HR Challenges Expanding to a New Country – Part 2

Posted by: Brad Reid on Tuesday, August 9, 2016

Previously we discussed the necessity of conducting your due diligence when expanding to a new country with a particular focus on the primary HR challenges companies will typically encounter during expansion. This week we take a look at employee benefits with an emphasis on the policy and contractual policies that should be at the forefront of HR’s considerations when expanding.

Minimum Wage and Collective Bargaining

As with most issues of remuneration, minimum wage levels differ significantly, depending on where you’re operating. Although U.S. industries such as car manufacturing have a long history of collective bargaining rights, companies from less unionized sectors may be surprised with the strength of collective bargaining agreements in other countries.

Collective bargaining agreements is not usually something that is easily researched; it’s one area that will only become clear once you’re working in that particular country and negotiating with the unions on the ground. Consequently, we strongly recommend partnering with an expert if you believe it will be applicable during your expansion efforts.

Statutory Benefits

Statutory benefit requirements, such as healthcare benefits, are set at different levels from country to country. You must provide the correct level of benefits to employ people legally.

In Europe and much of Latin and South America, there are statutory health insurance schemes already in place. For a U.S. company moving into a country where national health insurance is already in place, there is no requirement to offer private health insurance as part of a benefits package.

The seniority level of the employee is also an important consideration. For instance, although the U.K. has a national insurance scheme that covers everyone, candidates for more senior positions may expect supplemental plans that provide coverage above and beyond the state’s provision.

Paid Time Off

The issue of paid time off (PTO) is particularly challenging when looking to hire in a foreign market. It is important to consider statutory minimums as well as cultural expectations for paid time off.

Offering additional days off can also be a useful recruiting tactic. So, although the minimum number of days may be set at one level, pitching it a little higher—or significantly higher— can be a way to attract talent to your company. Knowing how and where to pitch your PTO offering is often a case of having the right local knowledge. Access to experts comfortable working and hiring in a specific country will help you avoid making the wrong offer to potential new hires.

Paid Family Leave

Maternity leave requirements are not consistent across the globe, and finding out the correct and most up-to-date information to ensure you are legally compliant can be challenging.

It’s important that your company not only satisfies legislative requirements but also conforms to local customs and expectations. Differences among states and local municipalities within a country can be extreme, as well as between countries that appear superficially similar.

SafeGuard World International has an network of global experts to help companies expand into new markets. Their international experience and relationships with local experts provide you with the support your business requires. Simplify your strategy with a single experienced partner to help your business grow across borders with confidence.

Next week we reach the final in our three part series of HR challenges when expanding, taking a deep dive analysis at the required steps when a worker’s employment comes to an end.

Brad Reid, Safeguard World International


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