Global Employee Relocation: A Guide For Employers

Moving is a hassle. Research tells us that it’s actually one of life's most stressful events, on par with job loss, illness, and divorce. Getting everything together can take a toll, from packing up your belongings to coordinating all the logistics and more. 

Employee relocation has its own set of stressors, especially when you’re doing it on a global scale. Moving an employee across the world is definitely a step above moving them across the city. 

Compliance with legal and administrative requirements adds an extra layer of complexity to employee relocation. However, it’s an essential piece of the puzzle, along with other specifications that should be considered. Keep reading to learn how to mitigate risks and ensure a smooth international corporate relocation process from start to finish. 

What is employee relocation? 

Employee relocation is when a company moves one of its employees to a different location, like another city or country, for work-related reasons. This move can be temporary or permanent and often comes with support to help the employee adapt.

Why Companies Relocate Employees

Companies have several reasons for relocating employees. Firstly, they may need to open new offices in different locations, and relocating employees can help establish the company's presence there. 

Secondly, companies might relocate employees to gain access to specialized skills or knowledge that are crucial for specific projects or tasks. 

Thirdly, short-term projects in different places may require temporarily moving employees to increase efficiency and handle them effectively. Fourthly, relocating employees to areas with lower living costs can save the company money. Moreover, expanding into new markets often involves relocating employees to understand local business conditions and establish connections. 

Lastly, strategic realignment, mergers, or acquisitions may be a push for employee relocation. It can help ensure your company stays competitive and aligned with its goals. Overall, employee relocation serves as a strategic tool for companies to achieve various business objectives and long-term company goals.

How it Works

The process of employee relocation starts when the company makes a formal job offer to the employee. After the offer is accepted, the company handles tasks like finding a place to live and dealing with paperwork. 

They may also provide support services like helping the employee adjust to the new culture and financial assistance. The employee continues working in the new location, and if it's a temporary move, there's often a plan for them to either return to their old job or find a new one within the company.

Different Types of International Corporate Relocation

When your employee is going to work in a different country while your company is based in another, it's important to figure out which type of relocation to rely on. There are typically three main types. 

Travel Relocation

This is usually a temporary move, lasting a few months to a year, and always has a set end date. Travelers usually hold visas like tourist or business visas, which determine the kind of work they can do.

Short-term Relocation

Here, the employee becomes a resident of the new country for a fixed period, but it's not forever. It's different from travel because there's no specific end date, and the employee is considered a resident.

Long-term Relocation

This is when an employee moves to another country for an extended period, a year or more, or even indefinitely. The big difference from short-term relocation is that there's no clear end date. Long-term relocating employees become residents, and the specific type of residence can vary by country. 

It involves dealing with immigration, taxes, and local labor laws. No matter how long your employee will be in another country, it's crucial to know the laws and rules that will apply to your employment relationship to make sure everything goes smoothly and legally.

Things to Keep in Mind

Global hiring isn’t easy. That’s why companies around the world rely on Employers of Record (EORs) like Borderless AI. We help you handle the complexities of hiring, onboarding, paying, and managing your global team members so you can focus on scaling and growing. 

Now, employee relocation takes it one step further. There are a number of things to keep in mind, from navigating immigration to understanding employment laws and more. That’s why we’ve put together this handy dandy guide to walk you through the process. 

Visa and Immigration 

To start, it’s important to set time aside to go through the visa and immigration requirements of the country your employee is relocating to. Make sure to identify the appropriate visa category for their destination country. 

For example, suppose your employee is moving to Germany. In that case, they may need a Blue Card for highly skilled workers, a Job Seeker Visa if they are searching for employment, or a Student Visa if they plan to pursue higher education while working part-time. 

Once you identify which visa you need to apply for, make it a top priority to ensure all visa applications and related documentation are completed accurately and submitted within the specified deadlines. Make sure to follow the laws to a T regarding how many employees can move, how long it takes to get things done, and the fees you have to pay. This helps make your employee's move go as smoothly and hassle-free as possible. 

Employment and Labor Laws

If you follow our blog, you likely have some understanding of how important it is to adhere to the employment and labor laws of the country your employee is working in. This is the case whether you hire from abroad or relocate your employee. Compliance with local employment and labor laws is paramount regardless of the situation. 

If you choose to go about it on your own, you need to get up to speed on the laws and regulations to create employment contracts that match up with the local labor laws. This means thinking about how long employees can work, what perks they should get, and how you can end their employment while ensuring everything follows the law.

Taxation

As you know, taxes can be a headache. However, they’re a necessary part of employee relocation. You need to evaluate the implications of relocation for you, the employer, and your employee. This means taking a very close look at your tax obligations in both your employee's home country and host country. 

Make sure to understand the accurate withholding and reporting of taxes. In some cases, implementing tax equalization or tax protection policies may be necessary to manage financial aspects effectively.

These strategies help make sure that taxes don't cause unexpected financial issues. They aim to keep things fair, especially when employees work in different countries, so nobody pays way more or way less in taxes than they should. It's like a financial safety plan.

Social Security and Benefits

Make sure to ensure strict compliance with your host country's social security and benefit regulations. This means understanding and following the rules regarding contributions and eligibility criteria. 

To achieve this, it's essential to carefully review and adjust your employee benefits packages. This ensures they align with both local legal requirements and customary practices.

In simple terms, you need to understand and follow the social security and benefit rules in the host country. This includes reviewing and adapting employee benefits to local laws and customs. It's all about making sure you're doing things right and taking care of your employees.

