Guide for global employers: Managing international employment arrangements

About the author

Peter Finding is a Partner at Pierson Ferdinand UK LLP with over 15 years' experience in international employment law matters.

Brightmine editors

Bar Huberman, a former solicitor, is content manager for the HR & Compliance Centre HR strategy and practice team.

Rocio Carracedo Lopez is a senior international legal editor with more than 12 years' experience as a researcher, writer and editor in multi-jurisdictional employment law.

Overview

In today's rapidly evolving global workforce, being aware of the full spectrum of employment arrangements is essential for any employer and their HR teams, particularly when employees are performing work across different jurisdictions. Whether dealing with a traditional full-time contract (see Typical employment arrangements) or one of the many atypical forms of work (see Atypical relationships), organisations must navigate a complex web of legal, operational and jurisdictional considerations. This guide explores a wide range of working arrangements, providing practical insights to help employers:

• make informed decisions;
• manage people risk; and
• create working solutions that support both compliance and organisational growth.

When hiring individuals in another country, employers have a wide range of options when it comes to structuring how those individuals are engaged. A common route is to establish a legal entity in the country where the work will be done, in order for that entity to employ individuals directly under local contracts. The typical employment arrangement involves a standard contract of employment, with the individual benefitting from the employment law protections relevant to their place of work.

However, setting up an entity and employing staff under local law can be time-consuming and costly. Therefore, many organisations instead partner with an employer of record (EOR) or professional employer organisation (PEO), which can hire staff on an organisation's behalf while handling compliance with local laws across essential areas such as payroll and benefits.

In some cases, businesses prefer to hire international contractors, often suitable for project-based work or where there is a need for specialist expertise. Alternatively, it may be possible to partner with local businesses that employ staff and deliver the necessary services on a business-to-business basis. These models often sit outside what is considered a standard employment relationship, so it is important to consider that they may bring various legal and tax implications.

Whichever approach is taken, each model carries its own risks and opportunities. Understanding these on a country-by-country basis will help internationally active employers ensure compliance, manage costs and provide appropriate flexibility.