Whether you’re a startup or a global enterprise, hiring overseas is a great way to tap into skilled talent and break into new markets ahead of your competitors.
Expanding your talent pool can also give you access to more affordable hiring markets and increased flexibility to find the right fit for a particular role.
The key is to take a careful approach and ensure you stay compliant with international employment laws every step of the way.
Compliance is more complex than you might think. Local employment laws vary, and non-compliance means putting your company at risk of costly legal penalties, government fines, employee disputes, and lasting reputational damage.
Key takeaways:
- International hiring compliance differs in every country and continuously evolves due to changes in legislation, industry trends, and cultural expectations.
- Global employment means your business must follow the labor laws of the countries or regions where you’re hiring, not just the laws of where your company is based.
- Managing payroll across countries brings significant risk — each region has different pay rate, employer contributions, and recordkeeping rules.
Follow Local Labor Laws — Not Just Your Home Country’s
Hiring practices and contracts must reflect the laws of each country where you hire to avoid employment disputes and ensure contracts are legally binding.
Specific contract terms in one country might not be the norm — or even illegal — in another, costing you quality talent and putting your business at risk.
Some common employment laws and norms that differ across borders include:
- Minimum wage and working hours
- Overtime and rest breaks
- Paid leave entitlements (e.g., annual leave, sick leave, parental leave)
- Social Security and employer contributions
- Data protection and employee privacy requirements
- Anti-discrimination and termination protections
For example, in France, employees are entitled to at least five weeks of paid leave and substantial severance protections.
However, the United States has no federal requirement for paid leave and allows at-will termination in most states.
Understand the Difference Between Contractors and Employees
Worker misclassification happens when you hire someone as an independent contractor but treat them like a full-time employee by taking actions such as setting a 40-hour workweek or closely managing their tasks.
Misclassification is one of the most significant compliance risks in global hiring and can lead to legal fines, back taxes, unpaid social contributions, and liability for benefits owed.
Governmental authorities crack down on worker misclassification to protect workers from missing out on the statutory benefits guaranteed to employees, but not offered to contractors.
How worker classification gets tricky:
- Each country defines whether a worker is considered a contractor or an employee differently.
- The same working relationship might be legal for a contractor in one country but illegal in another.
- Determining the legality of a working relationship often hinges on the degree of control, integration, and economic dependence between the worker and employer.
It’s not uncommon for companies to accidentally misclassify workers — unintentionally overstepping day-to-day management of an independent contractor in a way that mimics an employee relationship.
Regardless of intent, companies must understand worker classification definitions and remain compliant with laws to protect their business from legal issues, worker disputes, and costly fines.
For example, if a company is found to have intentionally misclassified workers in the United States, they face civil penalties up to USD 1,000+ per violation, plus back wages, benefits, and possible criminal charges.
Keep Up With Regulatory Changes
Successfully following a country’s employment laws and setting up legal contracts when hiring a new candidate doesn’t mean you’re out of the woods.
Businesses must continuously update their policies, work permits, and practices to reflect changes to local regulations as they occur.
Labor laws regularly shift, especially:
- Minimum wage rates
- Social Security contributions
- Work permits and visa requirements
- Remote work rules
- Data privacy laws
For example, the minimum wage was increased in the Philippines in June 2025, impacting around 1.2 million minimum wage earners in the National Capital Region (NCR).
Paying attention to these changes is crucial. For example, if you employ minimum wage workers in the NCR region in the Philippines and failed to increase pay for team members or reflect these changes in your contracts, you’re no longer in compliance.
Work With Local Experts or Partners
It’s unrealistic and risky to expect your internal HR, finance, or legal team to understand and keep up with the employment laws of every country where you hire. That’s why most companies rely on local expertise to fill the gap, such as:
- Local legal counsel to guide you through country-specific employment contracts, termination rules, notice periods, and dispute resolution.
- HR and payroll vendors to ensure international employees are paid according to local laws, in the right currency, on the correct schedule, and with the proper withholdings.
- Benefits brokers to help you structure compliant employee benefits packages that align with cultural expectations and legal requirements.
However, managing separate vendors across different countries quickly becomes complex. Each provider may use different systems, billing practices, and communication styles, creating extra coordination for your team to ensure legal compliance.
Maintain Compliance With Payroll and Tax Laws
Payroll compliance is one of the most complex and high-stakes aspects of international hiring.
Best practices to keep in mind include:
- Understanding local tax obligations: Many countries require employers to withhold income taxes and make payments to Social Security programs, unemployment insurance, pensions, or even mandatory healthcare funds.
- Complying with 13th-month salary requirements: In many countries across Europe, Latin America, and Asia, employers must provide an extra month’s salary (a.k.a 13th-month pay), either in December or split across the year, or face financial penalties and employee claims.
- Providing mandatory bonuses and allowances: In many countries, employers are responsible for offering specific statutory benefits. For example, it’s common in Latin America to provide transportation stipends, while employers often cover meal costs through vouchers in Portugal.
- Filing taxes and payroll reports on time: In most countries, employers must submit regular filings — usually monthly or quarterly — showing wages paid and taxes withheld. Missing these deadlines can lead to penalties, added interest, or limits to operate in that market.
- Keeping accurate records: Many countries mandate that employers keep payroll data for five or more years, including pay slips, contracts, and proof of tax payments, but these requirements differ per country. For example, in Germany, records must be stored for at least 10 years and made available in case of audits.
Managing cross-border payroll internally at your company creates significant risk. Rules change frequently, reporting systems differ from country to country, and human error can easily result in costly compliance issues.
Partnering with an Employer of Record (EOR), like RemoFirst, enables you to compliantly pay and manage your global workforce from one simple platform.
How an Employer of Record (EOR) Helps Companies Maintain Compliance
When you partner with an EOR like RemoFirst, the EOR becomes the legal employer for your international hires, ensuring your business remains compliant with local requirements and assumes compliance risks.
Instead of your team navigating multiple sets of employment laws, the EOR handles it all — from global payroll and taxes to contracts and health insurance benefits.
With EOR services, you gain:
- Global coverage: The ability to hire worldwide, without setting up expensive local entities.
- Accurate worker classification: Expert guidance to reduce the risk of misclassification penalties.
- Compliant contracts: Employment agreements that meet local standards and legal terms, while protecting your business from expensive disputes.
- End-to-end payroll: Wages, benefits, and taxes handled compliantly and in employees’ preferred currency.
- Proactive compliance: Ongoing monitoring of regulatory changes to help you stay on the right side of evolving laws.
Ensure Global Compliance With RemoFirst
International hiring doesn’t need to include compliance headaches.
RemoFirst makes it simple to hire, onboard, pay, and manage employees in 185+ countries and contractors in 150+ countries.
From ensuring compliance with local labor laws to protecting your IP and managing global payments and benefits, RemoFirst has you covered.
Schedule a demo with RemoFirst to see how easy international hiring can be.
