When we work with companies on planning and executing their global expansion strategy, we frequently come across a set of common challenges that many of our clients face. Today’s blog focuses on ten of the most common questions that our clients ask us when they expand overseas. You’ll notice a common theme in many of our responses: The specifics of how to tackle each challenge frequently depend on the country, industry or jurisdiction. That’s because many of the requirements of global expansion are country-specific and frequently in flux.
Please feel free to reach out to us to discuss your company’s specific challenges or questions. Our experts are happy to help you navigate the regulatory landscape of your target countries so that you can stay in compliance and support your global workforce effectively.
What is a Collective Bargaining Agreement, and would it be applicable to our employees?
A Collective Bargaining Agreement (CBA) is a contract between employers and employee representatives (often unions) that governs wages, benefits, and working conditions. These CBA’s are often updated on a yearly basis. Whether a CBA applies will depend on the specific country, industry, the company’s local business activities, and local labor laws. Because every country and jurisdiction has different legal requirements, it is critical for your HR team to both understand CBA requirements and know whether they apply to your business so that your company can stay in compliance and avoid incurring legal or financial penalties.
What is a Works Council and are we required to have one for our employees?
A Works Council is a representative body of employees that collaborates with employers on workplace policies, conditions, and rights. Requirements vary by country, industry, and company size. Some jurisdictions mandate Works Councils to ensure employee representation in decision-making. For example, in France, companies with at least 11 employees must establish a Social and Economic Committee (CSE), which employers are required to consult on workplace policies, compensation, and working conditions. Because Works Councils vary by jurisdiction, make sure your HR team understands whether your country or jurisdiction requires them (or when your obligation to establish one kicks in) and, as important, your company’s responsibilities in each jurisdiction.
Do other countries (outside of the US) also use exempt and non-exempt employee classifications?
While only the US uses the exempt vs. non-exempt classification, other countries do have similar methods of classifying jobs based on a variety of factors (working hours, overtime, and labor protections, to name a few). For example, in the UK, even though there’s no direct equivalent to the US exempt/non-exempt model, employees are covered by Working Time Regulations for determining working hours and overtime. In Germany, the Working Time Act also regulates hours and overtime pay, and exempts certain high-level employees from these limits. Because each country’s terminology and legal framework is different, it’s important that HR teams have a deep understanding of how workers are classified in each country or jurisdiction in which you operate.
Can I dismiss an employee ‘at will’ in a country outside of the US?
Generally, the concept of “at-will” employment (where an employer can legally dismiss an employee without cause or notice), is specific to the US. Most other countries require a just cause, notice periods, or other conditions (e.g., severance) to terminate an employee. However, those conditions vary from country to country. For example, Germany’s strict labor laws require informing and/or consulting with a Works Council (if one is in place) before termination. France also has significant employee protections. There, employers are required to both provide a valid justification for dismissal as well as follow specific employment termination procedures. Because disputes around termination of employees are the leading cause for employment tribunals claims, it is crucial to have a thorough understanding of these to avoid the legal and financial risks of terminating employees incorrectly.
What is the GDPR?
The General Data Protection Regulation (GDPR) is an important EU data privacy and protection law that governs how companies collect, process, and protect personal data. Currently, it is one of the strictest data privacy and security laws in the world. It is important to note that the law applies both to businesses operating in the EU and those outside of the EU who nonetheless handle data of EU residents. Thus, even companies that reside solely in the US but who may interact with individuals residing in the EU should comply with the law to avoid stiff fines. Make sure that your data practices align with the GDPR (or equivalent legislation) to avoid penalties and legal risks. It is also important to remember that data privacy and protection laws, similar to the GDPR, exist in most countries throughout the world. Thus, your organization must stay up to date and in compliance with the regulations for each country in which you operate.
What is the TUPE regulation in the UK?
TUPE (Transfer of Undertakings Protection of Employment) is a UK employment regulation that protects employees when a business or service is transferred to a new employer. TUPE legislation derives from the Acquired Rights Directive which is an EU wide Directive. TUPE applies to mergers, acquisitions, and outsourcing changes. If your company operates in the UK, this law can require you to retain existing employees and honor their employment terms, rights, and continuity of service. It is important to note that similar TUPE regulations also apply in other EU countries. Make sure that your HR team understands TUPE requirements in depth before you engage in an M&A or employer changes.
Do I need to offer employee benefits to employees outside of the US?
Generally speaking, while employee benefits requirements do vary by country, most jurisdictions do mandate some form of health insurance, pensions, or paid leave. Understanding these requirements for your specific country or jurisdiction is not only essential for compliance—it is often a key part of talent retention and acquisition. In addition, it is often considered common or best practice to offer additional benefits over and above statutory requirements in many countries and jurisdictions. To be competitive and compliant, make sure that your HR team designs benefit packages that align with legal requirements and best practices.
Under which circumstances can I not use an EoR to hire in-country?
An Employer of Record (EoR) is a third-party provider that legally employs workers on your company’s behalf so that you can avoid the relatively complex process of setting up a legal entity. Typically, an EoR provider will handle payroll, taxes, and compliance. While an EoR provider does simplify overseas hiring, many countries and jurisdictions either forbid or restrict its use. Countries with strict labor laws (e.g., China) require a formal legal entity for certain business activities. Others, like Germany, have strict labor laws that limit how long an EoR can operate on behalf of your company. In some cases, specific managerial or business development activities may also require direct employment. For HR teams, understanding these nuances is key to avoiding the risk of permanent establishment or being out of compliance.
Beyond an offer letter, what sort of new-hire documentation do I need for overseas employees?
An offer letter alone is not sufficient in most countries, as many jurisdictions require a formal employment contract outlining salary, benefits, working hours and conditions, to name a few. Depending on the country, you may need to include tax forms, right-to-work verification, social security enrollment, and country-specific compliance paperwork, including privacy notices required under the GDPR. Because these requirements always vary by country, your HR team’s hiring process must align with local labor laws to avoid being out of compliance.
Must I prepare a country specific employee handbook or what mandatory policies do I have to have?
We always recommend that our clients have country-specific employee policies in place to ensure compliance with local labor laws and align company policies with that country’s specific legal requirements (and even cultural norms). Many jurisdictions require specific policies, such as anti-harassment, health and safety, working hours, grievance procedures, and data protection (e.g., GDPR in the EU), while others may require Work Rules or Internal Regulations that must be filed with the local authorities or presented in case of an HR audit by the labor authority. Employee handbooks and company policy documentation are an effective way to set expectations with employees and to ensure that your company stays in strict compliance and avoids legal or financial penalties. Each country’s requirements, laws and norms are complex and often evolving. Thus, it is critical that your HR team both understand the requirements as well as stay current on them in order to avoid legal and financial risk, as well as to support your global workforce.
HSP is an end-to-end global expansion solutions provider focused on helping companies scale their operations overseas effectively and efficiently. We are the only global expansion expert to offer growing companies a full suite of end-to-end solutions designed to help them scale to any size and country.
Our in-country experts have delivered the full spectrum of global expansion solutions—from EoR to entity set-up and management—across more than 100 countries (and counting). HSP brings full payroll, accounting, tax, legal, compliance, and HR services to corporate teams, integrating with in-house staff to both guide and execute across every domain.
Contact us to discover how our full suite of global mobility services can help your company successfully expand overseas in any environment.
