What is Global Mobility?
Global mobility refers to the movement of employees across international borders to foster growth in global markets. Typically, it involves hiring, relocating, and managing staff while ensuring compliance with all legal and tax requirements across all jurisdictions.
Effective global mobility requires a holistic strategy aligned with your company’s growth goals, efficient and streamlined operations for managing a global workforce, and compliance regardless of location. Successful global mobility management frees your company to focus on its primary business objectives by ensuring that all aspects of your international workforce management and mobility needs are met seamlessly and accurately. Managed effectively, global mobility is a critical part of how your company can expand into international markets.
Which types of legal compliance do I need to follow regarding global mobility?
Because the laws and requirements of different countries and jurisdictions vary (and are constantly changing), global mobility is not typically an easy process for most companies. Here are the three most common pain points that you may encounter as you grow your company overseas:
Immigration compliance for employees: Navigating visa and work permit regulations across multiple countries is very complex. Not only does it differ from country to country, but those requirements will inevitably change over time. Non-compliance risks are severe—ranging from legal penalties, delays, and even denied entry for employees. These things can have wide-ranging negative impacts on your reputation, your operations, and employee satisfaction.
Tax and payroll compliance: Ensuring accurate tax calculations and payroll processing across different countries adds another layer of complexity. Similar to immigration requirements, the rules vary depending on location, change over time, and carry fines and other penalties if they are not followed. It is also important to consider whether sending employees overseas to work on behalf of your company could trigger a corporate tax nexus for your organization, which is affected by things including: how long the employees have been or will be in place, the nature of the work being performed, number of employees, economic value generated, and the specific jurisdiction’s definition of permanent establishment.
Employment compliance: Depending on the exact arrangement of the international assignment, you would need to follow both the statutory minimum employment standards of the country to which the employee is assigned as well as that employee’s contractual agreement in the home country. This includes considerations around how long the international assignment is expected to be (short-term versus long-term) as well as benefits, payroll setup, and tax obligations (home country versus host country).
What is an EoR?
An Employer of Record (EoR) is a service provider that handles most aspects of HR tasks (including hiring and payroll) for companies looking to expand their operations abroad. Essentially, an EoR becomes the legal employer of record for a company’s workforce in another country. This allows the company to operate in that country without having to establish a legal entity (a taxable presence in a country).
Many companies choose this option as a fast and easy way to hire workers overseas quickly without the administrative burden. One key distinction is that while the EoR provider handles the administrative tasks related to hiring and managing employees, the daily supervision remains yours. An EoR’s provider’s primary responsibilities are:
- Compliance Management: An EoR ensures your company’s adherence to all labor, tax, and employment regulations for each country or jurisdiction in which your company operates.
- Payroll Processing: The EoR provider is responsible for producing accurate and timely payroll for all employees, from taxes and social security to benefits.
- Employee contracts: The provider will draft and manage employment contracts to ensure compliance with all local laws and norms.
- Benefits administration: An EoR also oversees health insurance, retirement plans, and other employee benefits.
- HR administrative support: Your provider will assist with onboarding, employee relations, and terminations.
- Risk management: EoR providers will handle all employment-related liabilities and legal issues on your behalf.
While an EoR is rarely a viable long-term solution, it does offer growing companies a relatively fast and simple way to move into new overseas markets with initial hires.
For example, your company might need to hire local talent quickly in a new country to determine if that particular market might be a good fit for your company’s expansion goals. By using an EoR, you can quickly hire that employee without setting up an entity in that country. The EoR would, of course, handle compliance, payroll, and benefits.
In the context of global mobility, an EoR would be able to assist you with the immigration requirements when you wish to send an employee to a new country in which your company has no legal entity. In addition, the EoR provider would be able to take on the other burdens associated with employment, payroll, taxes and benefits.
The Role of EoR In Global Mobility
As tax, immigration, and employment laws across countries vary and change, it’s a given that most internal HR teams will have trouble keeping up with the compliance requirements for every employee in each country and jurisdiction. As we’ve noted, running afoul of these laws and requirements opens your company up to significant risk in the form of penalties, fines, and other sanctions. Thus, EoR can be a huge catalyst for your company’s global mobility strategy.
