Hiring Compliance: Essential Steps for a Legal Workforce

October 30th, 2023

Build a compliant workforce with expert insights into hiring regulations. Safeguard your business while recruiting top talent for sustainable growth.

Globalisation has completely transformed our work relations. The rise of remote work, the gig economy, and the increasing diversity of the workforce have reshaped the way businesses engage and onboard new talent.

In the past, hiring workers was limited to the same city or country where a company operates. Nowadays, companies can look beyond borders and expand their businesses by hiring people in different locations. While this possibility offers exciting opportunities, it also brings forth a host of challenges in the realm of hiring compliance.

Labour regulations, reporting requirements, payments, taxes, and benefits require companies to stay vigilant. Compliance is essential.

In this article, we will discuss some of the challenges in staying compliant when hiring employees – especially aboard – and how to prepare your company to face these challenges. Keep reading to learn more.


The main challenges for hiring compliance

Hiring remote workers presents several unique challenges for compliance, as it introduces a different set of considerations compared to hiring traditional in-office employees. 


Legal and regulatory compliance

Companies must adhere to employment laws and regulations that may vary by location. This includes minimum wage laws, overtime regulations, tax requirements, and workplace safety standards.

Ensuring compliance with the laws of the remote worker’s location can be complex, as these laws may differ from those in the company’s headquarters.

Managing taxes for remote workers can also be challenging. Different locations have various tax regulations, and employers may be required to withhold taxes, file payroll taxes, or comply with local tax laws. Failure to do so can result in legal and financial consequences.

To stay compliant, employment contracts must be customised to the location of each remote worker. These contracts should outline the terms of employment, responsibilities, benefits, and compliance-related clauses specific to the local legal framework.


Data privacy and security

Companies are often required to safeguard sensitive customer and employee data. Remote workers can introduce cybersecurity risks, especially if they handle such data from their own locations. Ensuring compliance with data privacy regulations, like GDPR in Europe or HIPAA in the United States, can be challenging.

If your business operates internationally and remote workers are located in different countries, the transfer of data across borders may be subject to legal restrictions. Understanding and complying with data transfer regulations is crucial.

Companies should require remote workers to encrypt data during transmission and storage to protect against eavesdropping and data theft. Encryption is vital for email communication, cloud storage, and remote access to the company network.

Remote workers also need training and guidance on cybersecurity best practices. Companies must invest in educating remote employees about the risks and the role they play in maintaining data security.

By taking a proactive approach to data privacy and security, businesses can protect sensitive information, reduce the risk of data breaches, and maintain compliance with relevant regulations while leveraging the benefits of remote work.


Tax compliance

Remote workers operating in different regions or countries can create complex tax implications. Employers may need to withhold taxes, file payroll taxes, or comply with local tax laws in the employee’s location. Failure to do so can result in legal and financial consequences.

Tax compliance is a significant challenge when hiring remote workers, primarily due to the complexity of tax regulations and the potential need to adhere to different tax laws across various jurisdictions.

Employers are typically responsible for withholding income taxes from employees’ pay cheques and remitting them to the appropriate tax authorities. This process can be intricate, as rates and rules can differ based on where the remote worker is located.

Compliance requires accurate calculation, withholding, and timely remittance of these taxes.

In addition to income taxes, businesses may also have payroll tax obligations. The rules for determining which jurisdiction’s tax rates apply can be complicated when dealing with remote workers.

Providing benefits to remote workers can create complex tax implications. The tax treatment of benefits, such as health insurance or retirement plans, can vary depending on local tax laws.

Navigating the complexities of tax compliance with remote workers is essential to avoid legal and financial repercussions. It’s crucial for businesses to work closely with tax experts, maintain accurate records, and ensure that remote workers are aware of their responsibilities when it comes to taxation.


Work hours and overtime

Compliance with overtime laws, especially in cases of non-exempt employees, is crucial. Implementing time-tracking tools and clear policies is necessary.

Managing work hours and overtime for remote workers can be a challenging aspect of compliance, primarily due to the flexibility inherent in remote work arrangements.

