Expanding internationally: How to Hire and Employ Workers in Another Country

Before entering a new market, it is vital to consider the regulatory and cost hurdles associated with employing workers overseas. Every country has its own employment laws to contend with, which can be daunting for even the savviest business leaders and a major obstacle to expand across borders.

PEOs provide various services related to human resources (HR) management, such as payroll processing, benefits management, and regulation compliance. PEOs operate in a co-employment relationship with their clients, by including the clients’ workers on their own payrolls. In such a relationship, PEOs become employers of record for tax and insurance purposes. PEOs exercise some decision-making in HR management; at the same time, they share legal responsibilities as co-employers. The workers whose payrolls are moved to PEOs are often referred to as “leased employees” because, on paper, they work for the PEO and are leased back to the client firm.

PEOs: Your Best Allies When Expanding Internationally

As a successful business owner, it is only a matter of time before you map out a plan for your expansion. As part of your market-entry strategy, you will be likely to explore all the advantages and pitfalls of establishing a satellite office abroad and therefore creating a legal entity for your company in another country. With these options comes the hefty task of understanding and complying with local employment law and trading regulations. In many cases, such operations are time and resource-intensive, especially if you are considering moving to a country with a different official language than yours.

If you’re unsure about managing payroll overseas, onboarding new employees or completing visa applications, a Professional Employer Organisation can take full responsibility for all employment issues, improving cost structures and reducing risk by keeping you on the right side of compliance. 

Managing your Workforce: How to Make the Right Choice

When engaging the service of a PEO, you can come by two main types of organizations; a Global PEO (also known as an International PEO) or a Local PEO (or Domestic PEO). Both International and local PEOs offer a level of convenience and efficiency you won’t find anywhere else for your international expansion, but International PEOs do have several limitations you should be aware of.

INTERNATIONAL PEOS

An international PEO operates in multiple countries: if you’re thinking about expanding into multiple countries and only wish to use one supplier, then you might be inclined to approach an International PEO. 

However, most international PEO don’t have the level of familiarity to a specific market as a local PEO, who’ll have robust systems in place to receive real-time employment legislation changes, as well as changes in working conditions. International PEOs often don’t even have fully owned operations and subcontract with a local PEO in the country you’re expanding into in order to place your employees. This means you’re ultimately going with a local PEO, but likely paying a higher price for it.

DOMESTIC PEOS - LOCAL EXPERTS 

A local PEO (or Domestic PEO) is one that operates in one country and serves only businesses looking to expand into that country. They will have one head office with a team of dedicated HR experts serving the local market. 

A local PEO is on the ground in your country of expansion and works on the same or similar time zones as your employees, being able to offer a level of support to your workers when they need it the most and basically acting as an extension of your business.

Most local PEOs will also support custom benefits that might be required for your team and help you plan for a benefits package that is tailored to the specific country laws and optimize tax efficiency.

BRIDGE IN - Your Local PEO in Portugal

GROW AT YOUR OWN PACE WITH OUR LOCAL PEO, EOR AND SOFT-LANDING SERVICES

When you are entering regions and territories where you have no experience operating and in-depth knowledge of the regulatory framework, miscalculating timelines, and underestimating potential costs are common mistakes. A general rule of thumb is that no matter where you are looking to gain an international presence, everything will take more time and be more expensive than you think. 

Many organizations choose to avoid or postpone investment in entity setup until they have justified the timeline, expense and corporate tax structure it entails. They use BRIDGE IN as a solution to hire employees and “test the waters” in new markets, so that when business grows and the cost of an entity can be justified, employees can be seamlessly transferred to the new local subsidiary while BRIDGE IN still takes care of payroll processing and HR functions.

Other organizations, wary of the tax presence and large financial investment required to set up an entity, rely on BRIDGE IN exclusively for fulfilling their employment needs in Portugal. Get in touch now and get a solution tailored to your needs.