For example, let’s say your employee is relocating to Mexico, where the law mandates the payment of an annual 13th month salary, also known as the "Aguinaldo," equivalent to at least 15 days' salary. As an employer, strict compliance is crucial. You need to understand not only the calculation of this bonus but also the eligibility criteria, which generally include employees who have worked for at least one year.

Ensuring that this "Aguinaldo" bonus is paid accurately and on time is not only a legal requirement but also a crucial part of employee compensation in Mexico. Failing to adhere to these regulations can lead to legal issues and dissatisfaction among employees. Thus, understanding and following the rules regarding the "Aguinaldo" bonus is essential to maintain compliance during your employee's international relocation to Mexico.

Employee Relocation Package

An employee relocation package is a vital component of the global mobility checklist for companies that have employees relocating. These relocation packages are designed to facilitate a smooth transition for employees who are moving to a new location for work. They encompass a range of relocation benefits and services to ease the process.

Relocation costs can vary widely depending on factors such as the destination, distance, and the employee's specific needs. Employee relocation packages typically include provisions for temporary housing to provide employees with a comfortable place to stay while they settle into their new surroundings. This aspect of the package is crucial in ensuring a smooth transition and reducing the stress of the move.

A well-defined relocation policy outlines the guidelines and procedures for managing relocation expenses. To streamline this process, many companies work with a relocation management company that specializes in employee relocation services. These experts in the employee relocation industry help manage all aspects of the move, from finding temporary housing to coordinating the transportation of belongings.

Offering a competitive relocation package is essential for attracting and retaining top talent, particularly when it involves international or long-distance relocations. By providing comprehensive relocation assistance and benefits, companies can give their employees the support they need during the transition. The overall goal is to contribute to their satisfaction and productivity in the new location. 

Currency

Keeping an eye on currency exchange rates and ensuring clear payment systems in the local currency helps mitigate financial challenges that may arise during the relocation process.

Work Permits and Authorizations

You need to get your hands on the right work permits and authorizations to ensure your employees can legally work in the country they’re relocating to. This means dealing with complex rules and processes to meet all the requirements for working legally.

Compliance with Export Controls and Sanctions

It's important to make sure that what your employees do doesn't break any export laws or sanctions against certain countries. For example, let’s say your company sells specialized software used in healthcare. You have customers worldwide, including one in a country under sanctions. If your sales team engages with this client without understanding export laws, it can lead to legal trouble and harm your company's reputation.

To prevent this, educate your team, check potential clients thoroughly, and establish clear processes to ensure all transactions comply with the law. This safeguards your organization and upholds ethical business practices globally.

Health and Safety Regulations

Make sure you follow the local health and safety rules every step of the way. It's about creating a safe and comfortable workplace for your relocated employees. This can have a big impact on their sense of well-being in their new home. 

Documentation and Record-keeping

To maintain transparency and accountability during the relocation process, make sure to keep thorough records of compliance-related documents. This can include visa applications, employment contracts, tax records, and benefit plans. Having these records on hand keeps you prepared in the case of any hiccups or legal issues cropping up. 

Data Privacy and Security

During employee relocation, compliance with data protection and privacy laws is crucial. This means securely handling sensitive data, following legal rules, and building trust. By maintaining strict compliance, you reduce risks and ensure the safety of both your employees and the company's data. 

Insurance and Healthcare

Ensuring your employee's health insurance matches the host country's healthcare system is crucial. It keeps things legal and ensures they have easy access to medical care. Plus, it saves money and keeps everyone happy. It also lowers risks and offers reliable coverage. In short, it's a smart move for a smooth relocation.

Repatriation and Exit Planning

Create a clear plan for your employees' return home after their international assignment is over if it has an end date. This plan should address tax responsibilities and legal requirements to help your employee avoid unexpected financial or legal issues. The goal is to promote a hassle-free return to their home country.

Legal Consultation

Navigating international employment laws can be tricky. That's where legal experts come in. They specialize in international employment law, helping you avoid legal troubles and stay compliant.

When disputes or issues arise, legal experts are there to guide you through negotiations, mediation, or litigation, ensuring a speedy resolution.

 Another benefit of working with legal professionals is that they will keep you updated and on track of ever-evolving employment laws.  Legal experts will give you peace of mind and ensure you're always on the right side of the law.

Communication and Transparency

Effective international employee relocation hinges on clear, honest, and open communication. This means discussing your employee's rights, job duties, and any changes to their employment terms in the country they’re relocating to.

This will help your employees feel informed and secure. It’ll also help build trust, avoid misunderstandings, and ensure the transition is as easy as possible. 

Ongoing Compliance Monitoring

When your employee relocates, it’s crucial to follow the rules. You need to keep an eye on the laws in both your company’s home country and the new country your employee is moving to.

Laws can change, and you need to be mindful of these changes to ensure the relocation process always follows the latest legal requirements. For example, tax laws can be updated, affecting how taxes are handled for both the employee and the company. Labor laws and immigration rules can also change, affecting the employee's legal status and work rights, among other things.

Monitoring these changes helps reduce the risks of issues and fines during the relocation process. It ensures that everything goes smoothly and according to the law, which benefits both the employee and the company.

Simplify Employee Relocation with Borderless AI

Borderless AI enables businesses to compliantly hire and manage talent worldwide without establishing a foreign entity. We alleviate the complexities and risks associated with hiring global employees with zero deposits, dedicated in-house support, and AI-powered global employment law resources.

Get in touch with our team and we’ll take care of your employee relocation needs. 

_Disclaimer

_{Borderless does not provide legal services or legal advice to customers, contractors, employees, partners, or the general public. We are not lawyers or paralegals. Please read our full disclaimer here.}

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