The ultimate guide: How to hire foreign workers?
Some businesses wish to hire international employees due to necessity, while others seek to improve or expand their company. No matter the reason, there are numerous benefits to utilizing an international workforce. Many companies hiring overseas employees don’t realize that they are suddenly exposed to more legal liabilities under foreign laws. Hiring foreign employees during overseas expansion as remote workers, can be complicated. Though the process of hiring foreign workers is not without its challenges, most employers find that it is worth their time and effort to do so.
Table of Contents
Guide to hiring overseas
Employers Guide to Hiring Abroad: Options
Hiring foreign workers abroad for your business can be an uphill task but it helps set foot in global markets and expand your business. Whether it’s establishing a foreign subsidiary or hiring foreign contractors, it’s essential to understand the regulatory requirements before moving forward. Here is a guide to hiring abroad, along with the options that work the best for your organization.
Foreign independent contractors
Foreign independent contractors are workers who are in their own independent business hired based on contracts. They are mostly used to execute short-term projects and they will often be required to work autonomously. Most times, the employer only has the ability to control the result of the work and not what will be done or how it will be done. They are subject to self-employment tax.
International employers are usually faced with some challenges when working with foreign independent contractors. When you decide to work with foreign contractors, they need close monitoring on how they are managed. An agreement based on the labor laws must also be set.
Establishing a subsidiary company
A foreign subsidiary is organization/company that is located in another country under the supervision of the client organization. The subsidiary has the autonomy of operating as a single entity but they are responsive to the client organization.
This solution is 100% compliant but is the most expensive and time-consuming one. It can take up to 18 months and tens of thousands of dollars to set up your own company overseas. You would need to hire a local lawyer, open a bank account, hire an accountant, rent an office, go through the bureaucratic procedures and hurdles without a guarantee of success. And when you decide to withdraw from the country, the process can be even more difficult.
However, if you want to start your operations in a foreign country within days with the lightest footprint, consider using EOR or International PEO services.
Employer of Record (EOR)/Global PEO
An Employer of Record (EOR) is an outsourcing/contract organization who becomes the employer of the base organization employees. To solve the overwhelming challenges of HR operations, the client organization will partner with EOR to manage her recruitment tasks and liabilities, employees’ financial and tax procedures etc. It takes care of the payroll, benefits, and employment in a foreign country, while you maintain full operational control.
By partnering with Employer of Record (EOR) like WeHG you get global network and local expertise. It takes care of the payroll, benefits, and employment in a foreign country, while you maintain full operational control.
- Tax Management
Employer of record takes care of the organization’s employees’ tax duties. They make sure that the taxes are deducted from the salaries and are remitted to the government revenue agency.
EOR ensures the compliance of employees working for your organization in another country. EOR ensures that the employees of the client organization must comply with the country’s legal bindings for operation. They review and oversee the employees’ eligibility to work and tax functions relative to that location.
- Growth and Efficiency
EOR provides organizations with the benefits of transforming the work environment into a conducive atmosphere through their actions. They give the client organization room to expand while you manage the HR operations. They ensure that your employees have the best framework, incentives and atmosphere in executing a progressive job.
How to hire foreign workers
Hiring foreign workers abroad is a very valuable exercise but it can turn out to be a problem if it’s not properly executed. In fact, the process can be overwhelming if the client organization is planning to hire foreign workers themselves. The self-processing is risky and time consuming. Understanding the following steps will help your organization in hiring foreign workers:
- Decide on the choice of workers you are willing to hire overseas; independent contractors or employees.
- Understand the payment methods that should be used since it can have impact on the worker’s classification, cost and efficiency in the client organization. Will be payment be made directly, remotely, incorporated locally via payroll or employment of third-party payroll service?
- Partner with an Employer of Record or International PEO like WeHG.
At WeHG, we help you with:
- Interviewing prospective foreign workers
We provide you with the best candidates leveraging on our recruitment network and employment solutions. We can perform the screening and background check on candidates. We provide the candidates with the best terms when employed via WeHG Employer of Record.
- Onboarding the resources
WeHG takes care of all your onboarding hurdles, payroll, compensation and benefits, tax filling, and termination of employment.
- Payroll and compliance
We provide our clients all over the world with 100% compliant EOR model. We manage employee’s tax filing to avoid fines and tax penalties.
Why do companies hire foreign workers?
Businesses and organizations seek to expand their markets, exploring job hiring abroad is a necessity. Your employees are one of the strongholds behind your organization; they showcase your product/service, interact with the customers, understand and interpret the market trends and requirements. Thus, it is expedient of client organizations to hire a pool of foreign workers to thrive in other locations. We’ve outlined three salient reasons for hiring abroad.
- Cultural Knowledge
Client organizations need to hire workers from that will effectively communicate and promote the organization’s product or service. Foreign workers will help businesses to localize their market and boost the growth due to their cultural knowledge
- Innovation and Creativity
Hiring foreign workers abroad leads to the birth of new ideas and impressions into the organization. They bring different perspectives to the way things are done in the organization. Through this medium , the growth rate of the organization will be immense.
- Skills Diversity
The level of expertise and industry varies from country to country. For instance, Eastern Europe has excellent people in the IT industry while South Africa is blessed with experts in the mining sector. It’s expected of a coal company in Germany to hire workers from South Africa for efficiency. Hiring the most qualified candidate will be easy if the door is opened to foreign workers.
WeHG has helped multinational clients to enter the foreign markets and new global marketplaces. Through our fast and 100% compliant EOR model, we support our clients in more than 150 countries and take off their shoulders employment and other risks. You engage a remote workforce; we mitigate the risk. We transform risk into opportunity by using our Employer of Record (EOR) service, as your company penetrates new markets and countries. Leverage our knowledgebase and reap the benefits of the international workforce, business incentives, and remote markets while retaining full operational control and compliance.
The ultimate guide how to hire foreign workers
A company can hire foreign workers overseas by:
- Understanding the type of workers they need; independent contractors or employees
- Being ready to obey the compliance and tax regulations
- Employing the perfect EOR like WeHG
- Starting the acquisition process.
Yes, US companies can enlist overseas employees but, in the process, they must adhere to the foreign laws and regulations. It is also important to note for American companies hiring overseas that the US payroll cannot be used for foreign workers in other locations. To mitigate employment risks, they can partner with EOR like WeHireGlogally.
Even though it is a dangerous venture to undertake, US companies can hire foreign independent contractors. Payments to foreign independent contractors can be mixed with that of their employees overseas. Also, how to report payment to foreign contractors is different from reporting tax and payroll or overseas employees.