Tapping into international labor markets can bring a range of benefits to your business. It opens the door to quality candidates and brings diversity to your teams. Businesses report better productivity and higher performance from internationally diverse workforces.
That said, hiring international contingent workers brings a range of compliance requirements including worker classification, tax identification, and local laws and regulations. In order to ensure compliance with these regulations, you need full visibility into your extended workforce.
In this article, we identify the compliance challenges faced by businesses employing international contingent workers, and the various solutions to overcome these challenges.
International compliance - what, where, why?
International compliance comes in a range of shapes, sizes, and severities. Examples include:
- Tax Identification - Workers must be correctly identified according to the tax requirements of their region; the DBA act in the Netherlands and the EU Enforcement Directive on the posting of workers.
- Worker classification - Workers must be correctly identified according to their role and regional requirements. In Spain, contingent talent must be classified as employees or otherwise face legal action from the supreme court.
- Local law - There are various individual laws and regulations unique to each region that must be adhered to when hiring internationally. For example, to hire German contingent talent it is a requirement to have an office in the country. Attempts to circumvent this law can result in fines up to €500,000.
There is a considerable financial cost associated with breaching international compliance. Germany issues fines of up to €1 million in extreme cases of worker misclassification. Because of this, you need transparency of your contingent workforce to determine the correct classifications and region-specific laws.
How to effectively handle international compliance
Automate the onboarding process
The onboarding process of new international workers involves processing important data, such as a worker’s specific regional regulations and their correct tax classifications. Managing this data to ensure compliance and avoid costly mistakes can consume both time and resources.
Extended workforce platforms automate administrative processes to optimize the onboarding of international workers. They provide visibility of internal policies/procedures and help teams enforce regional regulations when procuring talent internationally. As a result, efforts can be focused on finding specific global talent to boost the productivity and efficiency of your organization.
Managing existing international workers
Regulations are prone to changes and revisions. You need to manage your extended workforce to ensure tax statuses and critical information are still within compliance with these updates. Failure to do so can easily result in facing legal action/fines. The last thing you want to do is forget about your current contingent workers when you are focused on procuring new talent.
An extended workforce platform gives you an easy-to-understand management system and full visibility of audit trails. They provide visibility of the ever-changing laws and regulations tied to contingent workers, and help teams identify required changes ahead of time. It is also integrated with existing systems such as VMS payroll to enforce compliance across the board, eliminating the risk of breaching worker rights and facing fines.
Hiring an international contingent workforce with Beeline
Access to global talent will diversify and expand your extended workforce for the better. To support your global contingent workforce strategy, you need a global contingent workforce technology solution. Beeline is a truly multicultural, localized tool that addresses the unique fiscal, legal, cultural, and language requirements of individual countries.
To learn more about Beeline and how it can optimize the onboarding of your international contingent workforce, contact a member of our team today.