When crafting employment contracts, the first priority needs to be ensuring that they meet legal requirements. Beyond that, contracts should set clear expectations, outline company policies, and protect your business from potential disputes.
The stakes are even higher when hiring internationally. Written contracts are a legal requirement in many countries, and a detailed, compliant agreement is necessary to ensure you meet local regulations, respect cultural norms, and build trust from the start.
In today’s competitive talent market, a clear, well-structured contract can be a powerful tool for attracting and keeping top talent. According to McKinsey’s 2025 HR Monitor Survey, offer acceptance rates average just 56% across the countries studied, and 18% of new hires leave during probation.
By outlining competitive terms, growth opportunities, and clear expectations from the start, you can increase acceptance rates and secure stronger long-term commitments from employees.
Key takeaways:
- Contracts must comply with the employment laws of the region where you're hiring to avoid legal risk.
- Transparent contract terms (particularly around compensation, employee benefits, and policies) pay off in employee loyalty and reduce disputes.
- One way to ensure contracts comply with local laws is by working with an Employer of Record.
Employment Contract Basics
When hiring internationally, businesses must ensure that they are incorporating local employment laws and norms into contracts.
Depending on the country, these laws can specify that contracts must include information such as:
- Paid leave entitlements, which can include vacation days, sick leave, and public holidays
- The termination process, which typically outlines notice periods and any applicable severance pay
- Working hour limits and overtime pay rates
- Corporate contributions, which may include Social Security, payroll taxes, health insurance, and other mandatory benefits
Global hiring contracts must also specify the type of agreement being utilized and, if applicable, its duration. The two most common types are:
- A fixed-term contract, which ends on a specific end date or project milestone
- An indefinite contract, which continues until terminated by either party
In some countries, local laws dictate the maximum length for fixed-term contracts.
For example, in the U.K., fixed-term contracts generally convert to indefinite after four continuous years; whereas, in Italy, they are typically limited to 12 months.
Other basics that should be included in every contract, no matter the country, include:
Employee and Employer Information
Your international employment contract must identify both parties, including:
- Full legal names
- Home/corporate addresses
- Job titles and roles
- National IDs or business registration numbers (if applicable)
Job Title and Description
Clearly define the employee's role, including:
- Job title
- Main duties and responsibilities
- Working hours, expectations, and time zone alignment
- Location expectations (onsite, hybrid, fully remote)
- Reporting structure
- Flexibility expectations (like weekend work or travel)
Some countries require more detailed job descriptions than others to ensure legal compliance.
Compensation and Currency
The contract should define the:
- Gross salary before taxes/deductions
- Pay frequency (monthly, bi-weekly, etc.)
- Payment currency (USD, EUR, local currency, etc.)
- Incentive pay, such as bonuses and commissions, including any eligibility requirements
- Overtime pay rates, which must comply with local laws
Collective Bargaining Agreements
Adding to the complexity, many countries and industries have hiring regulations that fall under collective bargaining agreements, which supersede local standards, and the details of which must be incorporated into employee contracts.
For example, collective bargaining agreements frequently expand pay, leave, and benefits above statutory minimums in France, and must be noted in contracts.
Benefits and Perks
The contract should spell out the benefits and incentives, bucketed out into two categories:
- Legally mandated benefits: Vacation days, healthcare, parental leave, 13th-month pay, etc.
- Supplemental or company-offered benefits: Wellness stipends, equity, private insurance, retirement contributions, etc.
Make sure your benefits offerings are compliant with regional requirements. For example, most countries mandate the minimum amount of vacation days and maternity leave an employer must provide.
Also, contracts should outline eligibility requirements and timelines. For example, if your business doesn't offer health insurance for the first 30 days of employment, the contract should specify when health insurance kicks in.
Finally, if your benefits differ for team members based on region or role, specify this in the contract.
Probation Period
Many countries allow employers to set a probationary period, during which termination terms are more flexible.
Contracts should specify the:
- Length of the probation period
- Required termination notice during that time period
Termination Clauses
Contracts must define termination guidelines, outlining:
- Notice periods required by local law, company policy, or both
- Valid grounds for termination (e.g., misconduct, redundancy, mutual separation)
- Severance pay provisions where applicable (including how it's calculated)
- Policy for unused leave and return of company property
- Redundancy terms and procedures
Depending on the country, many of these terms are dictated by local labor laws.
