How to Overcome Legal and Compliance Challenges to Global Growth: A Fireside Chat with Semperis

Many experienced leaders now find themselves taking advantage of the fast and compliant expansion solution an Employer of Record (EOR) provides. By removing the need to set up an entity, companies no longer have to stress about global compliance and constantly changing employment laws that can complicate the global growth journey.

In our eBook, “2024 Global Growth Guide: Strategic Alignment for Executive, HR, Finance, and Legal Leaders,” we discuss the differences between navigating global expansion alone versus using an EOR. Regardless of the path you choose, global expansion requires strategic alignment and collaboration from every department — from Executive to HR, Legal, and Finance. 

Nicole Forbes, Deputy General Counsel at G-P, sat down with Lisa Furman, Associate General Counsel from Semperis for an insightful webinar that dives specifically into some of the legal hurdles that come with global growth and how partnering with an EOR can help overcome them.

Legal considerations: entity setup vs. EOR

Forbes: When you think about global expansion now, what are the things that you’re thinking about in terms of weighing out whether to set up an entity in a particular jurisdiction or whether to utilize an EOR?

Furman:  Setting up subsidiaries in many countries takes a lot of time, and G-P is a really cost-effective, manageable way to manage the resources that are available globally.

The number one consideration and factor that I would say to partner with an EOR from a legal perspective is the expertise with local labor laws, understanding of employee rights, local customs, and culture — and G-P has the expertise.

Then on top of having additional resources internally, [setting up an entity requires] going to outside counsel, and the fees there would be very expensive.

Forbes: It’s definitely a big lift in terms of time and money to go the route of setting up an entity in-country. What do you think are some of the other considerations specific to the legal field with partnering with an EOR?

Furman: In addition to the expertise, the cost factor of setting up subsidiaries, and the tax filings, there are so many other considerations that need to be taken into account. 

I’ve heard of an instance where a company just didn’t know what to do, so they went out and formed a whole bunch of subsidiaries in like 25 countries, and they only had two or three employees. And they realized it was not manageable. It was not cost-effective. They had to unwind all of what they had done, and they then ended up going with an EOR.

I like to learn from other people’s mistakes. I’m just very glad that Semperis chose G-P in their path of success.

How G-P helps drive global growth for Semperis

Forbes: Which products or features that G-P offers do you think have made a difference in your global growth journey?

Furman: One thing is the Employment Contract Generator. And if the contract needs to be in a foreign language other than in English, it’s automatically done for us. 

Additionally, everything is done seamlessly for us. There are so many laws that we are not aware of. One of the things that I recently have been introduced to is something called a 13th-month bonus, which is a mandated benefit in certain countries, and in others it’s just customary. I had never heard of that.

G-P educates us on all the changes in laws and understanding what the existing laws are, which is time-consuming. So that’s been a great service that G-P brings to the table as well.

Crafting a global strategy

Forbes: Managing expectations for stakeholders and making them understand you can’t apply a U.S. strategy to all of the international workforce can be tricky. One of the areas where I think there’s the potential for increased risk to companies is offboarding an employee, and terminating the employment relationship. 

What has been your experience in terms of facilitating offboardings of any professionals that you’ve used an EOR to employ?

Furman: The process has been made much simpler by having G-P as the facilitator. In each country, the laws are different and the requirements are different. So G-P has basically laid out all of the requirements and explained the process to Semperis.

Advice for legal professionals looking to expand globally

Forbes: In some instances, we see companies when they don’t have an entity in a particular country or haven’t yet heard of the Employer of Record model, they’ll hire workers in a different jurisdiction as an independent contractor. What are your thoughts from the legal perspective on that strategy?

Furman: So we actually have looked at this in the past, and there is a risk with misclassifying an independent contractor that could actually be considered an employee. There could be fines and other actions taken against the company, even as a U.S. company.

In some instances, there could be criminal charges that could be brought in, so there is a risk, and taking the right route in our case was using G-P’s EOR [solutions].

Forbes: Even if it starts off as an independent contractor relationship, I think the EOR model is a good one to provide an employment relationship and those employment protections and benefits to employees.

So looking forward, what advice would you give to others in the Legal profession that are looking to expand globally with the help of an EOR.

Furman: I would say, first and foremost, align with your Finance and HR teams and create a really good strategy — short-term and long-term. What are you looking to do short-term in the next three to six to nine months? But also, have a long-term plan for the next three to five years.

Some of the things that you really need to be conscious of are IP transfers. If you have people in a certain jurisdiction and they are with one subsidiary, and then your five-year plan says, we’re going to consolidate everything and it’s going to no longer be in France; it’s going to be in the U.S.,” you might have an IP transfer and then you’ve got problems.

Another potential risk that people might not think about is permanent establishment risk. So those are things that you need to be conscious of and consider as you’re developing a new strategy.

Don’t let the stress of compliance slow your plans for global success.

Navigating global expansion alone is difficult, but with an EOR like G-P by your side, you don’t have to. We help companies overcome the many challenges that arise throughout the global growth journey, including legal hurdles. 

With our global team of HR and legal experts, you no longer have to decipher ever-changing labor laws or spend time and resources setting up entities.  

For more insights into the legal challenges of global expansion, check out our full conversation with Lisa Furman from Semperis. If you’d like to know more about how to hire, onboard, and manage global teams, quickly and compliantly, contact us or request a proposal.