hr obligations abroad: a focus on europe

HR OBLIGATIONS ABROADA FOCUS ON EUROPE

As your organization expands internationally, the complexity of your operations will increase dramatically.

Hiring the employees with the skill sets you need, retaining them and even paying them the right way is critical to delivering sustainable growth in

international markets.

But processing multinational payrolls, paying employees on time and complying with local regulations can leave room for error, and lead to significant compliance

and business risk exposures.

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As a result, HR practitioners often find themselves out of their comfort zone and in unfamiliar territory.

Company structure, for example, will have an impact on many HR aspects, including employee benefits.In many countries having a payroll-only registration can restrict the number of providers offering supplemental benefit coverage since there is no credit or trading history in-country.

Ideally, your optimal legal-entity type should be determined long before the hiring process starts, as it will affect how benefits

are sourced and administered.

Now that you’ve determined your overseas structure, what type of worker are you going to put on the ground?The three main options are locally sourced employees, expatriate employees and contractors.

Which one you choose will depend upon many factors, including what kind of activities are going to be performed and your long term plans in-country.

Hiring local employeesDon’t make the mistake of assuming that your US employment and benefit practices will work in other countries — each country has unique rules and regulations to consider.

At best you could end up with disgruntled employees.

At worst you could be noncompliant with local employment laws.

Contractor vs employeeLocal employment tests will be used to determine contractor status.

If a contractor is deemed an employee by local authorities, the company can be liable for back taxes, penalties and backdated employee benefits.

Where a true contractor relationship exists, arrange for a locally compliant contractor agreement to be in place

before work starts.

Expatriate employees can be a quick way to get your international markets up to speed, as expats will know your company culture and objectives.Be mindful that expats will create some unique contractural and tax challenges and are generally more expensive.

How you structure an expat assignment package will depend on a number of factors.Duration of assignment, intent to return to the home country and host-country location are key factors.

Focus on France

France can be a particular challenge from an employment-law perspective,

and there are a number of HR considerations to be aware of.

Focus on France

French employment law is extremely complicated and

constantly changing.

Focus on France

Upcoming payroll reformsIn 2018, a new PAYE system will be introduced. Until that time, all income taxes will continue to be assessed through individual tax returns.

Focus on France

Upcoming reforms to labor lawFrom 1 January 2016 mandatory health insurance is required. Previously, health insurance was a supplemental benefit, unless required under a relevant CBA.

Focus on France

Employee hire requirementsA hiring declaration must be filed and a mandatory health examination carried out within three months of hire. “Prevoyance” insurance is mandatory and should be in place from day one of employment.

Focus on France

Ongoing HR requirementsRequirements include: mandatory training; tracking of vacation days on pay slips; health and safety obligations; and office postings.

Focus on France

Complex working time legislation is in placeIt is essential that working hours are tracked, monitored and recorded.

Focus on France

Employee terminations are highly regulated in most countries outside the US.Redundancy for economic reasons is almost impossible to successfully implement, and the process is often expensive and lengthy.

Mutual terminations are more common. They are favorable to the employee, and

employers can expect to pay between nine and 18 months of severance,

inclusive of notice periods.

Always have a locally compliant employment contract.A robust employment contract should not only cover the local statutory requirements, but should be designed to best protect the employer across many legal areas (i.e,. termination, notice, restrictive covenants, PIIA, etc.).

But don’t forget that employees will automatically be covered by local employment laws.

Make sure you understand and meet your obligations.

Many countries require that contracts, policies and procedures be written in the local language.This often adds unexpected costs, as legal translation can be expensive — especially when dealing with multiple countries and headcounts.

Only 55% of companies we asked said all of their employments

contracts were locally compliant.

Employee benefits considerations Legal requirements will vary country to country, and collective bargaining agreements can have a significant impact on terms of employment.

Be sensitive to and understand the landscape in each country.

Conduct local employee benefits benchmarking.

Don’t offer the same benefits across the board just because you offer them to your

US-based employees.

A good HR administrative infrastructure is key to successful program implementation.Identify, budget for and source the necessary contacts required to implement employee benefits.

This is often the easy part.

Managing multiple plans in multiple countries can be time-consuming and frustrating for employers and

employees alike.

Always put it in the local language. Local courts require all contract documentation to be presented in the local language.

Remember: Everything will be different overseas.

For more expert advice, listen to our webinar on your

European HR Obligations.

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