For example, under Australian law, employers must provide a minimum notice period for termination based on the employee's length of service. They must also pay mandatory redundancy, which starts at four weeks' pay for employees with one to two years of service and can increase to up to 16 weeks' pay for those with 10 or more years under their belt.
Failing to clearly define these requirements in the contract, and following them during termination, can expose your business to legal liability.
IP Protection and Confidentiality
All contracts should set clear terms to protect your company's intellectual property (IP) and proprietary business information.
In some countries, like Switzerland, local laws may automatically assign IP rights to the person who created the work, unless a contract explicitly states otherwise, so spelling out IP ownership and confidentiality terms is crucial.
Similarly, non-compete clauses are not always enforceable in every jurisdiction, so it's essential to know the local laws first.
The contract should clearly define:
- Who owns the rights to work products created during employment
- Confidentiality terms and conditions
- Any enforceable non-disclosure agreement (NDAs), non-competes, and non-solicit clauses, if legally permitted
Ensure these requirements are clear, complete, and legally binding in the local region where you're hiring.
Work Location and Remote Setup
In the contract, outline expectations such as:
- Primary work location, including if it's in-person, hybrid, or remote work
- Standard work schedule and any additional requirements, such as occasional work outside of business hours to attend meetings, or travel expectations
- Policies around potential relocation, including to another country
For example, could the employee potentially be asked to relocate. And, what does the approval process require if an employee asks to relocate in the future?
Dispute Resolution and Governing Law
Contracts should explain how disputes will be handled, including:
- Which country's law will govern the contract (usually, it's the employee's home country)
- Whether mediation, arbitration, or court proceedings will be used for dispute resolution
- The venue/jurisdiction for legal matters
Some countries require disputes to be resolved locally, and employers cannot override this requirement in the contract.
Don't Forget: Language and Cultural Considerations
Don't overlook language and cultural differences when putting together international employment contracts. Also, always provide employees with a translated employment contract in their native language.
This is a legal requirement in many countries, like France and Saudi Arabia.
Also, remember cultural habits and communication styles can affect how terms are understood or followed. Attention to these details clarifies things, builds respect, and helps avoid misunderstandings.
The Case for Working With an Employer Of Record
If you don't have a legal presence in the country you're eyeing for global expansion, you have two options for hiring: establish a local entity or partner with an Employer of Record (EOR).
Opening an entity can be time-consuming, and it requires a lot of upfront work and expenses, including:
- Registering the business
- Opening local bank accounts
- Office space, utilities, and infrastructure
- Administration costs
- Insurance
It can take months and significant resources, which makes sense if you’re planning a major expansion, but isn’t ideal if you’re only hiring one or two employees in that region, or looking to move quickly.
On the other hand, working with an EOR allows you to legally employ international workers in a matter of days.
The EOR becomes the legal employer on paper, handling contracts, payroll, taxes, benefits, and local labor compliance, including:
- Onboarding team members in days versus months
- Drafting employment contracts to meet country-specific requirements
- Managing required social contributions
- Reducing HR burden and absorbing liability
- Managing cross-border employment logistics
- Ensuring your business remains compliant with evolving labor laws.
Working with an Employer of Record (EOR) like RemoFirst simplifies compliance by handling all contractual legal nuances and tailoring contracts to local regulations.
Otherwise, your HR and legal team will need to carefully review all contracts for accuracy and compliance, which can be challenging if they aren't familiar with a particular country's employment laws.
In short, an EOR is the fastest, most compliant way to hire global talent without taking on unnecessary legal risk.
Employ Your International Team With RemoFirst
RemoFirst helps companies compliantly hire full-time employees in 185+ countries, without the need to open local entities.
We handle all the legal, HR, and payroll complexities — including employment contracts, onboarding, employee benefits, and tax withholdings.
Need more than just compliant contracts? We've got you covered with additional optional services, including:
- Visa and work permit assistance
- Comprehensive background checks
- Private health insurance and global benefits
Whether hiring one employee or building a global workforce, RemoFirst ensures a smooth, fast, and fully compliant experience.
Schedule a demo to see how easy international hiring can be with RemoFirst.
