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Discover why Compliance is King During Global Expansion

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Going Global? Compliance is king

When it comes to the world of global hiring, thorough research and due diligence were the core takeaways shared by GPA’s Melanie Pizzey (CEO) with guest speakers Kathryn Barnes, Senior Employment Counsel (EMEA) at G-P, and Nicola MacDonald-Dodin, Director of International Growth and Transformation at Alight on a recent webinar exploring the topic.

For instance, webinar attendees agreed that there were inevitable challenges to going global, with 46% polling that France was the most complex country to expand into. The audience proved correct, as according to Alight’s recent 2023 Global Payroll Complexity Index report, France does indeed rank 1st for difficulty. But, even more so, the country’s ranking has increased by 10% in terms of complexity versus Alight’s previous report two years ago. An example that MacDonald-Dodin cited is that “in France, you need to keep a paper trail for more than twenty years for certain documents.”

Compliance is not a static picture.

However, expansion obstacles aren’t limited to France, as each country has its specific labor law regulations to follow during market expansion. In terms of handling these laws, such as hiring and termination laws, benefits offerings, and pension schemes, MacDonald-Dodin also advised: “You can be very aware in the beginning … but don’t think it’s a static picture. It will evolve. So, make sure that you’re regularly evaluating your responsibilities in any territory.” This is a beat that was followed closely by Barnes who warned of the rapid pace at which laws can change. 

“It’s really important to be very selective in terms of the partners you use in-country as well,” Barnes began. “And we’ve found that having good third-party advisors that will jump on a change in the law, or that will advise you of something ahead of time so you can make those decisions is absolutely vital.”

In 2023 alone, several countries have updated their work-related legislation. These include:

  • Belgium: Ruled that all companies employing 20 or more employees must draft a policy on the right for employees to disconnect outside of working hours.  
  • Italy: Approved a new Labor Decree that, among other things, will allow fixed-term contracts to be valid up to 24 months under certain conditions. 
  • UK: Introduced upcoming legislation that includes The Carer’s Leave Bill, which will give those responsible for dependents the right to up to one week’s unpaid leave ─ or up to a week used flexibly.

As Barnes stated, “Compliance is a fundamental benefit to any company, and if you don’t have a good compliance framework from the start, your company is always going to be looking behind trying to backtrack because the laws change all the time.” 

On the uniqueness of each country’s laws and local nuances, MacDonald-Dodin highlighted an interesting contrast between different payroll complexities. “In Spain and France there is a legal obligation that you have to give your employee an advance of their salary before the pay date if they request that, so you need to be able to facilitate that. And then in places like South Africa, an employer has the right up until the seventh day of the following month to pay that employee. So if they’ve run out of money, they get a few days to juggle.”

Misclassifying workers can lead to business disruption and reputation damage.

Misclassification of workers was another area that both guest speakers advised companies to be wary of when hiring internationally. Barnes explained that misclassification occurs when workers are hired as contractors but in reality, are actually employees. While an employee’s workload and schedule are generally assigned by their manager, an independent contractor should have ultimate control of how, where, and when they work. 

Several penalties await guilty companies. For instance, using Germany as an example, if a misclassified contractor files a successful lawsuit, employers can be liable for up to four years of social security contribution arrears, including 12% annualized interest. And, if the misclassification is proven to be intentional, then penalties can grow even more severe ─ companies can be liable for up to 30 years of back payments in these cases, and can even face criminal charges. 

So, while businesses that expand globally can gain a competitive advantage, going global is by no means without its challenges. To learn more valuable insights and strategies for overcoming compliance and payroll complexities, you can download this webinar in full, here.

About G-P: 

G-P’s #1 Global Growth Platform™ quickly unlocks the potential of global teams by enabling companies to hire anywhere in the world, quickly and compliantly, in minutes instead of months. G-P’s industry-leading platform is backed with the largest team of world-class legal, HR, and tax experts to support growing companies every step of the way. Grow beyond borders and boundariesbook a demo today

 About Alight: 

Alight have simplified the payroll experience to ensure your people are paid efficiently, accurately and on time. Leveraging innovative technology, flexible managed payroll services and expertise in 180+ countries and 25 languages, we deliver a payroll experience that puts your people first. For more information, visit www.alight.com

About GPA:

Global Payroll Association is the first international payroll association of its kind. We are a central hub for ‘all-things payroll’. A one-stop-shop supplying comprehensive directories, interactive training and in-depth country resources. We are here to help you with your global payroll needs, no matter how complex, connecting you with the world’s leading experts and offering a forum to network with other like-minded global professionals. Global Payroll Association welcomes international payroll, HR and financial professionals of all levels. For more information, visit www.globalpayrollassociation.com

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