Management March 2, 2022 Last updated March 2nd, 2022 3,128 Reads share

Hiring Staff Overseas: The Benefits and Drawbacks of Hiring Foreign Workers

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It has never been easier to work remotely from anywhere.  Technology has meant that you no-longer need to physically be in the place where you work.  Coupled with this has been changes to routines brought on by the pandemic.  More employees than ever now want to work from home at least some of the time.  So if your staff are working remotely, then potentially you could expand your reach for employees.  

Hiring staff overseas can open up entire new job markets for a business, and potentially fill roles that have been a struggle to fill locally.  Here we look at the advantages and disadvantages of employing foreign staff, and the regulations involved.

 

Advantages of hiring foreign workers

Expanding your workforce overseas can bring many benefits to a business, such as:

  • Access to international talent

This has got to be one of the main reasons to seek staff overseas.  Expanding your workforce will give you access to the best talent and encompass a more diverse knowledge-base.  You will have the choice of many more people who may be better qualified for roles than local employees.  This can enrich and grow your business.

  • Lower employment costs

Another main benefit to foreign employment is cost.  Hiring workers from developing countries will come with a lower employment costs.  Wages in their country will be significantly less than those in this country. Modular Exhibition stand contractor Quadrant2Design  employs data entry staff in the Philippines for exactly this reason.  MD Alan Jenkins said ‘They have a great work ethic, and are performing roles that we have struggled to fill in this country.  It also makes financial sense.’ 

  • Increased productivity

If you hire staff who are on different time zones you create a business that can operate more or less 24 hours a day.  This will give you an edge over your competitors and bring customer service benefits as the office is always open.

  • Flexibility

Foreign workers may be more amenable when it comes to job demands and working different hours.  UK workers may not be as flexible.  They may also demand less benefits than local staff.

  • Venture into new markets

If you are looking to explore international markets, having local staff can bring a number of benefits.  It will give you knowledge of the local market, customs and regulations.  And it will help overcome the language barrier.  Therefore hiring foreign staff can transform your business into a global venture.

Disadvantages of hiring foreign staff

Although hiring staff abroad can expand and diversify your company, the process brings with it some difficulties, including:

  • Local entity registration

To hire staff in another country a business has to register as a local entity in the country.  This brings with it administrative duties and challenges to comply with local rules and regulations.  The business will need to understand local employment laws and benefits staff are entitled to.

  • Local pay scale

Every country will have different pay scales for different roles.  A business will need to understand these to avoid over or underpaying its staff.  This cost will also be affected by currency fluctuations.

  • Management

Then there will be the issue of managing staff who are based in another country.  Time differences may limit opportunities for zoom meetings and the foreign staff may find themselves without support when the offices close in the UK.  Plus there are all the local laws and customs for a manager to familiarize themselves with, and there may be a language barrier.

  • Local unemployment

If large corporations consistently hire foreign staff, for example in outsourcing call centers, this can lead to unemployment in the host country which brings with is societal problems.

  • Lack of onboarding

It might be challenging for workers based abroad to get to know the company they are working for and other members of staff.  This might lead to a lack of commitment and cultural issues.  It will be a challenge for workers abroad to carry out projects if they don’t understand the culture of the company and host country.  As a result they may lack commitment to the business and turnover could be high as a result.  Training remotely may also be a challenge.

  • Communication problems

Not only might there be a language barrier, but all communication will be reliant on technology.  There may be issues with internet connection in some countries which will hinder communication.  Computer glitches may frequently interrupt zoom meetings.

Legal guidance to recruiting from outside the UK

You need to have a sponsor license to hire most workers from outside the UK.

Skilled workers

Anyone you recruit from outside the UK as a skilled worker needs to demonstrate that:

  • they have a job offer from a Home Office licensed sponsor
  • they speak English at the required level
  • the job offer is at the required skill level of RQF3 or above (equivalent to A level)
  • they’ll be paid at least £25,600 or the ‘going rate’ for the job offer, whichever is higher

If the job will pay less than this – but no less than £20,480 – the applicant may still be able to apply by ‘trading’ points on specific characteristics against their salary. For example, if they have a job offer in a shortage occupation or have a PhD relevant to the job.

There are different salary rules for workers in some health or education jobs, and for “new entrants” at the start of their careers.

Tips for hiring foreign workers

  • Familiarize yourself with the local employment laws

You need to employ people in compliance with their country’s laws.  Some key considerations are income tax and other taxes, holidays and mandatory paid leave.  Be aware that local holidays will not necessarily fit with your holidays.  You must respect their public holidays.

  • Know exactly where they are based

Employing staff globally means they could be anywhere.  Make sure you know exactly where they are so that you can be compliant with local laws and customs.

  • Be aware of Permanent Establishment risk

Depending on what roles your foreign staff are carrying out and how many you have, you could be at risk of Permanent Establishment.  Permanent Establishment (PE) refers to a business that is considered by a local tax authority to be a permanent and ongoing setup. As a result, the business may be liable to pay corporate taxes or VAT on the revenue generated in that country or jurisdiction.  Many businesses employ from overseas without this being a problem, you just need to be aware of it.

  • Know the local salaries

Ensure that you are paying your overseas staff a fair salary based on their qualifications and experience by familiarizing yourself with the local job market.  You also need to know how to pay them, many countries have certain systems in place, like PAYE in the UK.

  • Enable online onboarding

Give your new employees everything they need to get up to speed with their role and the company.  Schedule plenty of online meetings when they first start so that they can meet the team and get to know the company.

  • Ensure they are set up remotely

Make sure they have all that they need in their remote office to perform the necessary tasks.  Set up remote working software like Slack or Monday to help remote teams to collaborate effectively.

  • Provide online learning and development opportunities

Virtual development tools can help your foreign employees develop their roles and skills. They can also further employee resilience and adaptability through up- and re-skilling. Companies like Learnerbly are helping businesses create bespoke training for all employees working abroad.

 

Conclusion

Hiring foreign workers can bring an organization many benefits – from accessing the best talent to expanding into new territories.  But there can be problems in onboarding those staff and navigating local laws and customs.  If you are going to investigate this, just make sure you follow government guidelines and the regulations of the host country.

Mr Saqib

Mr Saqib

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