Glossary

What is compliance?

Compliance refers to the adherence to laws, regulations, standards, and ethical practices that govern an organization’s operations. In the workplace, it involves following employment laws, tax codes, health and safety requirements, and company policies to ensure fair and lawful business practices. Compliance helps organizations avoid legal issues, financial penalties, and reputational damage while fostering trust with employees, partners, and regulatory bodies.

Compliance in global hiring

When hiring internationally, compliance becomes more complex due to the varying legal and regulatory frameworks across countries. Global hiring compliance involves understanding and adhering to labor laws, tax requirements, and employment standards in each jurisdiction where a business employs workers.

Key areas of compliance in global hiring include:

• Employment contracts: Contracts must meet local labor laws, including language requirements, mandatory clauses, and terms of employment such as notice periods and working hours.
• Worker classification: Ensuring that employees and independent contractors are classified correctly according to local definitions to avoid fines or legal disputes.
• Payroll and taxation: Proper calculation and withholding of local taxes, social security contributions, and other mandatory deductions.
• Benefits and entitlements: Providing statutory benefits such as paid leave, health insurance, and pensions as required by local regulations.
• Data protection and privacy: Complying with data privacy laws like GDPR and local equivalents to safeguard employee information.
• Termination procedures: Adhering to local laws regarding notice periods, severance pay, and dismissal processes to ensure lawful terminations.

Challenges of compliance in global hiring

Navigating compliance in global hiring can be challenging due to:

• Varying laws: Employment regulations differ widely between countries and may change frequently.
• Complex tax systems: Tax codes can be intricate, requiring accurate calculation and timely submission of payments.
• Administrative burden: Managing compliance across multiple jurisdictions demands significant time, resources, and expertise.

How an Employer of Record (EOR) can solve compliance challenges

An employer of record (EOR) is a service provider that takes on the legal responsibility for employment in a given country, ensuring full compliance with local laws. By partnering with an EOR, businesses can:

• Ensure legal compliance: The EOR handles employment contracts, tax filings, benefits administration, and worker classification according to local laws.
• Simplify global hiring: Companies can hire and manage employees in new markets without establishing a local legal entity.
• Reduce risk: The EOR assumes the legal liability for compliance, minimizing the risk of fines or penalties.

In global hiring, compliance is critical to protecting your organization and workforce. Partnering with an EOR helps ensure adherence to local regulations, allowing businesses to focus on growth while maintaining operational integrity.