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6 Legal Factors to Consider When Hiring Global Employees

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6 Legal Factors to Consider When Hiring Global Employees

By Caron_Beesley, Contributor
Published: April 3, 2013

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.
  • Non-Compete 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.

Additional Resources

 

 

About the Author:

Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Comments:

You hire foreign workers to pay higher amount
An eye opener, it is true that most of the companies goes from the dilemma of hiring overseas staff at their comfort. But there are many legal implication applied for hiring any individual for specific task.
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.
I have been very dis satisfied with hiring global employees. They seldom can speak our language, their time zones clash when they need to be answering phone in customer service jobs, their grammar is very notable not very good english. The sad part is that the gobal workers we hire are very motivated and it skilled. Too bad we can't all speak the same language, be on the same time zone and all work together.
Foreign companies, most notably Europe and Australia, are very generous in their vacation, sick and maternity leave policies
I strongly suggest getting legal advice within the legislation at the place of hiring an employee! For example, here are some specifications for Germany: • Time off in Germany: sick and maternity leaves are subject to rules set by the law (the employer CAN be more generous), by law vacation is at least 24 workdays but 30 days annually are quite common. • Power of the Unions: changing policies conditions is generally not subject to union approval – if there is a worker’s council there is a list of items that require their consent, and if the policy or condition is defined in a collective labor agreement then this has to be negotiated with the tariff commission (where the union will have a seat). • Non-Compete Agreements: are possible in Germany but are subject to certain rules (time limits and reimbursement). • Privacy rules: You can run an employee directory but above that there are some restrictions in Germany.
Are these laws also applicable to companies outsourcing work to companies/individuals overseas, can you help give idea on legal implications for the same.
Sara Thanks for your comment, these laws typically apply to hired employees - labor laws in other words. It's not clear whether you are hiring employees or working with other companies who would technically be the employer overseas? I suggest you get legal advice to clarify the implications of doing this.
Great tips,what I do at my company is hire a freelance writer to come up with ideas and current events that are going on in our industry.

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