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International relocation is a great way to get your foot in the global market door. By sending employees abroad, you’ll be able to begin expanding your company without needing to fully commit to a branch office or subsidiary.
Plus, employees nowadays embrace global mobility. Even with Covid-19, employees are more willing to relocate than ever before. According to a survey by Wakefield Research, 80 percent of employees said that they were open to relocation during the pandemic, and 31 percent of those employees stated they would relocate internationally. Having a comprehensive relocation package can make your company more appealing to potential hires.
Whether you’re relocating employees to another country for a short-term period or a few years, here are some key considerations.
How long does it take to move an employee internationally?
Sending employees to another country is a long process. Typically, an international relocation will take around one to three months. This period encompasses the time it will take for the employee to obtain proper documentation, find a new home in the destination country, resolve their living situation in their home country, and ship their belongings to the new location.
Ultimately, the timeline for an international move depends on several factors, including:
- The distance between the home country and target destination
- The political relationship between both countries
- Existing travel restrictions
- Visa and passport processing
It’s best to begin organizing as soon as possible to ensure a smooth transition.
How to plan an international relocation for an employee
When sending employees abroad, you’ll need to take a series of steps to ensure a compliant and straightforward move. Knowing what to expect in terms of labor laws and tax rules can help you avoid potential issues moving forward – and providing appropriate support to your international employees can help ensure their success.
1. Obtain documentation
The required documentation will differ depending on the country and the length of the employee’s stay in the host country.
There are three different types of global relocation for employees:
- Travel: An assignment typicallyshorter than a year, which will have a specified end date. This assignment will require your employee to obtain a business or tourist visa, which determines the kind of work they can legally do within the host country.
- Short-term: A short-term relocation assignment usually lasts longer than a travel assignment but still has a fixed end date. Your employee will move to the country under a residence visa rather than a tourist or business visa.
- Long-term: An employee will live abroad for an extended period of time that may or may not have a fixed end date. As with a short-term relocation, your employee will enter the country under a residence visa. For long-term relocation assignments, employers should familiarize themselves with labor laws in the destination country to avoid accidentally violating them.
Each country and type of assignment will require different documentation. In general, the following documentation is necessary for working and living abroad:
- Appropriate visa
- Official work permit
- Social security card
- Birth certificate
- Medical records
- International health insurance card
Some documents, like birth certificates and social security cards, are papers your employees will already have. However, your human resources department will likely need to assist your employees in obtaining documents like visas, work permits, international health insurance, and passports. Submit all applications early to allow for processing time, which generally takes around a month without delays.
2. Understand local regulations
Before you send employees internationally to work, you should conduct extensive research on labor and tax laws in your destination country.
For example, a U.S.-based employer needs to know that at-will employment is primarily an American concept. At-will employment is a work arrangement where the employee can be terminated for any reason. But in other countries, like Italy, employees work under contract and thus receive protection from potentially unfair dismissal.
Familiarizing yourself with legal nuances can mean the difference between a successful assignment and a failed one. An international database is a great tool for learning about your country of interest.
3. Determine benefits and compensation
There is no one-size-fits-all relocation package because every employee’s situation is different. For instance, a single employee will have different needs than a married employee who plans to bring their family.
The benefits you include as part of a relocation package should depend on the length of the assignment and the provisions you already offer. Many relocation packages include the following:
- Health insurance: It’s best to provide the same coverage you would ordinarily grant your home-based employees, like medical and dental insurance, through an international medical insurance policy.
- Hardship allowance: Also known as a post hardship differential, this allowance is additional compensation for employees who take on assignments in locations where living and working conditions are significantly more difficult. This compensation is usually between 5 to 35 percent of an employee’s base salary depending on the circumstances of their host country.
- Time off: Best practices dictate that you provide the same vacation policy to your international employees as you would to your employees at home. However, be sure to follow the host country’s policy if national rules dictating paid time off are different. You should also follow the host country’s calendar when planning paid holidays.
- Cost of Living Allowance (COLA): A COLA is a nontaxable allowance meant to account for a higher cost of living in the host country.
- Housing allowance: This allowance covers the cost of renting or owning a home in the host country. The amount you provide will vary depending on the circumstances of the employee in question as well as the cost of living in the host country, the type of home they will occupy, the neighborhood they choose, and their family size – if applicable.
How to help an employee move internationally
As an employer, you might want to contribute to certain costs to ensure your employees make a smooth, successful transition into their new homes. Consider the following aspects of the move.
1. Moving immediate family and pets
Employees moving internationally with their families — including their pets — will encounter unique challenges that single employees will not. They’ll need to move more belongings and more people, so they’ll need additional support from their employer. It’s also important to consider that employees who are single parents may need more assistance than those who live in two-parent households.
Moving pets can be especially complicated, as each country has different laws regarding which animals can cross its borders. As with every step of the moving process, it’s best to plan as far ahead as possible. Pets may need additional vaccines or a microchip to cross the border. Pet relocation services are also available for those worried about moving their pets on their own.
