By the end of March 2020, over 100 countries across the globe had issued lockdown orders or recommended their citizens stay at home to reduce the spread of COVID-19. With employees not able to go to work, companies in almost every sector had to adapt quickly to a remote working model. Fast forward nearly 9 months and it is estimated that more than 60% of workers in the UK are still not back in the office. In the US, the number of employees working from home in 2021 is expected to be double that of pre-COVID-19 times, with similar trends predicted in other leading countries. This growth in remote workers is expected to continue over the next few years, presenting an opportunity for recruitment agencies to grow their global market reach. Businesses worldwide are realising the benefits of opening their hiring gates to an international workforce, whether that be remotely or on a contracted basis. In countries like Denmark, Germany and Australia, foreign national workers are an integral part of the economy and labour market are highly sought after. However, agencies that are looking to expand into the global market need to be cautious of non-compliance when placing a candidate on an overseas contract.
Here are three challenges that international recruitment agencies need to be vigilant about to succeed in the international market.
Challenge #1: Staying up to date with Employment Laws and Regulations in Multiple Markets
Employment legislation and regulations vary country-to-country, with each being subject to regular updates and reform. The terms of a contract and the contractor’s home country could also affect what laws and regulations need to be applied. Additionally, if a worker is contracted in one country, but works remotely in another, taxation and social contributions may be required in the country where the work is performed or in some cases both countries. Although in some cases the 183-day rule may be applied, it is often used incorrectly and may result in non-compliance. As such, international taxation liabilities need to be reviewed individually, taking into account each specific circumstance.
In a situation where the contractor relocates to the host-country, agencies will need to be across each country’s requirements to ensure compliance is met. This could become substantially more difficult for those in the UK and the EU if the UK exits the EU on a no deal basis. [RS1]
Some examples of worker legislation and requirements that can vary between countries include:
- Employment rights
- Social contributions including insurance, healthcare, social security and pension
- Taxation law
- Foreign worker permits and visa requirements
- Double tax treaties.
Getting the ‘in-country’ tax and social security arrangements wrong can have expensive consequences for the agency, end-client and contractor, depending on the circumstances. It is also important to remember that agencies and end-clients have a responsibility to ensure tax compliance in their supply chain. In particular, the Criminal Finance Act imposes an obligation to put processes in place to prevent tax evasion in that supply chain. This applies to contracts performed both in and outside the UK. The international contracting market remains rife with non-compliant payroll solutions, so any agency operating in this area would be well-advised to work with a trusted international contractor management partner to ensure they do not expose themselves to unnecessary financial and criminal risk.
Challenge #2: Ensuring Accuracy in a Volatile Environment
Workers who take on overseas contracts are often highly skilled and highly sought-after. Retaining such talent means ensuring they receive a flawless experience, every step of the way. Inaccuracies and errors may result in the worker losing trust in the agency and looking elsewhere for their next contract.
Additional challenges in ensuring accuracy include:
- Currency conversion
- Language barriers
- Managing multiple time zones
- Varying taxation and social contribution requirements.
Challenge #3 Brexit
On 1st January 2021, Britain will no longer be subject to the rules of the European Union single market and customs union. For international agencies, this means a new set of entry and compliance requirements to account for when setting up UK or EU contractors in each respective region. As a deal between the EU and the UK has yet to be made, businesses are advised to prepare for a no-deal Brexit. However, even if a deal is reached, there will still be increased barriers to workforce mobility between the UK and EU.
Generate International
Partnering with Generate International allows agencies to turn over every aspect of international payment and HR to a dedicated specialist.
Generate International takes care of everything, including:
- Ensuring compliance – Because we work closely alongside our in-country partners, we are always up-to-date and in the know of any in-country legislative changes. We are equipped to help your contractors get set up in-country, quickly and effortlessly. As well as providing your agency with peace of mind that contractor compliance is taken care of.
- Single payroll – We serve as a single source of payment for contractors across a range of countries. Agencies only need to make one monthly payment in each currency, regardless of how many international contractors they have.
- Accurate & timely payments – We are dedicated to ensuring your contractors always receive timely and accurate payments, along with a support team they can turn to if they have questions about their payroll or host country regulations.
- Expert advice – From Brexit to the 183-day rule, our team of experts and in-country partners can provide you with up-to-date advice to ensure your contractors get the most out of their international journey.