Remote workers may be located in different time zones, which can complicate scheduling and tracking work hours. This can lead to miscommunication and create difficulties in coordinating work across multiple time zones.

Determining which remote workers are eligible for overtime pay under labour laws is crucial. Exempt vs. non-exempt employee classifications and understanding the rules surrounding overtime can be complex.

Ultimately, maintaining compliance with work hours and overtime for remote workers involves a combination of clear policies, proper tools, effective communication, and ongoing monitoring to ensure that remote employees are fairly compensated while adhering to legal regulations.


Labour laws and employment contracts

Different regions have various labour laws, and employment contracts may need to be adapted to local regulations. Compliance with these laws can include issues like notice periods, severance pay, and employee rights.

Labour laws govern various aspects of employment, including minimum wage, working hours, rest periods, overtime, and leave entitlements. Compliance with these standards can be challenging when remote workers are subject to different rules based on their location.

Furthermore, employment contracts must be tailored to each remote worker’s location. This requires careful drafting and customisation to ensure legal compliance.

If remote workers are in different countries, additional challenges related to work permits, visas, and international labour laws come into play.

Managing labour laws and employment contracts for remote workers requires a comprehensive and proactive approach to ensure that the company adheres to legal standards while providing a fair and equitable work environment for remote employees.


Health and safety

Ensuring that remote workers have a safe and healthy work environment is crucial. Compliance with workplace safety regulations may involve ergonomic assessments and adherence to safety standards, even in remote settings.

Remote workers operate in a decentralised manner, often without direct oversight by their employers. This means that employers may have limited visibility into the work environment, including the safety conditions in the remote worker’s home office or chosen workspace.

Employers need to ensure that the remote worker’s home office or workspace complies with safety standards. This includes proper lighting, ventilation, electrical safety, and fire safety precautions.

Health and safety also encompass mental well-being. Isolation and the blurring of boundaries between work and personal life in remote work arrangements can lead to stress, anxiety, and burnout. Employers must support the mental health of remote workers.

By prioritising health and safety in remote work arrangements, employers can create a safe and supportive environment for remote workers while mitigating the associated risks and legal obligations.


Employee benefits

Offering benefits to remote employees, such as healthcare, retirement plans, or stock options, may have different requirements and tax implications based on the worker’s location. Ensuring equal and fair access to benefits is a compliance concern.

Administering benefits for remote workers can be more challenging than for in-office employees. The process may involve working with various benefits providers and ensuring that remote workers can easily enrol and manage their benefits.

Benefits, particularly healthcare and retirement plans, can be a significant expense for employers. Balancing the cost of benefits with the need to attract and retain remote talent is a challenge.


Non-discrimination and equal opportunity

Remote work arrangements should not create discrimination or inequality. Ensuring equal opportunity and non-discrimination, including addressing accessibility for remote workers with disabilities, is essential.

It is important to keep in mind that different locations may have their own anti-discrimination laws and regulations that protect employees from discrimination based on factors like race, gender, age, religion, disability, and more. Employers must understand and comply with these laws.

Implicit bias can be a challenge, as remote workers may not have the same level of visibility as in-office employees. Managers and colleagues may form judgments based on limited information, leading to unconscious bias that can affect promotions, assignments, and opportunities.

Ensuring non-discrimination in the recruitment and hiring process is critical. Remote workers should have equal access to job opportunities and face no discrimination during the hiring process.


Communication and collaboration

Maintaining open communication and collaboration with remote employees can be challenging. It’s important to ensure remote workers receive the same information and training as on-site employees to maintain compliance with company policies.

In a physical office, spontaneous conversations, brainstorming sessions, and quick consultations occur naturally. Remote workers may miss out on these impromptu interactions, which can stifle creativity and innovation.

Effective communication and collaboration often rely on technology. Remote workers need access to reliable communication tools, video conferencing platforms, project management software, and collaboration systems. Ensuring consistent access and training can be a challenge.

For this reason, communication in remote work settings must be clear and concise, as misinterpretations can occur more easily without face-to-face interactions. Employers and employees need to be effective communicators, using written and verbal communication appropriately.