Often, hiring in a particular country overseas means that you’ll be bringing in workers who will need permission (a work permit or visa) to work in that country. If this is the case, those workers must be sponsored by their employers. Typically this requires that the employer establish an entity (at a minimum) in that country. After setting up an entity, the employer can obtain the required permissions on behalf of the employee (for example, obtaining a sponsorship license or applying for a work permit or visa).
While many companies do choose to set up an entity, that may not be the ideal scenario for your particular company’s business plans, depending on your growth objectives and how quickly you wish to enter a new jurisdiction.
This is where EoR can be a good alternative solution—by helping you to avoid common compliance mistakes in global expansion (ranging from local labor laws and tax regulations to employment standards) as well as to provide you with a solution to quick hiring and onboarding.
Additionally, some (not all) EoR providers can also support the immigration process by sponsoring an overseas employee’s work permit/visas and acting as their legal employer. However, it is important to keep in mind that the process to apply for and obtain work permits/visas will ultimately extend the onboarding timeline for an EOR because no employment agreement can be issued or executed until a valid work authorization has been obtained. EoRs also handle payroll, benefits, and employee contracts. They also mitigate risks related to cultural misunderstandings or non-compliance with termination regulations.
While EoR can help many companies expedite their global mobility, there are two important limitations on how it can be used:
- Not all jurisdictions allow EoR to sponsor work permits or visas. Many countries, particularly in Europe, make it illegal for an EoR provider to sponsor work permits or visas. The rationale for this is that the employee’s work is not for the benefit of the EoR itself but rather for the company that contracts the EoR. In fact, we see this restriction on EoR as a growing trend, chiefly because more countries are realizing that allowing foreign companies to use an EoR instead of establishing a tax-paying entity is a missed opportunity to collect government revenue.
- Employees employed and sponsored (via work permit) by an EoR are subject to local taxes and social security. If an EoR can sponsor an individual’s work permit and employ them on your company’s behalf, that person will be treated as a local resident employee. This means that they will be subject to local taxes and social security, and will need to be removed from their current payroll and benefits. This is an important factor to consider when determining whether to send an individual overseas and the length of the assignment, particularly when discussing their compensation package for making the move.
Under an EOR employment (with the EOR sponsoring the work permit), it is not possible to set up a traditional expatriate arrangement, whereby an employee remains enrolled in their home benefits and on their home payroll (e.g.,, setup of a shadow payroll) due to the fact that the employee will now be considered a fully local employee. The length of the assignment is important because, if an individual is only going to be overseas for a short-period of time, having that individual under EOR employment may not make sense—it will have longer term impacts on their home country benefits and home country tax status/obligations.
HSP’s Bespoke EoR Services for Global Mobility
HSP Group’s International Employer of Record (EoR) services are tailored to meet the unique needs of your company’s global growth expansion strategy. Our EoR services ensure a seamless expansion into new markets, all while minimizing compliance risks and optimizing your operational efficiency as you expand. We manage the complexities of international staffing and compliance so that you can focus on your core business activities.
- We start by determining whether EoR is the right fit for your company, ensuring that your decision is well-informed, cost-effective, and beneficial for your business.
- If you determine that EoR is the best solution, HSP leverages its extensive network of EoR providers to find and manage the provider that best aligns with your needs.
- Once you select a provider, our experts manage the integration, allowing you to avoid the typical challenges associated with transitioning to an EoR. Best of all, our experts allocate dedicated technical consulting hours to empower your team, enhancing the value derived from your EoR provider and ensuring seamless operations worldwide.
Effortless Expansion With EoR and HSP
As your partner, HSP’s proven EoR services can make exploring overseas markets faster and simpler while reducing your risk of being out of compliance—regardless of where your employees live and work. We also recently came out with a calculator that shows how much money you can save by expanding with an EoR. Check it out here.
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.
Our experts will help you successfully define your global HR strategy to help you seamlessly navigate the complexities of international expansion. Talk to an expert today.