Whether or not you include these services in your employees’ relocation packages can depend on the overall cost of the move, the employees’ ability to pay for themselves, and the amount your company can afford to contribute. Make sure to map out these expenses in advance so you can make an informed decision.
2. Moving belongings
Moving a house full of belongings will most likely take longer than moving the contents of a small apartment. The timing also depends on the kinds of items the employee needs to take. For example, most moving companies won’t transport personal items like records, computers, or jewelry, so employees may need to use a parcel delivery service, which will take more time.
There are three ways to transport belongings:
- Air: While air shipping is the most expensive method, it’s also the fastest way to send items to countries not connected by land. Depending on distance and flight availability, it can take about eight to 10 days to ship by air.
- Sea: Shipping by sea is the most popular and economical option, although it takes the longest. Shipments by sea typically take around 25 to 31 days.
- Ground: Ground shipping can be just as quick as air travel for countries near each other. However, this option is only viable for moves between two nations connected by land.
As an employer, you’re not legally required to assist with moving costs. However, if you want to provide extra help, you could include moving expenses in the relocation package. You could reimburse your employees with the cost of moving, or you could pay for it outright depending on the agreed terms.
3. Integrating into the new workplace
Those beginning work in a new place will need time to adjust before jumping back into their usual workflow. This fact is especially true for expatriates adapting to a new country. You will need to have realistic expectations about the amount of work your employees can produce until they have acclimated to their new environment. Make sure you keep deadlines reasonable and account for an initial period of lower productivity.
To help your employees with the integration, keep open, continuous communication with their new office. Every workplace has its own established dynamic, and your employees may take some time to adjust. This can help ensure that they receive a warm welcome upon arrival. Similarly, reviewing the host country’s business culture can help team members navigate their new office’s social landscape. In no time, they’ll learn how to fit in with their new co-workers.
4. Engaging with your international employees
Struggling employees are more likely to fail an international assignment than employees who receive support from their companies. Employers must provide constant reassurance for team members to flourish while still maintaining the organization’s bottom line.
You can make the transition easier for your employees by offering personal support through your human resources department. HR should conduct regular check-ins with your employees to ensure they’re doing well. Consider implementing an open-door policy where employees are able and encouraged to speak with HR any time they need or would like additional support.
How to pay employees relocating internationally
If you’re planning on taking a more traditional route, you’ll need to register your company as an entity in your host country. This step allows your company to become established as a legal employer within the country. It’s best to set up your entity before your first payroll period.
It’s also crucial to understand how conversion rates can affect your employees’ paychecks and your budget. Conversion rates tend to fluctuate depending on economic changes like inflation, so you should always account for these variations. Check your host country’s financial condition frequently.
You’ll need to become familiar with local tax laws so you can remain compliant with your host country’s rules. The percentage you’ll need to withhold from a usual paycheck, for example, can change from country to country. You will have to pay other tax obligations as an employer, like fringe benefits taxes or health care, which can vary depending on location.
Even if you’re not ready or willing to set up a legal entity in your host country, you can still legally pay your employees. Consider partnering with an Employer of Record that can take care of payroll and tax responsibilities for you.
Gaining international presence with an Employer of Record
An Employer of Record is a legal means of outsourcing payroll, human resources, and tax responsibilities when hiring or sending employees abroad. Your Employer of Record may be the employer on paper, but your team members still work for your company.
The ideal Employer of Record will have the following traits:
- Self-contained: Make sure your Employer of Record doesn’t outsource its functions to another third party.
- Global: Find an Employer of Record that provides services in your destination country or in any other location you plan to expand to in the future.
- Established: You want to choose an experienced Employer of Record with a good reputation.
- Transparent: Your Employer of Record should disclose exactly how much you should expect to pay at the end of each month.
- Available: Find an Employer of Record that has representatives and in-country experts available whenever you or your employees need support.
The advantages of working with an Employer of Record
Working with an Employer of Record allows you to maintain compliance with local employment law while eliminating the need to set up a legal entity in your host country. This method is ideal for companies that want to test out international markets before creating a more permanent strategy.
An Employer of Record will take over your administrative responsibilities so you can focus on growing and managing your company.
Learn more about Globalization Partners’ solution
Globalization Partners is an Employer of Record operating in 187 countries with a 98 percent customer satisfaction rating. Our global employment platform enables you to hire anyone, anywhere, so you can build your company abroad with ease. Our AI-driven platform allows you to manage your team from any device and access information like salary, paid time off, and benefits. Plus, our technology automates payments for you in all supported currencies, including cryptocurrencies. You can relax knowing your employees will receive correctly taxed payments on time.
Our regional experts are available 24/7 to provide support when you need it most.
If you’re interested in learning how we can make international growth easy for your company, request a proposal today.