Compliance reporting

Remote workers may not be as visible as on-site employees, which can make it harder to monitor their compliance with company policies. Ensuring remote workers have clear channels for reporting any compliance issues is important.


How to ensure compliance with remote hiring

To ensure compliance when hiring remote workers, businesses need to establish comprehensive strategies and practices that address the unique challenges associated with remote work. 

Regularly reviewing and adapting compliance strategies will help to keep remote work arrangements in line with the evolving regulatory landscape.


Legal and regulatory review

Consult with legal counsel to understand the labour laws, tax regulations, and other employment-related legislation in the locations where your remote workers are based.

Regularly update your compliance strategy to adapt to any changes in laws or regulations that might affect remote work.


Clear employment contracts and agreements

Create employment contracts that are tailored to the specific location of the remote worker. These contracts should include all relevant legal and compliance clauses.

Ensure that employment agreements clearly outline the expectations, job responsibilities, working hours, and any relevant compliance requirements.


Data privacy and security

Implement strong cybersecurity measures to protect sensitive company and customer data. This includes data encryption, secure access controls, and regular cybersecurity training for remote workers.

Ensure compliance with data protection regulations such as GDPR, HIPAA, or CCPA by creating data handling policies and procedures that remote workers must follow.


Tax compliance

Work with tax professionals to understand the tax implications of hiring remote workers in different regions or countries.

Ensure that payroll processes are adapted to account for the specific tax requirements in the remote worker’s location.


Work hours and overtime

Use time-tracking and productivity monitoring tools to accurately record remote workers’ hours and ensure compliance with overtime regulations.

Establish clear policies on breaks, meal times, and work hours, and communicate these to remote workers.


Labour laws and benefits

Be aware of local labour laws and adapt your HR policies and benefits packages accordingly. This includes understanding notice periods, severance pay, and other local employment regulations.

Offer remote workers benefits that are in compliance with local requirements and communicate these benefits effectively.


Health and safety

Conduct remote ergonomic assessments to ensure remote workers have a safe and comfortable workspace.

Educate remote workers on health and safety standards and provide guidelines for reporting any safety concerns.


Non-discrimination and equal opportunity

Maintain a commitment to non-discrimination and equal opportunity for all remote workers, just as you would for in-office employees.

Ensure that remote workers have access to any reasonable accommodations required by law.


Communication and collaboration

Establish clear channels for communication with remote workers and provide regular updates on company policies and procedures.

Use collaboration tools to ensure remote workers have access to necessary information and training.


Compliance reporting

Create reporting mechanisms for remote workers to raise compliance concerns or report any potential violations.

Ensure that concerns are addressed promptly and follow up with appropriate actions.


Regular training and education

Provide ongoing compliance training to remote workers to keep them informed about regulations and company policies.

Use e-learning platforms and webinars to reach remote employees.


Periodic audits and assessments

Conduct periodic audits of your remote work compliance program to identify areas that may need improvement or revision.

Seek feedback from remote workers about their compliance-related experiences.


Final thoughts

Hiring professionals abroad is an amazing opportunity to expand businesses and work with talented people beyond borders. However, the hiring process comes with a series of challenges.

Navigating the complex landscape of tax regulations and labour laws might be daunting, but with the right partner, this challenge becomes more manageable. At Briars Group, we are experts in international business services and global expansion, which means we can help your company grow abroad and hire employees in different countries while staying compliant with local laws.

Working with a specialised company like Briars can help you manage all the concerns we have listed in this article while also fostering growth and development. Contact us to learn more about how we can help your business when it comes to hiring compliance.

Amanda Simon

Amanda is our Chief People Officer and joined in 2022 with over 30 years HR experience focused on International Consultancy services. As a member of the Executive Leadership Team she is responsible for HR and Payroll services and internal HR strategy. Amanda has CIPD, FedEE and SHRM certifications to support her technical knowledge and has a passion for improving employee engagement. Amanda spends much of her spare time with her family, including 5 grandchildren, her role it seems is to provide snacks, food and the odd taxi service! When she is able, she prefers winter sun breaks to get away from the harsh UK weather!