Global mobility: three considerations when employing abroad
Over two thirds of SMEs anticipate they will have more employees on the payroll in the next 12 months, and half are confident that demand and revenue will increase in the next six to 12 months.
However, last month MPs launched an enquiry into the UK labour market. This was in response to new ONS figures showing that there are now more vacancies than people to fill them for the first time.
Committee chair, and MP, Darren Jones said the purpose of the inquiry was to identify how to get “the right workers, with the right skills, in the right places”.
If you are looking to recruit but are struggling to find talent, now might be the right time to look abroad.
In the past, global mobility was predominantly spearheaded by companies looking to expand into new territories.
Now with the shift to remote working and the shortage of talent, the expectations and options for employees are increasing and the individual is driving global mobility, too.
Having a clear view
As companies evaluate the merits of looking overseas to fill vacancies, it’s important to have a clear view of international requirements and establish how a more mobile workforce will be managed.
Tax, payroll, employment and legal matters need not be a blocker. Nor should cost.
Individuals and countries will differ according to nationality and international agreements, but these can be accommodated by first deciding how you will address three core considerations.
The employee lifecycle
Having a holistic view of the employee lifecycle is imperative to the success of employing internationally.
Without understanding how to compete with native offerings, mandatory and elected benefits, favourable employment terms, employment law, tax gaps as well as how trade unions work and how disputes are settled, recruiting overseas can be a hard path to navigate.
This of course can be time-consuming. Will you have someone internally you can dedicate to this? If not, you’ll need to outsource this to a consultant who has the knowledge as well as the ability to give your company a competitive edge in these areas.
Re-framing an old mindset
There is a common misconception that expanding globally can be very expensive.
Often, the initial set-up in a new territory is where the cost lies, but after the first employee is hired the cost per head drastically reduces.
It's also worth considering the compounding financial implications and loss of revenue that open vacancies have on business.
Are you ready to bite the bullet on the upfront costs to ensure your business can play the long game?
Commercial activity or purely hiring staff?
Partnerships and umbrella companies are a good answer to accommodating multiple external factors such as work permits, visas and documentation.
Adding to this, if commercial activity is excluded (i.e., you’re not making revenue), companies are generally not liable to pay corporation tax as you’re simply hiring someone to do a job in a different country.
In this case, your company just needs to register a representative office with the local tax authority. However, there are some roles that can generate corporation tax liability, so it's important to check this.
Is the purpose to expand into new territories and generate revenue? If so, the process can be a little bit more complex and will require a company to register for corporation tax.
The role of technology
With more and more businesses seeking international employees as a means of resolving their recruitment challenges, technology will become increasingly important as an enabler.
However, while this technology enables mobility, there is no one size fits all, out-the-box solution. That in part is also due to the nature and complexities of each country and individual.
To get the most out of any investment, and to meet the next phase of the digital age, many businesses choose to outsource consulting and payroll using a managed payroll service provider.
This ensures that your business remains compliant as it takes advantage of talent on a global scale, likewise, this talent will get the support they need throughout the entire employee lifecycle.
Let IRIS manage your payroll so you can focus on your business
IRIS has a wealth of experience of supporting companies manage a global workforce. Find out more about IRIS Fully Managed Payroll here.