Setting up new operations in a new country can be a very exciting time for your organization’s growth. It can also be incredibly challenging. Here are a few best practices when moving into a new market or country:
- Do not assume that the labor law or labor code for the new country is the same as the existing countries that you operate in. Make sure that you research “what it means to be an employer” in these countries. This can be accomplished through consultants or technology. If you haven’t heard of technology that can show you labor law/labor code in a country or what it means to be an employer, we offer Global People Strategist, a technology that allows our clients to research this information themselves.
- Make sure that you have set up the right type of company formation, registered office, etc. and have your appropriate tax and social accounts set up.
- Do you need to set up a local bank account? In some countries this is required. Make sure you know the requirements in each new country so you can pay employees once operations begin.
- US. Employers – Do not assume that employees can be “contractors” or a 1099 equivalent (sometimes called a “freelancer”). We see this common mistake happen frequently. Do the due diligence and research if the country offers an employment designation similar to this, and what the parameters are for that designation. You can ensure compliance by working with global consultants (we offer global consulting services to help). Another common mistake is that employers think if they have “contractors” or “freelancers” they do not need to set up a company formation or registered office in a new country. In many situations that is incorrect. Make sure to research or review this with a consultant or attorney.
- Find out minimum statutory requirements, and also supplemental or customary employee benefits to offer in-country. Some employers try to mirror or match what they offer to existing employees when they move to a new country to be fair to those new employees. However, in some situations this may not the best strategy. For example, in Mexico when you offer an employee benefit, the labor law makes it incredibly difficult to take away that benefit from your employee later. In some situations, you may want to offer what is required by law, and then survey your employees or have discussions with them about what supplemental benefits are important to them prior to actually offering the new benefits. Many employers feel like they have to offer all employee benefits right away, which can actually prove problematic down the road if you plan on changing employee benefits later.
With so many considerations before beginning operations in a new country, it is best to consult with experts to determine the best company formation, understand the unique labor laws in each country, create bank accounts, how to hire and appropriately designate employees, and provide benefits that meet the organization needs. Blue Marble has simplified global expansion with in-country experts, technology to help with labor and employment law research, and more. Talk to us today about expanding into new markets and we can help you ensure compliance a smooth transition into a new country. Click here to learn more