How to Navigate the Challenges of International Employment

January 15, 2018

Many companies will eventually reach a point when it becomes necessary for them to consider international hiring. According to a Harris Poll, 55 percent of employers plan to hire overseas, which is an increase of 21 percent from a year earlier.

While there are many benefits to this, there is also quite a bit of red tape to get past. There are many complexities that exist in hiring, managing, and terminating international employees.

It’s important that U.S. employers familiarize themselves with these challenges. Failing to so puts them at legal and financial risk. This article will highlight several key differences in employment law between the U.S. and other countries.

Benefits

One of the biggest differences between hiring locally and international hiring comes down to benefits. And one of the biggest challenges for most companies in the U.S. is providing health care insurance.

In most countries outside of the U.S., the government provides universal health insurance and other social benefits to all citizens. So this is a challenge that won’t be as relevant when dealing with foreign employees. Supplemental benefits, however, can be purchased in some situations as an additional employee perk.

There are also additional benefits that foreign countries guarantee with which U.S. employers might be less familiar. Many Latin American countries guarantee employees a 13th-month bonus. This means that employees get a bonus at the end of the year that is one-twelfth of that year’s pay.

Paid Time Off

In the U.S., paid time off policies typically don’t distinguish between sick days, personal days, or vacation days. And most plans won’t let employees carry over any unused time into the following year.

But in most foreign countries, employees are often entitled a certain amount of time off each year by law. Most countries also allow employees to carry over any unused time off.

Some countries even require that employers give extra time off to more senior employees. Hungary gives an extra seven days of vacation time to an employee with children.

Employee Termination

“At-will employment” is a term that is familiar to U.S.-based employers. According to U.S. federal and most state labor laws, this means that employers can fire an employee at any time, for any reason.

So it comes as a surprise to many employers that “at-will employment” does not exist overseas.

Termination laws tend to be much stricter in foreign countries and heavily favor employees. There are rigorous rules regarding causes, notification timelines, salary payouts, and more.

Mishandling an international termination can land you in a world of fines and damages. So you should always review the employment contract and local regulations before terminating an overseas employee. This will help you figure out any provisions that you need to take to establish just cause.

Conclusion

When it comes to international hiring, U.S. employers face many challenges. Familiarizing yourself with foreign employment laws will help you understand the local requirements. Going forward, here are a few things to consider:

  • Is there a 13th-month bonus or other benefits that are required by law?
  • Can employees carry over any unused paid time off?
  • Are there any other types of paid leave employees are legally entitled to?
  • Does the country require you to provide just cause before terminating an employee?  If so, what procedures do you need to follow?
  • What are the penalties for wrongful termination?

Have you experienced roadblocks when trying to hire overseas? If so, Clearfront HR can help. We can manage the complexities of international HR for you. Get in touch and let us know more about your international hiring needs.