How PEOs Manage Global Employment Law

global employment law

Global business operations come with their fair share of challenges. They need to manage the daily tasks of employees, attract and retain new customer bases, manage HR, and adapt to local cultures.

Doing those tasks in-house can quickly become a burden as you expand into new markets. That’s why many businesses choose to partner with a professional employer organization (PEO) to help them manage global employment laws. A PEO establishes its own entities around the world, then leases employees to your business. This means the PEO is accountable to all compliance requirements, which means your business doesn’t assume any risk.

Related: What is an international PEO?

Maintaining compliance with local labor and employment laws is critical for successful operations. The last thing you want to worry about are expensive fines or penalties from neglected regulations.

How PEOs manage global employment law

A PEO provider enables businesses to focus on other important growth initiatives while they manage the local mandates. Here are five ways a global PEO empowers businesses to succeed:

1. Employment law

2. Payroll tax

3. Compensation and benefits

4. HR documentation

5. Ongoing compliance

1. Employment law

Because PEOs assume all the risk associated with compliance, they ensure all business practices are consistent with government requirements. International employment law includes wages, work hours, workplace safety, anti-discrimination, and sexual harassment prevention.

PEO providers are also responsible for protecting confidential information, such as financial data and personal employee information. They can also oversee all the contractual obligations, including confidentiality agreements and non-compete clauses.

2. Payroll and taxes

Corporate taxes can be a complicated matter, depending on the countries of operation. With trade agreements and tax treaties around the world, it’s important to know the payroll requirements. Noncompliance with payroll taxes can have serious consequences, such as legal action and fines.

Related: 4 benefits of streamlining your global payroll system

PEO providers manage the payroll for the local employees so you never have to worry about violating payroll laws. They file all necessary payroll taxes, including both income

taxes and social programs. Instead of managing a host of local providers, a PEO provides a centralized payroll service. This ensures all your data stays accurate and up-to-date.

3. Compensation and benefits

Understanding the local customs ensures PEOs are offering the best compensation packages for your international workers. They also have the expertise required to craft compliant written employment contracts according to local labor laws.

Having a PEO provider on your side will help you recruit and retain top-tier talent. Their knowledge of country standards will ensure you offer attractive supplemental benefits for prospective candidates. Talented workers are the key to growing and maintaining your business overseas. A PEO can also pay workers in their local currency, pay bonuses, and handle commission structures.

Related: 5 steps to offering a competitive salary internationally

With a large network of employees, a PEO can negotiate lower insurance rates and other benefits for their clients. This enables smaller ventures to compete with larger corporations for top talent.

4. HR documentation

HR documentation is especially important for countries within the European Union. GDPR laws require businesses to maintain all employee information for workers to request at any time. This includes everything from applications, payroll information, leave/medical files, benefits, terminations, and more.

These records protect employers from any employment disputes and help minimize liability risks. Data protection is taken seriously in many countries, which is why proper HR documentation helps resolve employment issues. A PEO provider helps create, maintain and update all necessary documentation for employees.

Related: 7 common questions about international employment contracts

The more countries a company operates in, the more difficult it is to manage all that documentation in-house. PEOs leverage streamlined technology to centralize all employment information to ensure compliance and easy access.

5. Ongoing compliance

Even with an extensive employment law guide for every country, it’s still possible to make mistakes without experienced professionals. Employers must constantly adjust their policies to stay compliant with ever-changing regulations. Following all international employment laws matters to the success of your operations.

PEO providers monitor and update their clients on any changes to local laws and take action to ensure all policies are compliant. Their extensive experience and expertise allow them to provide hire-to-retire HR services, including recruiting, hiring, onboarding, and payroll.

Partnering with a PEO provider

Global PEO Services (GPS), a Safeguard Global company, helps companies expand globally without setting up legal entities or dealing with related talent acquisition, HR, benefits, payroll, tax, and compliance issues. Hire employees fast, test new markets, and respond to growing business needs quickly while leaving the compliance and operational burden to us.

With our Professional Employer Organization (PEO) or Employer of Record (EOR) services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent and speed to market. Reach out to one of our Global Business Advisors today to see how we can support your growth needs.