How to hire overseas and scale your business globally

TL;DR

Where to start with hiring international employees

Why you need to learn the lay of the land.

Being conscious of cultural differences

Stay on the right side of your new employees (and even the law).

The formal bit

Legal and financial implications of operating overseas.

Companies who’ve successfully scaled internationally

Key lessons from some of our clients.

Where to start with hiring international employees

We have been there and done it with our partners. See how our solution and consultancy model can drive your growth.

Deciding how you want to operate

Expanding overseas and hiring international employees is a complex business.

Employment laws in each country will dictate how you implement things like holiday, sick pay and benefits. And no two countries have exactly the same laws, regulations or tax rules, so you’ll need to do some extensive research.

While it’s important to have a clear plan and structure for how your business will operate at a global level, it’s more important that you have the flexibility to adapt locally.

As a starting point, you’ll need to decide how you want to legally operate in each new country.

You can:

Set up a legal entity there

This involves forming a business in the country you want to operate in, as well as notifying HMRC in the UK that it exists as part of your company’s portfolio.

Use an Employer of Record

This is a third-party company already registered in the country you’re expanding to that will take responsibility for payroll, taxes, visas, benefits and any insurances on your behalf. This is an ideal option if you want to scale quickly.

You won’t technically have a legal entity in the country, but you will be responsible for outlining contractual agreements for any employees the EOR manages on your behalf.

Set them up as a contractor

You can hire a third party services company to manage payment and administration for you, but you will be responsible for negotiating rates and payment terms.

If you choose this route, you’ll need to make sure you pay contractors at least the minimum wage dictated by law in that country. You’ll also need to factor in exchange rates and any admin fees for the payment service you use.

There are legal and financial implications to all of these options, so we strongly recommend you speak to a tax adviser in the UK and the country you’re expanding to.

Being conscious of cultural differences

You may think you know enough about the country (or countries) you want to start operating in, but there will most definitely be cultural, social and political differences that you aren’t aware of yet.

And they can impact everything from the way you hire, to the benefits you need to offer.

It can be really tricky to create an inclusive policy that can be rolled out on a global scale because candidate expectations, the way of living and cultural etiquette could be drastically different.

For example, employees working in the private sector in the Philippines are legally entitled to a 13th month of pay, which needs to be paid on or before 24th December. Christmas is celebrated from September to December there, so this ‘bonus’ is a big deal.

What might be normal practice in one country could be offensive (or even illegal) in another, so this is definitely a case for doing your research and making sure your operations are squeaky clean.

The formal bit

There are some weird and wonderful differences between countries and how things are done that you likely won’t be aware of if you haven’t operated there yet. Even across Europe, where most countries follow EU law, there are still some subtle differences.

If you hire five or more employees in Germany, you legally have to set up a Works Council. And in the Netherlands, you need to provide sick pay support at 70% of salary for two years and pay an 8% holiday allowance (on top of salary) to encourage staff to take annual leave.

Getting advice from someone who understands these nuances means you have a better chance of being an employer of choice and protecting yourself legally.

That doesn’t necessarily need to be someone based in that country, or a lawyer. A talent consultancy could help you navigate the whole process (without the need to learn a new language or deep dive in legalese).

Staying on the right side of the law

Any contracts you have in place will need to abide by the laws and regulations of the country you’re operating in and meet that country’s basic requirements for minimum pay, holiday entitlement, statutory benefits and employee rights.

They should also always be written in the native language of the country. Many international companies will have a copy of their contract in English as well, but it tends to only be legally binding when it’s written in the native language.

It’s also worth considering setting up a Collective Bargaining Agreement (CBA), if there isn’t one already in place. This is a bit like a trade union. Depending on the country you’re operating in, the CBA may have a lot of clout and potentially overrule your own policies.

Paying the right amount of tax

Navigating tax is one of the biggest challenges you’ll face in setting up overseas. Even if you send a UK employee to another country (for example, to help set up an office there) you and they may be liable to pay tax both in the UK and the country they’re working in, even if it’s a temporary agreement. This will come down to how long the employee is there for and if/how that impacts their tax residence position.

One of the biggest challenges over the past few years has been the rise of globally remote workers. On the surface, a lot of people have made it look very easy to up sticks and work anywhere in the world. In reality, this comes with tax implications for them and potentially your business too.

If you’ve chosen to operate through an Employer of Record, they can manage the tax and regulatory side of things for you. Depending on the scale of your new operation, this could be the most cost-effective option but you will need to account for their fees on top of monthly employee costs.

If you’re setting up as a legal entity, you’ll face much bigger implications and will need some very good advice from a tax specialist there.