The potential for HR managers to make mistakes grows as an organization
expands internationally. Why? Foreign labor laws, cultural differences and
cross-border communication (to name a few) add significant complexity to the
job and create more opportunity for things to go wrong.
If you’re planning to expand your business to new markets and are worried
about HR risk, make sure to keep these common mistakes in mind.
1. Misunderstanding local labor laws
For HR professional, understanding all the different laws that regulate
employment conditions, like work hours, compensation, pension and severance,
is critical for ensuring compliance and protecting the company from potential
litigation.
But employment laws change frequently and vary from country to country, so
keeping up with local legislation (especially in multiple regions) can be a
huge undertaking for your HR team.
Consider working with in-country legal and HR experts to help your team
navigate compliance risk and avoid unintentional mistakes in new markets.
2. Expecting the same work week
Related to the above, you may run into some issues if you expect the same work
week for every employee. While workers in the U.S. are familiar with the
40-hour week, other countries do not share that same expectation. For example,
in Australia and France full-time employees work 38 and 35 hours per
week, respectively. Of course, you can ask workers to extend working hours on
certain weeks as necessary, but keep in mind you may have to pay overtime
(which can add up quickly).
In addition to local regulations, HR teams will need to consider cultural
influences that may impact employee work hours, as some countries maintain
variable hours throughout the year. In Spain, for example, working days are
typically shortened during hot summer months and lengthened in the cooler
winter months.
Flexibility is key for international human resource management, as there are several factors that influence working hours for a global team.
3. Not being aware of national and regional public holidays
This can seem obvious, but you would be surprised how many organizations and
HR professionals overlook non-American holidays—a mistake that can lead to
complications when scheduling paid time off, filling in timesheets or planning
company-wide meetings.
From days for marking seasonal harvests to celebrations for patron saints to
independence days, you can expect some sort of holiday at any time of the
year. And while some employees may be fine working through holidays, keep in
mind that you may be required to pay extra wages. For example, if employees
in Mexico work on a national holiday, they are paid triple their daily wages.
Additionally, whether a holiday is cultural or faith-based, they fill
important roles in people’s lives beyond work, so not acknowledging holidays
(even unintentionally) could impact employee performance and job satisfaction.
4. Neglecting time zone differences
In the U.S. alone, factoring in time zones can be difficult if the
organization runs a bicoastal operation. Now imagine how much more challenging
that gets when you expand to global time zones.
At a practical level, forgetting to factoring in time zones can result in
missed due dates or problems with receiving time-sensitive projects. And when
scheduling company-wide meetings, the onus is on HR to plan accordingly, as
some workers may be clocking out for the day while others are just waking up.
5. Using different formats for numbers and measurements
The U.S. is one of the few countries that does not use standard metric units,
which can contribute to some confusion if you need to discuss measurements of
any kind with global team members. In addition to measurements, there are
other numerical formats that you need to keep in mind. For example, “zip
codes” are common in the U.S., but in the U.K. they are better known as
postcodes.
How dates are formatted can also cause confusion. The U.S. has made standard
the month-day-year (mm/dd/ yyyy) format for dates, but nearly all other
countries use the day-month-year (dd/mm/yyyy) format. That can get confusing
if, for example, you ask for a project to be completed by 2/12 (and mean
February 12), but a non-U.S. employee reads it as December 2.
6. Not looking into multiple leave entitlement policies
In the U.S. and U.K., workers usually only have one paid time off plan with
some slight variations on how it accrues.The U.K.
also
has separate paid sick leave entitlements, which some businesses in the U.S.
are adopting. However, most other countries have other forms of paid leave,
usually in relation to length of service.
Other countries also tend to have more robust laws for leave related to
bereavement and parental responsibilities. Employers are obligated to
encourage their workers to take these leave plans, or they can pay out the
amounts.
These different leave policies can accrue in different ways. Developing an
internal strategy that allows for multiple different types of absence and
leave allows for greater flexibility to accommodate the needs of a global
workforce.
7. Not considering multiple currencies
Your HR system already has to handle and record information for payroll,
including reports on salaries, benefits, bonuses, pensions and all the other
components of employee compensation. But when you work with a global
workforce, your system has to do all of that while also converting those
numbers into a foreign currency.
Staying on top of workforce spend is integral to business operations, so make
sure your HR or payroll system is robust enough to track compensation beyond
dollars and cents.
8. Not meeting visa or immigration requirements
This mainly applies to employees that are expatriates, but you are responsible
for providing expat workers with necessary work visas and permits. Even if
they work for you but reside elsewhere, you are the entity in charge of
complying with local immigration regulations. You will have to sponsor the
employee’s visa with a legal entity in their country of residence.
An expat working on a tourist visa or even a business visa would be out of
compliance, resulting in penalties and deportation, and those penalties would
most likely fall on you as the employer and liable party.
9. Not prioritizing employee data protection
Many countries are enforcing more stringent regulations to protect employee
data privacy, like General Data Privacy Regulation (GDPR ) in the European
Union. HR teams that are responsible for collecting, using, sharing and
storing sensitive data about their international workforce will need to
prioritize data protection, especially when it comes to highly sensitive
payroll data.
Not doing so can risk severe legal penalties
and
damage to employee trust.
10. Misclassifying international employees
There are several differences between independent contractors vs.
employees. Contractors are exempt from traditional employer-employee relations, meaning contractors typically accomplish a task with
little instruction, while employees operate with more oversight from an
employer (and are often afforded more benefits).
HR must understand how the local government defines employees in order to
avoid unintentionally misclassifying them—a violation that can lead to severe
penalties.
How to avoid international HR mistakes
Mistakes are bound to happen within any HR team, especially those that are new
to managing an international workforce. One way to support human resource
activity as your company expands into new global markets is to work with local
experts that can fill gaps in legal and cultural knowledge.
An employer of record, like GEO, can
help your HR team navigate local employment and payroll regulations and
avoid common mistakes that pose risk to your business.
Ready to learn more? Contact us today
to speak with a
global solutions advisor about how GEO can protect your business from HR
risk.
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