Top 5 Challenges for Employers in Business
Global mobility involves sending employees to different locations for various purposes, such as expanding into new markets, developing talent, and serving customers. Global mobility can offer many benefits for employers, such as access to a broader talent pool, greater employee retention, workforce diversity, and better insight into new markets.
However, global mobility also comes with some challenges and risks for employers, as they have to deal with various legal, financial, and operational issues in different countries. Risks associated with global mobility call for a proactive, sincere, and meticulous strategy to be addressed.
Some of the top challenges for employers in business related to global mobility are:
Compensation and payroll administration: Employers have to design and implement fair and competitive compensation and benefits packages for their globally mobile employees, considering the differences in living standards, exchange rates, tax regimes, and social security systems in different countries. They also have to manage the payroll and reporting processes for their employees, ensuring that they comply with the relevant laws and policies and avoid any errors or discrepancies.
Tax, social security compliance, and reporting: Employers have to ensure that they and their employees comply with the tax and social security obligations in both the home and host countries, which can be complex and dynamic. They have to calculate and withhold the appropriate taxes and social security contributions from their employees’ salaries and file the required returns and reports to the authorities. They also have to provide tax and social security advice and support to their employees and help them claim any reliefs or exemptions that they are entitled to.
Risk of creating permanent establishment: Employers have to be careful that their global mobility activities do not create a permanent establishment in the host country, which is a taxable presence of a foreign entity. A PE can be created by various factors, such as having a fixed place of business, having employees or agents acting on behalf of the entity, or carrying out core business activities in the host country. A PE can expose the employer to additional corporate tax liabilities, as well as reporting and auditing requirements, in the host country.
Complex labor laws and employment regulations: Employers have to comply with the labor laws and employment regulations in the host country, which can vary significantly from the home country. These laws and regulations can cover various aspects, such as working hours, overtime, holidays, sick leave, maternity leave, termination, discrimination, health and safety, and data protection. Employers have to ensure that they respect the rights and obligations of their employees and avoid any disputes or litigation that might arise from non-compliance.
Cost multiples and lack of financial overview: Employers have to manage the costs and benefits of their global mobility program and ensure that they align with their business and talent objectives. They have to consider the cost multiples, which are the factors that increase the cost of an assignment, such as relocation, travel, accommodation, compensation, benefits, tax, and social security. They also have to have a clear and comprehensive financial overview of their global mobility program and monitor and measure its return on investment and value for money.
Corporate managers who are in charge of employees’ overseas assignments must be informed, capable, and able to work closely and cooperatively with specialists. This will enable them to negotiate dangerous situations confidently, protect the health and safety of their workers, and fulfill the duty of care owed by their employers.
You can learn more about global mobility challenges in our webinar recording. Contact us if you need to know more!