Staying on top of labor laws can be a headache for any HR manager, but for international companies, that pain is often felt much more acutely given that each country has its own labor laws, healthcare system, currency, language and culture. In fact a recent report from Mobility Magazine showed international compliance issues are the top problem for those in charge of handling global assignments.
While these compliance issues can be cumbersome to navigate, it is important companies do so effectively. A 2012 survey by Ernst & Young showed location and cultural issues are the third most common problem plaguing international assignments. If employees don’t feel supported by their company, there is an increased risk of the assignment failing.
Here are some of the compliance issues that can be the most challenging for companies and their international employees:
Connect the Dots
One hurdle is many companies segment the different administrative and compliance functions, such as payroll or immigration, which help support an international assignment. Sometimes this segmentation isn’t just by function, but also location, with the corporate office and local offices dividing responsibilities even further. This divide-and-conquer approach might make it easier for individuals to focus on a single task, but it makes communication errors much more likely.
It’s imperative for companies to develop a clearly defined strategy for how these different functions will be segmented, how they’ll be shared with different departments, and most importantly, shared with the employee.
Overcoming Cultural and Compliance Barriers
Relocating and managing employees in certain countries is easier than in others depending on how complex a country’s compliance issues are, according to the Mobility Magazine report. Even though China is among the most common destinations for expatriates (50%), it is also among the most difficult for a transferee and his or her family to get acclimated to because of all the cultural and compliance differences.
Regularly review all countries where you have assignments and identify common mobility problems experienced there – both in general and those specific to individual countries. UniGroup Relocation offers a variety of country-by-country assimilation services to help individuals and their families get off to the best start in their new country.
Taxation and Equalization
Of all compliance issues, taxes are some of the most daunting. As a recent SHRM article on international mobility notes, it’s important to state the tax obligations for the transferee at the start of an international assignment – for both during and after the assignment is completed. Tax equalization, which allows transferees to pay the same taxes as they would in their home country, can take some time to fully balance out, and if nothing is previously stated and agreed upon, it can be difficult to settle with a former employee after an assignment.
Compliance issues will always be part of global mobility in some capacity, but as these recent articles and report indicate, the current business climate is especially difficult for international companies. We welcome the opportunity to assist you with your global mobility needs and challenges. We have partners that can assist with payroll, taxes, immigration, compliance and other HR issues that you might be experiencing with global mobility. If you’re just beginning to develop a global mobility strategy, please contact our client services team, who can walk you through the common problems needing your attention, so you can give your assignments the best chance at succeeding.