As businesses scale globally, hiring international teams has become an increasingly popular strategy. Whether you’re tapping into specialist talent, expanding into new markets, or building a remote workforce, international hiring brings fantastic opportunities but can also bring legal complexities.
A vague or poorly drafted contract can leave your business open to disputes, compliance issues, and unexpected liabilities. Different countries have different employment laws, and a one-size-fits-all approach simply won’t cut it.
To help you get it right, here’s a practical guide to ensuring your employment contracts are legally tight when hiring international teams.
1. Choose the right employment structure
Before drafting a contract, you need to decide how you’re hiring. There are three common ways businesses structure international employment:
- Direct employment: You hire the person as an employee under your company. This typically requires setting up a legal entity in that country, which can be costly and time consuming.
- Employer of record (EOR): A third-party company employs the worker on your behalf, handling payroll, tax, and compliance in their country while they work for you.
- Independent contractors: You engage the person as a self-employed contractor rather than an employee. This avoids local employment obligations but comes with legal risks if misclassified.
Each option has pros and cons, and employment laws in the worker’s country will influence what’s possible.
2. Set clear terms in the contract
A strong employment contract is critical to protecting your business and ensuring clarity on both sides. Here are the key areas that must be covered:
- Job role and responsibilities: Be specific about what the employee is expected to do. This prevents disputes over role expectations.
- Compensation and benefits: Outline the salary, bonus structures, benefits, and any allowances (such as relocation or remote work requirements).
- Working hours and location: Some countries have strict regulations on working hours, overtime, and rest periods, so ensure you remain compliant.
- Termination and notice periods: Clearly define how the contract can be ended and what notice is required on both sides.
- Intellectual property ownership: If the employee creates anything as part of their role, ensure the contract states that IP belongs to your business.
- Confidentiality and non-compete clauses: Protect sensitive business information and ensure employees can’t immediately work for competitors after leaving.
Many companies make the mistake of copying and pasting contracts from one country to another. This rarely works, as employment laws vary widely.
3. Ensure compliance with local employment laws
Employment laws are heavily regulated in most countries, and failing to comply can result in fines, legal claims, or reputational damage.
Key areas to check in the worker’s country include:
- Minimum wage and pay regulations: Some countries have strict laws on minimum salaries, overtime pay, and holiday entitlements.
- Statutory benefits: Some benefits, such as pensions, health insurance, or parental leave, may be legally required.
- Tax and social security: In many countries, employers must deduct and pay tax and social security contributions on behalf of employees.
- Right to work and visas: If hiring internationally, ensure the worker has legal permission to work in their country.
Local laws take precedence over anything written in a contract, so if your contract contradicts local regulations, it may be unenforceable.
4. Handle cross-border payroll correctly
Paying international employees can be a legal minefield. You’ll need to consider:
- Currency and exchange rates: Will you pay in the employee’s local currency or another currency? Be clear in the contract.
- Payroll tax obligations: Some countries require tax to be deducted at source, while others expect employees to manage their own taxes.
- Payment methods: Some countries have restrictions on paying wages into foreign bank accounts.
Many businesses use global payroll providers or employer of record services to simplify compliance.
5. Protect your business with restrictive covenants
When hiring international teams, it’s essential to protect your business against risks such as employees leaving to join a competitor or taking confidential information with them.
Key clauses to include:
- Confidentiality agreements: Ensure employees can’t share or misuse sensitive business information.
- Non-compete clauses: Prevent employees from joining a direct competitor for a defined period after leaving. However, be aware that some countries don’t allow restrictive non-compete clauses.
- Non-solicitation clauses: Stop employees from poaching your clients, customers, or other team members after they leave.
These clauses must be drafted carefully to be enforceable under local laws.
6. Consider data protection and GDPR compliance
If your business is handling personal data from employees in different countries, data protection laws such as GDPR (for employees based in the EU) will apply.
Make sure your employment contracts include:
- How employee data is collected, stored, and used
- Who has access to personal data
- What data protection rights the employee has
Failing to comply with data protection laws can lead to heavy fines, so it’s worth getting expert legal advice.
7. Review contracts regularly as laws change
Employment laws evolve, and what was compliant when you first hired an international team member may not be in a year or two.
Regularly review contracts to ensure:
- They comply with updated employment laws
- The terms remain fair and commercially viable for your business
- They still align with your business growth and risk strategy
Final thoughts
Hiring international teams opens up incredible opportunities for businesses providing you get your employment contracts right.
At Jamieson Law, we specialise in helping businesses navigate the complexities of international hiring, ensuring employment contracts are legally tight and fully compliant.
If you’re planning to hire internationally and need guidance on structuring contracts, compliance, or risk management, book a free discovery call with us today.
