6 Legal Factors to Consider When Hiring Global Employees - The University of La Verne Small Business Development Center (SBDC)
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6 Legal Factors to Consider When Hiring Global Employees

Are you thinking of hiring overseas-based employees? Whether you are operating an overseas branch of your own business or looking for specific skill sets that aren’t readily available here at home – there can be benefits to hiring overseas employees, but there are also challenges.

How do you make sure your staff turns up for work on time? How do you hold them accountable and keep them motivated? What about communication across different languages, cultures and time zones? These are all concerns and challenges that many business owners have faced and their suggestions for tackling them are discussed in this guide from The New York Times: Running a Business With Staff Scattered Around the World.

But what about the legal and regulatory side of managing employees in other countries? Labor laws will likely differ from those in the U.S., so it’s important to understand those laws before you make your first overseas hire. For example, U.S. “at-will” employment laws don’t apply overseas. Most countries demand that employers have a concrete reason to fire someone (whereas most U.S. states permit employers to terminate any employee at any time, for any reason, or for no reason at all).

What other factors of foreign labor law should you consider?

Ben Macaluso, writing for the Denver Business Journal, suggests that U.S. employers watch out for the following:

  • Time Off Laws – Foreign companies, most notably Europe and Australia, are very generous in their vacation, sick and maternity leave policies. Certain countries also extend leave policies to encompass other activities such as building homes or career development.
  • The Power of Unions – Unions carry a lot of weight overseas and employee benefits and work conditions are strongly controlled by these. For example, you might not be able to change existing policy or conditions without union approval.
  • NonCompete Agreements – Many U.S. businesses write non-compete agreements into employee contracts. Foreign countries generally prohibit these.
  • Notice – How much notice you are required to give in the event of a lay off or firing also varies overseas.

Some U.S. laws also apply when it comes to hiring employees in other countries, for example:

  • Bribes – U.S. federal law prohibits corruption in the form of payments to foreign officials for business favors.
  • Employee Privacy – Other countries may have strict laws that govern what employee information you can share publicly (even apparently harmless records such as an employee directory could run the risk of violating privacy laws).

To ensure you are complying with local labor and tax laws, consult in-country experts who are familiar with business and regulatory matters in the country you intend to base employees out of.

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