As the saying goes: You have to go local to go global.
If your company is seriously considering expanding into a new country, you must first determine how you can legally employ prospective new hires in that country. Remember, “at-will employment” is a concept that is unique to the United States, which makes for unique challenges for legal when expanding a business in a new country.
To start, you will need to find local, in-country accountants and lawyers who can do the following:
- Guide you in setting up your international subsidiary;
- Determine your local banking requirements;
- Inform you about the relevant employment laws that apply; and
- Ensure that you understand your tax and accounting obligations as a local employer.
Before you decide to set up in a given country, make sure you understand the complexities so you are able to carry out your obligations. Here are four examples of things that are often overlooked:
In Sweden, the rate of unionization is more than 70 percent, and is distributed pretty evenly in both the public and private sectors. Collective labor agreements are common so you should work with your local team to determine whether your company would fall under a collective labor agreement. Also, note that you may not screen out job candidates based on their union membership. In fact, you shouldn’t even ask about it.
In Poland, employees require a medical screening before they can start employment. Make sure that you know how you would effectuate such a medical screening before making the hire.
In Brazil, if you intend to hire an employee who will receive a commission, annual or semi-annual payouts are the norm. Monthly commissions would be assessed social charges (i.e. statutory governmental benefits) of 80 percent, the same assessed on standard salary payments. If you limit commissions to one or two times a year, those commissions are assessed social charges of 40 percent (so long as such commission or bonus amounts don’t exceed 50 percent of base salary).
In general, parental leave varies widely across countries. Estonia tops the list with 87 weeks of paid leave. Though Bulgaria, Hungary, Japan, Lithuania, Austria, the Czech Republic, Latvia, Norway, and Slovakia offer over a year’s worth of paid leave. Given the U.S. does not mandate any paid parental leave, many U.S. companies are surprised by this factor.