Key Challenges for Expanding Global IERG Member Client Companies

Hedley Lawson
Hedley Lawson - Key Challenges for Expanding Global IERG Member Client Companies

In today’s digital age and with the continuation of business diversions, like COVID-19 and remote working teams, crossing international 

 

boundaries can happen as easily as clicking a link on a webpage. As the challenges of staying closely connecting around the globe increases, so too do the opportunities for employers to operate on a global scale. 

As I have found over my career when leading organizations in expanding to other countries in the ever-expanding global market, it is important for them to seek legal advice in each country where business is conducted to act consistently with required employment laws and practices of local employers.
Here are a few areas that I have found present key challenges that global employers should be proactively aware of:

Establishing a Global Presence. An organization seeking to expand globally needs to consider the type of business structure it will put in place to achieve its international objectives. The choice will depend on a number of factors, such as legal and tax issues, language and cultural considerations, and the degree of control the organization wishes to maintain over the international business. Some options worth considering when establishing an international presence include:

  • A joint venture;
  • Acquiring a business;
  • Setting up a new business;
  • Franchising internationally; or
  • Appointing an agent or distributor to conduct business on its behalf.
Always Upholding Ethical Operations Standards. It is vital to understand ethical business requirements, particularly with regard to fraud, bribery, and corruption, in whatever location a business operates. Do understand that there are strict enforcement laws in place to combat bribery, though enforcement methods and sanctions vary significantly by country.

An employer should establish a “Code of Ethics” that includes policies against bribery and conflicts of interest, take a zero-tolerance approach towards bribery and provide ethics training to its employees to help multicultural teams comply with legal requirements.

Diligently Planning International Assignments. The arrangement you choose for international assignments will depend on several factors, including the duration of the assignment, the objectives of the assignment, and country tax implications. An organization needs to decide what type of arrangement it will put in place when assigning an employee (and family) to work overseas, such as secondments (in which the home organization “loans” the assigned employee to the host organization), family benefits, transfer agreements and dual employment contracts.
 
The employer also should consider what factors will be important in making an international assignment successful, including the personality traits, “cultural shock” of working abroad for a long period of time, and experience and skills needed by the employee, including differences in language and cultures. Once selected, the terms and duties of the assignment, pay and benefits, family leaves, and arrangements for proper payment of taxes must be clearly set out and documented. In addition, training and support should be provided to prepare the employee and any accompanying family members for an international assignment.
 
Recruiting and Selecting a Workforce. The availability of a qualified work pool from which to hire is always a key factor to consider in determining where to grow internationally. One of the first steps I have found that an employer must take when expanding abroad is to ensure that there are sufficient employees with the relevant skills to build a competitive business in each respective geographic labor market.
 
When setting up a recruitment process, it is crucial to comply with a country’s antidiscrimination laws and follow best practices when sourcing candidates and the total compensation package offered to employees. Job offers and employment contracts should be reviewed to ensure they are binding under the laws of the country where individuals are employed.

Understanding and Ensuring Compliance with Country Industrial Relations. Most countries’ laws differ drastically from industrial relations (labor relations) in the US, where at-will employment is the norm. Even in regions where broad principles apply, such as the European Union, the precise legal framework may be very different between countries.
 
Because of the wide variety of country-specific requirements, a global employer must take into account several factors for handling industrial/labor relations issues in each country in which it operates. For instance, it should understand:
  • If and how employees are organized;
  • Requirements to inform or consult with employee representatives under specified circumstances (e.g., during a layoff or when acquiring or merging a business);
  • The role of unions in relation to terms and conditions of employment;
  • Any special legal protections that exist for unions; and
  • Circumstances in which industrial actions (such as strikes, boycotts, and lockouts) may be taken.
Ensuring Equal Employment Opportunity. Many countries have laws protecting employees from discrimination directly or indirectly linked to a protected characteristic. Protected characteristics vary from country to country, but age, gender, sexual orientation, race, disability, and pregnancy are often covered. Protection against harassment is also widespread.
 
Where discrimination is unlawful, the umbrella of protection is often wide. An employer may choose to adopt a global approach to equal opportunities by ensuring “Best Practice” legal observance, consistent standards across the organization.
 
Guaranteeing Employee Rights. Employee rights vary widely across the globe, so an employer expanding abroad may find that it has more legal obligations than expected. Some common employee rights around the globe include rest breaks, minimum wage, family leave, and a safe workplace.
 
Despite some common themes, the specific rights granted to employees can vary dramatically from nation to nation. Even doing business just across the US border with a familiar nation, like Canada, is rife with different legal rights for employees. And violations can carry stiff penalties, as Google found out when it was fined $57 million for violations of Europe’s data privacy protection laws.
 
Consistently Providing for Employee Health and Safety. As we all know, employers have a duty to protect the health and safety of their employees. Compliance with the national, and sometimes regional and local, health and safety laws should be a priority for employers conducting business in another country.
 
In some countries, a breach of health and safety law could lead to suspending the employer’s operations until the required standards are met, or the imposition of financial penalties. Even worse, failing to maintain good standards could result in serious injury to, or the death of, employees or members of the public. A multinational organization should take a global approach by adopting basic global principles and/or an organization-wide policy on health and safety.

When working with international client companies that have an interest in global expansion, I hope IERG members will find this information helpful and beneficial.
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