is so
important for effectively managing international benefits and compensation.
Common U.S. benefits may not translate overseas
There are many instances where it may be inappropriate to offer benefits that
are commonplace in the U.S. to international workers. For example, most
countries offer state-provided healthcare coverage that is more than adequate,
so offering a private health plan to foreign workers is often not necessary.
It’s OK if you want to keep some continuity in your company’s benefits scheme,
just ensure you’re offering relevant components that are both necessary and
favorable in the local market.
Bonus plans may pose risk
If you hire an employee in Germany , for example, equal protection laws may
interfere with how bonus participants can be selected, and if bonuses are
performance-based or discretionary, German Labour Courts can determine the
amount of bonus pay
.
Additionally, bonus payments that are a large percentage of employees’ total
pay can fall under regulatory scrutiny by the local government in some
countries.
To avoid possible litigations, you’ll need to be cautious when agreeing to a
bonus plan with an international employee.
International benefits and compensation costs can multiply
In many countries, the definition of total compensation goes well beyond salary and includes bonuses and
benefits, so employer contributions like social security, pension and
severance pay can be calculated at a much higher cost than you'd expect.
Make sure you carefully consider how total compensation is defined in a
foreign country before you make an employment offer.
Collective bargaining agreements may be a factor
In some areas of the world, collective bargaining agreements—negotiations
between trade unions and employers that determine working conditions and terms
of employment—can play a large role in how you manage international benefits
and compensation.
Across the EU, 60% of employees are covered by collective bargaining. In Germany
and Italy, collective agreements may regulate the legal salary range within
certain industries. And in Australia, they dictate overtime pay, rather than the local law.
Before you hire an international employee, research whether collective
bargaining agreements will influence the terms of employment.
Local culture will influence expectations
Benefits that are considered a perk for your U.S.-based employees may be less
appealing to your international workers. For example, in Brazil, a paid
company vehicle is often viewed as a burden.
You’ll need to understand whether company benefits will integrate with
cultural norms in the country you’re planning to hire—a difficult undertaking
when you don't have an in-country HR team to guide you.
How to ensure your international benefits and compensation plans are competitive and compliant
Go beyond minimum statutory requirements
Your company’s benefits package can be a competitive advantage when attracting
and retaining international workers, so try to go beyond minimum statutory
requirements whenever possible.
Researching the international benefits and compensation that industry leaders
are offering in the local market can help you learn how your company stacks up
against the competition. And for a greater competitive edge, you can
differentiate employee benefits by offering unique perks, like unlimited PTO
or monthly meal allowances, that may appeal more universally to the global
workforce.
Partner with local HR experts
Going beyond statutory requirements can give you a hiring advantage in the
local talent pool, but that advantage will fall flat without compliant
employment contracts in the local language.
If you’re looking to hire global talent quickly and have little experience
with the laws that will affect international benefits and compensation,
consider partnering with a global employer of record
,
sometimes known as an international PEO
.
An employer of record, like GEO , will ensure employee contracts are compliant with
the local law and can help you benchmark international salary and tailor a competitive benefits plan that takes local customs
into account.
GEO can also save your organization time and money by eliminating the need
to establish your own local entity .
Contact us today to
speak with a global solutions advisor and learn how GEO can support your
unique international hiring needs.
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