Cross-border employment has become a key strategy for businesses to access global talent as it enables them to hire from different geographies, and bring in diverse skills, cultures, and perspectives. Employees are also embracing cross-border careers, with 93% saying that working internationally would be “life-changing.” This opens up opportunities for companies to expand globally and remain competitive in an interconnected and rapidly evolving market.

However, cross-border hiring is not the same as domestic hiring. For a smooth and successful international hiring process, there are certain considerations you’ll need to be aware of. Curious to know about them? Keep reading. 

Cross-Border Employment – A Quick Glance

Cross-border employment refers to the practice of hiring employees who work for a company in a country other than their home country. This could involve individuals relocating to another country or working remotely. 

Companies today are no longer confined to their local talent pool as they now have plenty of options when hiring individuals. Here are some of the trends currently driving cross-border hiring:

Increased focus on diversity and inclusion

Organizations are increasingly recognizing the value of a diverse and inclusive workforce, pushing them to hire individuals from different geographies and cultural backgrounds. This offers them access to diverse skills, perspectives, and experiences, leading to greater creativity and innovation.

Adoption of flexible work models

Flexible work models like remote and hybrid work are becoming popular as they offer more autonomy and work-life balance for employees. 

Offering these arrangements also leads to higher employee retention for employers. According to a survey by Owl Labs, companies that provide remote work have 25% lower employee turnover than those that do not. 

Since people can now work remotely with the help of digital communication and collaboration tools, geographical constraints are removed. As a result, companies no longer need to confine themselves to their local talent and have the opportunity to expand their workforce.  

Shift towards skill-based hiring

Many companies are increasingly focusing on hiring employees based on their skills rather than their geographical location. This opens up opportunities for employers to consider a wider talent pool with relevant skills that cannot be found locally. 

Emphasis on employer branding

The global job market is highly competitive and strong employer branding has become the key to attracting top talent. A recent Glassdoor survey found that 86% of job seekers read company reviews before applying to a job, while 95% of the candidates look into the company’s reputation before applying. 

Companies are hiring talent across borders to enhance their global reputation as desirable employers. And in doing so, they maintain a strong international presence, boosting their employer brand, which is key to attracting top talent worldwide. 

6 Key Points to Consider

Here are some of the key factors to consider before hiring employees from other countries:

1.Employment law considerations

Cross-border employment is not an easy or straightforward process as domestic hiring. Remember, employer and employees are located in different jurisdictions. As a result, companies need to learn how to navigate international labor laws to ensure compliance.

The key focus areas of employment law include:

• Employment contracts: International hiring begins with a contract that specifies the terms of employment. It encompasses crucial details such as jurisdiction, dispute resolution, terms of employment, and governing law. The contract must comply with local rules and regulations of the employee’s country even if the employer doesn’t technically operate there. 
• Work permits and visas: For relocating employees, cross-border employment involves navigating the host country’s immigration system to obtain all essential documents such as work permits and visas. This process can vary between countries and also depends upon the employee’s nature of work. 
• Labor standards: Employers must comply with the labor laws of the employee’s country, which govern working hours, safety standards, minimum wage, and overtime compensation. These standards may differ significantly across countries.
• Termination of employment: Some countries have varying termination policies for employees. Employers have to ensure they follow the appropriate legal procedures when terminating employees, which include notice periods, severance pay, etc. 

2.Compensation and benefits

Offering an attractive compensation and benefits package can help attract and retain foreign talent, boosting your competitiveness globally. 

However, there are several variables to consider when developing a benefits and compensation structure for international employees such as:

• Local regulations: Though international companies have more control over the compensation package being offered, they still have to comply with local and federal laws, tax regulations, minimum wage standards, and economic conditions. The same applies to benefits as well such as paid time off, work schedules, insurance, etc. 
• Employee status: Since payroll structures are different for employees and contractors, you must ensure you do not misclassify either of them. Wrongly classifying an employee as an independent contractor or vice versa can bring legal troubles to your organization and cause employee dissatisfaction.
• Market research: Through market research, you can study the payroll and benefits structures offered by your competitors to their workforce. This will give you comprehensive insights on building the appropriate compensation and benefits package.
• Budget considerations: When hiring foreign workers, you must ensure they align with your company’s financial goals. Apart from the initial investment, you’ll need to consider ongoing expenses such as employee training, mandatory benefits, and compliance. 

3.Global payrolling processes

As workforces span multiple countries, managing global payroll has become a crucial aspect of cross-border employment. Employers face the following global payroll challenges when hiring and managing overseas employees:

• Currency exchange rates: Employers must convert their currency to the employee’s local currency, which can incur fees and transaction costs. Fluctuating exchange rates can also affect the predictability of payroll expenses. To reduce conversion costs, companies will have to implement multi-currency payroll solutions to streamline salary payments accordingly and ensure employees are paid accurately and on time in their local currency.
• Taxes: Taxation policies differ between countries. Employees need to understand the withholding requirements and tax reporting obligations of each country to ensure compliance. Additionally, they need to be conversant with relevant double tax treaties to prevent situations where employees pay taxes in both their home country and the country where they work. 
• Banking systems: Differences in banking systems across countries can pose challenges in processing payroll. Factors such as varying bank transfer times, banking fees, and the availability of direct deposit options can impact how and when employees get paid. Partnering with local banks or global payroll providers that have established relationships with international banks can help facilitate smooth and timely payments to employees.
• Payroll regulations: Different countries have different payroll regulations that must be followed. Familiarize yourself with country-specific rules on pay periods, overtime calculations, minimum wage requirements, and mandatory benefits. Failure to comply with these regulations will result in payment of hefty fines and legal repercussions. 

