Now more than ever, companies are hiring globally to boost growth, remain competitive, and expand their reach. In a key finding of G-P’s recent 2024 Global Workforce Trends, 39% of executives expressed an interest in hiring more specialized talent, indicating a strong commitment to global hiring in the new year.
Of course, with these new opportunities come new obstacles to navigating the complex landscape of country-specific rules and regulations. Labor laws continue to evolve rapidly, and maintaining compliance has become increasingly challenging, requiring a comprehensive approach to mitigating risks. Companies can face significant penalties, damage to their reputation, and legal disputes if they fail to comply, with costs potentially exceeding USD 14 million per year.
The good news is, companies don’t have to take on compliance alone. With a proactive strategy – and an experienced Employer of Record (EOR) partner by their side – any business can achieve compliance that aligns with their growth objectives and promotes equitable workplaces. In this article, we’ll share the five keys to managing local labor law compliance throughout your expansion journey and how partnering with G-P can help you build and manage global teams compliantly.
So what goes into ensuring and maintaining compliance with labor laws across different regions and fostering a conducive environment for successful global expansion? Here are five best practices to know:
Key 1: Understand the local labor laws.
Companies planning to expand globally benefit from thorough research on the labor laws of the countries they wish to operate in. Labor laws vary significantly by jurisdiction and can cover a wide range of employment areas, including employment contracts, working hours, wages, benefits, termination procedures, and employee rights. Ensuring compliance requires a comprehensive compliance review, which may include:
- Identifying key differences and similarities with home country labor laws.
- Analyzing the implications of local regulations on various aspects of the business, including recruitment, hiring, compensation, performance management, and termination.
- Utilizing online resources and databases, such as G-P’s Globalpedia, provides valuable information on labor laws and regulatory requirements across different regions, such as Europe, APAC, and the Americas.
With a strong knowledge of local labor laws, organizations can proactively manage risks and avoid gaps in compliance, laying a solid foundation for further business expansion.
Key 2: Develop a comprehensive compliance plan.
Developing a comprehensive compliance plan is a crucial step to maintaining adherence to local regulations throughout market entry and beyond. A well-designed compliance plan is a roadmap for ensuring your organization follows labor laws in each country or region of operation. It’s helpful to develop a checklist or matrix that clearly aligns your legal obligations to important health, safety, and wellbeing standards, as well as employment practices like minimum wage and overtime rules.
Other key steps to creating an effective compliance plan include:
Creation of a centralized digital handbook: A centralized handbook outlining global labor policies can ensure a consistent understanding and practice across your organization. HR teams can use the handbook to document employment-related matters and reflect local laws and regulations changes.
Customize policies to local requirements: Companies may have to modify the policies on working hours, overtime pay, leave entitlements, and termination procedures outlined in their home country to follow local regulations and meet employee expectations.
Build your plan around clarity and accessibility: Use plain language, avoid legal jargon, and offer the plan in multiple languages if needed.
Investing in a thorough, inclusive compliance plan can effectively address challenges on a global scale and promote a culture of accountability and transparency across the organization.
Key 3: Educate employees on local labor laws.
An in-house HR team will need extensive training on local labor laws to ensure effective compliance and enable informed decision-making. While it’s critical for business leaders and their HR and legal teams to understand and adhere to country-specific labor regulations, it’s also important for employees to know their rights and to set expectations.
Companies can build a solid educational foundation by offering:
Thorough employee education programs: Companies can share valuable information about employees’ rights and responsibilities under local labor laws through workshops, seminars, or online training.
Regular updates to training materials: Frequent updates to training programs and materials help employees remain aware of and adjust to changes in labor laws and organizational policies.
Reporting system for addressing concerns: Organizations can use dedicated channels for employees and their managers to raise issues and seek guidance around their concerns.
Companies can ensure compliance with local labor laws and foster a positive culture by educating their employees. When employees are empowered to drive compliance efforts, organizations benefit.
Key 4: Plan for managing ongoing changes to rules and regulations.
Labor laws are subject to frequent updates, so companies need to plan to manage these ongoing changes to ensure continued compliance. Key strategies for staying up to date with evolving local regulations include:
Regular monitoring: Companies will need to keep their compliance plans current with new regulations that may emerge and with changes to existing rules. Regular review of employment practices will help ensure the entire organization is current on laws known to change over time, such as minimum wage or tax rules. Actively reflecting these changes within the compliance plan helps everyone stay informed, and employees know their legal rights and responsibilities.
Organizations can stay informed about labor law changes by subscribing to legal publications, participating in industry forums, or leveraging online resources. One example is G-P’s Compliance Workbook for Global Hiring, which was created to help teams stay organized and on top of the key elements of compliance.
Establishing a system for timely updates: Companies can hire or appoint designated HR or legal teams to monitor regulatory developments and assess their impact on the organization. They can also partner with an Employer of Record to leave the complexity of monitoring labor laws and updating business practices to experienced legal experts.
Engaging with stakeholders: Effective monitoring of labor laws requires collaboration and communication with key stakeholders such as legal advisors, C-suite executives, and HR professionals. Any significant changes to labor laws that may impact employees’ day to day should also be communicated to managers, who can clarify or explain any team questions or concerns. They should also know who to direct their teams to for more complex queries or issues.
To maintain a culture of compliance and minimize legal risks, companies should proactively manage changes to rules and regulations in today’s complex regulatory environment. By doing so, they can adapt to evolving legal requirements and position themselves for success in the long run.
Key 5: Seek assistance from experts.
Companies can leverage local expertise to access valuable resources and specialized knowledge, allowing them to navigate complex compliance regulations and labor laws easily. Organizations can also benefit from partnering with global compliance experts like G-P to handle the complex aspects of achieving compliance, making the process more efficient.
Hiring teams and leaders can access expert guidance by:
Working with local legal counsel: Local employment law attorneys can help companies navigate labor regulations, address compliance challenges, and minimize legal risk. They provide advice tailored to the business and needs, review contracts, and represent companies in legal proceedings.
Consulting global hiring experts: Hiring experts with global growth experience can provide valuable insights and practical solutions for addressing compliance issues, including employee management practices, compensation structures, and global recruitment strategies.
Utilizing compliance tools: Global employment technology, such as G-P Meridian Suite™, can offer useful tools to help streamline the compliance process. For example, the G-P Employment Contract Generator automatically generates customized, legally compliant contracts based on local or regional requirements. These tools allow teams to hire globally quickly and easily while adhering to regulatory requirements across multiple jurisdictions.
Networking with local companies and industry associations: Networking can aid in knowledge sharing and collaboration among key players. Encourage leaders and employees to attend industry events and workshops for insights into local practices and emerging trends in the labor market.
Achieve global growth compliantly with G-P.
As the momentum for companies expanding globally builds, the need to understand and invest in rigorous compliance to stay within legal boundaries, foster employee trust, and drive long-term success is critical.
G-P has helped companies unlock new growth opportunities for businesses like ClickDimensions, Wondermove, Kraft Sports + Entertainment, and other ambitious companies for over a decade. With G-P as your partner, you’ll find the expertise and technology to find, hire, and manage a global workforce — with unmatched compliance.
If your company is seeking guidance on labor law compliance, book a demo to learn how G-P can help support your expansion and growth plans in 180+ countries around the world.
