International Labor Compliance – How to Avoid the Traps

937ad0908e103306a2814db3d0ff794fIf hiring independent consultants or employees in a new country is part of your business strategy, you’ll have to become familiar with international labor compliance. It’s a robust subject filled with plenty of positives for building your brand overseas, but there are also many traps you need to avoid to protect your company.  In order to help you have a firm understanding on how to handle these international labor compliance traps, we discuss areas at risk and how to avoid the issues.

Establishing a Taxable Presence (or not)

To legally hire a local employee, you need to establish an entity in your target country to be able to provide them with the necessary entitlements and tax withholdings required by labor laws. Setting up an entity is a capital investment that you may not be willing to make right now, especially if you’re testing the market. The maintenance of the legal entity can be very time consuming and expensive as well.

Instead, use FSaaS to setup a taxable presence in your new country without going through the strains of establishing an entity. This is an aggregate of services that allows you to hire in-country and operate your business. FSaaS also takes substantially less time and money, while being more flexible.

This service also protects you from potential audits or employment classification disputes that could come from an agreement dispute with an independent contractor. If a contractor decides that their work was actually classified as an employee’s responsibilities, they can take their dispute to labor courts and challenge their job status. You will need to show up and have a legal presence in the country to challenge your contractor’s dispute.FSaaS helps with this portion of the legal battle not just by giving you the power of enforceability, but also by focusing on managing risk proactively.