October 3, 2013

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The HR Implications of Sending Workers Overseas

By Rachel Madison

October 3, 2013

In recent years, it has become more and more common for Utah-based businesses to operate completely out of the state or expand their organizations to foreign countries. Because of this, many business owners have questions about international human resources and properly managing employee benefits.

World Trade Center Utah held a seminar Wednesday for business leaders who work solely in foreign countries or are looking to expand their markets. Industry leaders from Utah-based businesses spoke to the group about the ins and outs of providing employee benefits and navigating the varying laws each country has when it comes to said benefits.

Richard Polak, executive vice president of Gallagher International Benefit Services, said not all employees, organizations, regions and reward programs are the same. He said every company needs to have a basic global philosophy, but they also need to understand the way different countries provide benefits.

Tax Considerations

One area that’s important to understand is tax considerations, said Stu Myhill, managing director of CBIZ. He said businesses have to ask, “If you send U.S. employees overseas, what are the impacts to those employees and what is the impact to your company?”

“Whenever you have a U.S. citizen go overseas to work for you, the first thing you look at is if they are in a country with a tax treaty with the U.S.,” Myhill said. “If the country doesn’t, whether or not they’re subject to tax as a worker in that country is up to local law. If they go into a country with a treaty, then you can look to the tax treaty and it’ll give you some rules.”

International Benefits

Tim Anderson, leader of the International Practice Group at Jones Waldo, said when it comes to international benefits, it’s important to remember that they differ from country to country.

“It’s a good idea to have good [legal] counsel in the country you are entering,” he said. “One small mistake [regarding benefits] can be a big one.”

Using Japan, Germany and Australia as examples, Anderson explained some of the differences.

In Japan, there are two different types of minimum wage; an offer letter is considered a formal, written agreement of employment; part-time workers have first dibs on full-time work when a full-time position opens up and vice versa; if an employee has worked continuously for six months and attended work 80 percent of the time, they are eligible for 10 vacation days; paid sick leave is not required; and there is no firing at-will allowed and employees must be given 30 days notice if they are fired.

“Being fired in Japan is very serious. You can hurt a person very badly when you fire them in Japan, more than in this country, so keep that in mind. They may not be able to find work for years,” Anderson said.

In Germany, there are no laws prohibiting discrimination during the hiring process; contracts must be signed by all employees; companies with more than 10 employees are allowed to form a worker’s council and any actions taken have to be run past the council; and typical work weeks are 48 hours long.

In Australia, employees work about 38 hours per week and several accommodations are made regarding leave, especially when it comes to pregnancy, children and families.

“Just because we do things differently in the U.S. doesn’t mean they’re doing it in a way that’s less effective than what we do,” Anderson said. “In many ways, employee rights are respected more in other countries than in the U.S. We can learn a lot as we expand globally.”

Employees Abroad

Thomas Whitaker, who oversees business development at Odyssey Relocation Management, said besides knowing the ins and outs of employee benefits and other HR duties, companies need to remember their employee is a person.

“In some cases, your relocating employee might feel like they’re going under the knife by going through all these changes,” he said. “It’s a people process, not just a process process.”

Whitaker said employees have to think about selling and buying a home, relocating their families, finding new schools for their children and adjusting to a new culture.

“Relocation is the most stressful thing you can go through, after the death of a loved one or divorce,” he said. “It’s physically and emotionally draining.”

Whitaker said another thing many companies don’t consider is the repatriation process employees go through when they return to the U.S.

“The process of coming home is actually more stressful than leaving,” he said. “Over 50 percent will leave your company after you’ve repatriated them because they’re so used to getting all these extra benefits and you bring them back home and they are just a normal employee. They feel demoted so they look for another opportunity. Don’t leave employees alone to do it themselves.”

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