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4 HR Points to Consider When Going Global

Multinational companies must keep up-to-date with the political, social and legal changes that are happening around the world—and global HR professionals must understand the operational issues that affect international employment.

David Ellis and Kerry Weinger, partners with Baker & McKenzie in Chicago, said it is critical for employers to understand the differences between U.S. employment laws and the laws in other countries where they intend to operate.

Speaking at the SHRM 2017 Annual Conference & Exposition, Ellis and Weinger offered HR professionals some tips for applying best practices in their global ventures.

[SHRM members-only toolkit: Introduction to the Global Human Resources Discipline]

1. Designate an Employer for Projects Abroad

When U.S. businesses expand into new countries—even for temporary projects—they need to decide who is going to employ any existing staff and new workers who are sent abroad.

The "employer" is the entity that has the right to direct and control the employees—which is not necessarily the entity that pays the employees, Weinger said.

There are a number of employment arrangements that businesses may consider. For example, the workers could remain employees of the U.S. company, they could be terminated and hired by a subsidiary in the host country, or they could have a dual employment arrangement. They could also be put on "secondment," meaning they would remain employed by the home entity while their services are lent out to an overseas entity.

Some countries require businesses to have a local registered presence, Weinger said. That could be a new company, a registered branch, or a liaison or representative office.

Each arrangement has advantages and limitations, so international HR professionals must think about which one would work best for their business needs.

Importantly, HR should partner with employment attorneys, as well as data privacy, tax, security and other specialists, to consider the pros and cons of each employer arrangement and to decide which works best.

2. Develop a Strategy to Hire Local Nationals

When hiring local nationals, employers have a few options, such as:

  • Hiring employees through a local corporate presence. This is the safest way to hire local nationals, Weinger said. Businesses can set up a local entity, establish a bank account and employ locals. The downside to this arrangement is that it takes a while to set up.
  • Using a third-party agency. This is faster than setting up a local corporate presence, but if the company is telling the agency how to direct the workers, it could be deemed a joint employer.
  • Hiring independent contractors. This is also a quick way to get workers on board, but if the company controls the independent contractors' work, they may be considered employees.

What works best for one business may not work for another, Weinger said, and employers must weigh all the risks and benefits for their particular operation when deciding how to hire local nationals.

3. Understand Local Employment Laws

U.S. employers have to be familiar with local employment laws and how they differ from U.S. laws. Ellis noted that the U.S. is the only jurisdiction that has employment at will—meaning that the worker and the company can terminate the employment relationship at any time with or without cause or notice.

In other countries, employees can generally still leave the company or get fired, but there is going to be some sort of notice period or compensation provided, Ellis explained.

In countries like the United Kingdom, written employment contracts are provided to every employee, whereas in Japan, either a written or oral contract may be used.

Another difference, Ellis said, is that while U.S. employers can usually make unilateral changes to nonvested and noncontractual employment terms, employee consent is often required in other countries.

Furthermore, in some countries nearly every employee is a member of a trade union, unlike the U.S., where union membership represents a smaller percentage of the workforce.

4. Understand Applicable Privacy Laws

Privacy laws can't be avoided, Weinger said; they are everywhere and cover nearly everything. Thus, employers need to know about the applicable rules that impact their global workforce—such as the two privacy shield agreements the U.S. has with the European Union (EU) and Switzerland, respectively, and the EU General Data Protection Regulation.

Ellis said HR professionals need to ask:

  • What information is being collected?
  • Is collection justified?
  • Do we need to get employee consent to transfer data?
  • Do we have policies encouraging people to keep data private?

"If you are going global, data privacy is such a big issue outside of the United States that if your company has a chief privacy officer, that person is going to be your best friend," he added.


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