Through international relocation, companies can expand and tap into global markets while preserving and leveraging existing talent to drive success. However, building a global workforce can be a complex task.
Global mobility strategies like international relocation present challenges such as country-specific labor laws, payroll regulations, and ever-changing tax policies. Luckily, a best-in-class Employer of Record (EOR) can handle the administrative responsibilities of international employee relocation for you. Let’s explore how employee relocation can help you grow beyond borders and boundaries.
What is employee relocation?
Employee relocation, also known as corporate relocation, is the process of moving a team member from one location to another. Why do businesses relocate employees? Companies relocate employees to achieve global growth, but also to:
- Offer talent location flexibility. An employee wants to move back to their home country and work remotely.
- Test international markets. A company is opening a branch in a new country and needs an existing employee to manage the process.
- Strengthen local teams. A company wants to strengthen its business by moving top employees to areas that lack specialized skills.
- Save money. A company gets a large project in another country and finds it more cost-effective to relocate an employee rather than conducting a candidate search.
- Support future leaders. An employee shows potential as a future leader, and the company wants to support their growth by offering temporary relocation opportunities.
What is international relocation?
When an employee moves within the same city, state, or country, it is known as domestic relocation. When an employee is moved to a different country, this transition is called an international relocation, also known as global relocation.
Data shows that most employees are willing to relocate for a job even in the era of remote work. According to the EY 2024 Mobility Reimagined Survey, 92% of employees believe an international assignment can be life-changing, and 64% are more likely to stay with their employer after a long-term cross-border assignment.
There are two main types of international relocation for employees:
- Short-term relocation: This type of relocation typically has a fixed end date. For example, it might involve remote work relocation or training with international team members. For relocations lasting less than a year, a business visa or work authorization is required, depending on the activities and assignment duration. For longer assignments and broader work activities, a work visa and residence permit is necessary.
- Long-term relocation: This type of relocation is when employees live in another country for an extended period with or without a fixed end date. Similar to the short-term relocation, the employee must enter the target country under a residence visa. For any relocation assignment, employers should understand the labor laws in the destination country to avoid accidental violations.
How long does it take to move an employee internationally?
Typically, international employee transfers take around one to three months. This period includes the time needed to obtain proper documentation, find a new home in the destination country, settle the living situation in their home country, and ship household goods and belongings to the new location.
However, international relocation may take longer depending on the destination, since some countries impose more challenging requirements for international workers. For instance, Australian authorities require at least four months to process a short-term working visa. In Canada, the process can extend up to 41 weeks, depending on the employee’s citizenship.
What are the benefits of employee relocation?
Employee relocation offers benefits for both employees and employers, including gaining access to new markets, simplifying scaling operations such as establishing a new branch, distributing expertise to new markets, and retaining talent. The relocated team member benefits from exposure to new cultures, professional development, and potential perks from a relocation package.
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Employee relocation also offers one of the most valuable benefits for any business: global mobility.
Why is global mobility important?
Global mobility unlocks access to new growth opportunities for both employees and companies. According to G-P’s 2023 Global Growth Report, 95% of professionals believe global companies outpace their peers, and 79% want to work for a global company.
By implementing global mobility strategies, such as relocating employees to new markets, companies can build a team that’s better equipped to navigate diverse cultures and business environments. Global mobility is a key step towards developing an everywhere workforce and international presence.
What should an international relocation package include?
An international relocation package may include health insurance, temporary housing, relocation expenses, assistance with an international moving company, and even cost-of-living-allowance (COLA). However, there is no one-size-fits-all relocation package because every employee’s situation is different. For instance, a single employee will have different needs than a married employee who plans to bring their family.
- Housing assistance and allowance
- Health insurance
- Moving expenses
- Travel and relocation costs
- Temporary housing
- Settling-in services
- Legal and visa support
- Cultural training
- Cost-of-living-allowance (COLA)
- Hardship allowance
- Additional time off
- Lump sum payment for additional expenses
- Bonuses and in-kind benefits
Having a comprehensive relocation package can make your company more appealing to potential hires and current team members. A well-rounded package with attractive perks and in-kind benefits can make relocation even more enticing for employees.
What are the challenges of international employee relocation?
International relocation presents several challenges for companies, including obtaining the proper documentation, understanding and complying with local regulations, and managing payroll for employees in other countries.
Challenges of international employee relocation can include:
- Obtaining proper documentation. Requirements will vary by country and assignment length. Company employees may already have some documents like passports, social security cards, and medical records. However, the company’s HR department will likely need to help employees obtain documents like visas, work permits, and international health insurance.
- Complying with local regulations. Different countries have different employment laws and tax rules. For example, in the U.S., at-will employment allows employers to terminate employees for any reason. But, in other countries like Italy, employees have contract-based protection against unfair dismissal.
- Understanding country-specific payroll nuances. It’s crucial to understand how conversion rates and tax laws can affect employees’ paychecks and your budget. You will also have to pay other tax obligations, like fringe benefits taxes or healthcare, which can vary depending on location.
Understanding legal nuances can mean the difference between a successful assignment and a failed one. An international database like G-P’s Globalpedia makes learning about the rules and regulations in your country of interest fast and easy.
Gain a global presence seamlessly with an EOR.
A reliable Employer of Record (EOR) partner can help manage payroll, human resources, compliance responsibilities, and work permit arrangements when relocating employees internationally. However, as we explore in our 2024 Global Growth Guide, navigating the path to expansion requires careful planning and strategic alignment among executives and key stakeholders.
With a best-in-class EOR like G-P, you gain access to the most up-to-date technology and global expert guidance to support you every step of the way. With us, you can hire, onboard, and manage teams easily across 180+ countries in full compliance with local laws – without setting up local entities.