4.Monitoring the performance and productivity of employees

The absence of in-person interactions in cross-border employment arrangements means managers have limited visibility into team members’ day-to-day activities. This lack of direct oversight makes it challenging for managers to ensure employees are on track to complete tasks, potentially leading to missed deadlines and delays in project timelines. 

Time zone and cultural differences can also hamper communication and collaboration between team members and supervisors, leading to misunderstandings and delays in information sharing. These communication barriers slow down the achievement of organization goals.

To effectively monitor employees and ensure they are productive, set clear expectations and performance metrics. Use technology solutions to track working hours and project milestones for transparency. Additionally, use communication tools to facilitate real-time interactions. Regular virtual meetings and check-ins can ensure alignment and provide opportunities for feedback and support.

5.Cybersecurity and data privacy risk

An organization’s vulnerability to cybersecurity risks is heightened in remote settings because there is no direct oversight over security protocols. Also, remote workers often use personal laptops or unsecured networks to perform their daily tasks, increasing the risks of cyberattacks. 

If remote international employees fail to implement robust security measures to protect sensitive data, data breaches may occur, leading to significant financial losses, reputational damage, and legal issues

To avoid such risks, companies have to: 

• Communicate with remote workers through encrypted communication channels
• Follow all relevant data protection regulations
• Conduct regular security audits 
• Provide cyber security training to cross-border employees to maximize awareness on the subject 

6.Employee’s local culture & hiring practices

While cross-border employment offers access to top global talent, it also poses several cultural challenges that businesses must address:

1. Communication barriers: Some employees may not be fluent in English or the specific language requirement of the role. Additionally, communication styles vary across cultures. This can cause miscommunication and misunderstandings.
2. Cultural gaps: Remote workers may not be accustomed to differences in workplace norms and meeting etiquette. This can lead to misalignment and cultural conflict between team members. 

Mitigating these challenges requires: 

• Effective cultural training which can be accomplished through cultural exchange programs 
• Altering interview practices based on the location and cultural background of the candidates 
• Adapting to different communication strategies. 
• Implementing cultural sensitivity training for employees.

Importance and Benefits of Cross-Border Employment

According to the EY 2023 Mobility Reimagined Survey, 93% of employees said working internationally would be “life-changing.” As attested by several employees, cross-border employment can offer several advantages for them as well as the companies operating on a global scale. Some of the key benefits include:

• Access to global talent: Companies can tap into a diverse pool of talent worldwide by searching for potential candidates beyond borders. This gives them access to specialized skills, experience, and knowledge, which will drive better outcomes and give companies a competitive advantage.
• Cost efficiency: Cross-border hiring can enhance cost efficiency through location-based hiring. By hiring from countries that have low labor costs, businesses can optimize their expenditures and maintain high levels of productivity.
• Flexibility: Remote workers offer companies greater flexibility as they can easily scale teams up or down in response to changing market dynamics and business opportunities. 
• Global market expansion: By hiring remote workers from other countries, companies have the golden opportunity to expand their operations in other countries. They can utilize valuable knowledge, language proficiency, and cultural insights of local employees to better understand the regional market and cater to its demands accordingly. 
• Improved work-life balance: Remote workers are often more satisfied with their jobs than in-house employees since they have more control over their work schedule. 

How Can Gloroots EOR Help?

If you are looking to expand your talent pool through cross-border hiring, look no further as Gloroots is here to help you with that. Our state-of-the-art Employer of Record (EOR) services can help streamline cross-border hiring and payroll processes, allowing you to tap into a massive global talent pool. 

With Gloroots, your organization will benefit from:

• Compliance across borders: Gloroots is equipped to handle varying payroll regulations, enabling you to navigate the complexities of international payroll compliance with ease. We ensure that your business stays compliant in every country and will not be impacted by any regulatory issues.
• Efficient multi-currency transactions: We minimize global payment challenges by managing payroll in multiple currencies. Our system is designed to handle currency conversions and transactions smoothly, ensuring your employees are paid fairly.
• Customized payroll solutions: Since every business is unique, your payroll needs will also vary. Gloroots offers customized solutions to match your specific payroll requirements, ensuring a perfect fit for your global hiring strategy.
• Global benefits package: We cover a comprehensive range of global employee benefits plans that are suitable, market-competitive, and cost-effective for your business. A few that include life insurance, private healthcare, mental wellness, and gym plans.  
• Expert support & guidance: We’re not only your service provider, but your partner as well. At Gloroots, our team of experts are always available to offer guidance and support whenever in need. We help you navigate the intricacies of global payroll management, cross-border employment, and compliance across multiple regions. 

Build Your Cross-Border Workforce With Gloroots

Establishing systems and processes to ensure legal compliance, seamless payroll processing, team efficiency, and cultural awareness, is key to successfully building a diverse international workforce.

Partner with Gloroots to streamline cross-border hiring and global payroll processing. We offer global legal compliance, seamless onboarding, timely and accurate payments, and attractive benefits packages, leading to higher satisfaction for your workforce.

To know more, contact us today and revolutionize your international hiring experience.