FAQs on Compliance: Your Questions Answered
Expanding your business globally provides tremendous opportunities for its growth and success. However, with those opportunities come complex compliance requirements and regulations that can vary significantly across different countries, markets, and regions.
To better understand the global expansion process from a compliance standpoint, we’ve put together answers to some of the most frequently asked questions businesses have regarding global employment laws and regulations.
1. What are the most common regulatory compliance requirements for businesses?
While specific requirements differ across locations and industries, some of the most common compliance regulations relate to:
Data privacy and security laws regarding consumer and employee information
Workplace health and safety rules and reporting
Environmental regulations around waste disposal, emissions, and sustainability reporting
Financial reporting rules for accounting, taxes, expenses, and more
Employment laws covering hiring, termination, workplace policies, benefits, worker classifications, local contracts, payroll systems, and much more
Additionally, specific industries have their own forms of compliance. For example, the UK has the Data Protection Act and UK GDPR to help ward off security breaches. In the U.S., there are US Privacy Act, the Freedom of Information Act (FOIA), FDA regulations in healthcare, SEC rules in finance, and communications laws for media companies. Requirements can also layer on at multiple jurisdiction levels, including federal, state/province, and local statutes.
With so many regulations to keep track of, it’s difficult for companies to get a solid handle on all compliance obligations as they relate to global expansion. A single misstep can lead to serious financial, legal, and reputational consequences.
2. How do you ensure your company is compliant with regulatory requirements in multiple countries?
Manually staying on top of varying interrelated regulations across different countries is extremely difficult, time-consuming, and risky. Therefore, partnering with an Employer of Record (EOR) service is the easiest way to ensure compliance across all locations regarding employment laws and your people operations.
A reliable Employer of Record (EOR) like Atlas helps you stay constantly up to date on varying employment laws and handle all compliance around hiring, payroll, benefits, terminations, worker classifications, employment contracts, workplace policies, and more based on each country’s specific regulations.
3. How can you ensure regulatory compliance when expanding your business operations overseas?
Expanding internationally can unlock a whole new avenue for growth in your business, but it also comes fraught with compliance risks around the various employment and labour laws that are specific to a country or region. Every region has its own regulatory nuances and statutes around employment and labor that are constantly evolving. So, how do you ensure compliance as you expand across different geographies?
You can start by thoroughly researching region-specific requirements—like permit quotas, language laws for employees, data localization rules, or specialized security protocols—that apply within your expansion footprint. Ultimately, ensuring compliance begins with understanding the baseline legal landscapes across the regions you want to enter.
You should also take a proactive approach to maintaining global compliance. For example, you can incentivize your HR teams to review your existing workplace policies and procedures routinely to ensure they align with ethics laws across the various regions in which your company operates. Similarly, you can adapt your company’s core values to more closely align with the cultural values and expectations of these regions.
If this sounds like a lot of work, that’s because it is. Trying to single-handedly handle multi-nation compliance without external guidance is both time-intensive and risky. However, an Employer of Record (EOR) service provider like Atlas can help you to hire, onboard, manage & pay global talent compliantly in over 160 countries.
4. How can you prevent worker discrimination in the global workplace?
Maintaining consistent workplace policies oriented around a robust equal opportunity framework is key to avoiding discrimination in the workplace. You should also familiarize yourself with any anti-discrimination regulations in the countries you’re operating in. Here are some actionable steps you can take to prevent worker discrimination:
Implementing a standardized code of conduct establishing zero-tolerance for workplace discrimination and harassment
Regularly training managers on equitable hiring practices, preventing biased decision-making, and fostering inclusion
Updating internal reporting procedures for employee concerns so that you can respond promptly
Ultimately, engaging in regular unconscious bias training and having reporting procedures where employees can voice worries confidentially are key for avoiding discrimination as your company expands internationally.
5. What are the most common compliance risks when expanding business operations globally?
Curious if you’re at risk of non-compliance? Some of the top compliance risks for global expansion include:
Misclassifying workers as independent contractors when regulations dictate they meet standards for full-time employment. This can occur when leaning on external consultants or freelancers to manage day-to-day operations or lead projects in different countries and regions.
Lacking locally knowledgeable HR, payroll, and compliance support results in errors around employment contracts, worker rights, payroll taxes, safety standards, etc., that violate regulations.
Inconsistencies between internally developed company policies that are focused on the headquarters country and local labor laws or cultural norms that cause issues. For example, at-will employment policies common in the U.S. often look different across countries.
Overall, the primary risks center around problems caused by companies applying their own country’s norms globally without consideration for local laws.
6. What penalties can you face for not maintaining global compliance in the workplace?
Workplace compliance penalties vary widely depending on countries, violation types, and severity levels but often include:
Back-payment of owed wages, overtime, benefits, etc.
Government regulatory fines from labor boards
Employee-initiated civil lawsuits and litigation expenses
Ineligibility for tax credits and incentives
Permit or license suspension
Temporary closing of operations
Loss of government contracts/support
Criminal proceedings and jail time in extreme cases
Additionally, fixes for non-compliance after employee relations fray can be costly. However, maintaining compliance proactively with the help of an EOR helps mitigate the legal, financial, and reputational risks from the start across all the regions in which you operate.
7. How can you stay up to date with changes to employment law in various countries?
Trying to single-handedly track legal changes across multiple countries and regions is nearly impossible. Even if you were to manually track these rules and regulations, your risk of noncompliance would only increase exponentially as your business scales.
Ultimately, partnering with a reputable global Employer of Record is the best way to stay up-to-date with changes in employment laws across regions.
Top worldwide EORs like Atlas monitor legal updates across regions in real-time and continually adjust international HR, payroll, and compliance services to align with laws in each country.
8. What are some best practices for avoiding common employment law issues globally?
There is no perfect answer to this question, as it depends on the region you’re asking about. However, general proactive measures you can take include:
Standardizing flexible remote work and paid time off policies across teams to comply with local laws and worker expectations.
Budgeting for potential overtime worker compensation.
Updating employee behavior guidelines and codes of conduct to prevent harassment and safety incidents before you continue to scale your business.
Overall, the #1 technique for sidestepping employment regulation problems as you scale globally is partnering with an established EOR firm from the start. Leaning on their expertise instead of taking risks handling HR, payroll, and compliance fully in-house will only set you up for success as you expand globally.
9. How do EORs ensure that a company's hiring, termination, and workplace policies are compliant with relevant laws and regulations in different countries?
EORs maintain in-house teams with deep expertise in constantly evolving local employment laws across different countries and regions. They consult regularly with specialized legal professionals across jurisdictions to interpret regulations and precedents properly.
By acting as the legal employer on your behalf, an EOR allows you to scale abroad rapidly without worrying about violating labor statutes or building large internal legal and global HR support teams. Put simply, leaning on proven EOR compliance infrastructure lets you refocus your energy on accelerating business growth instead of worrying about compliance risks.
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Disclaimer:
The information contained in this article is intended for informational purposes only and is not intended to be construed as legal advice. The content is provided as updated at the time it was published only without any warranty of any kind, expressed or implied. Atlas is not a law firm and the material provided should not be used in lieu of professional legal consultation. It is recommended that readers seek legal advice from a qualified attorney or legal expert for guidance on any legal issues addressed in this article. Atlas shall not be responsible for any damages or problems that may arise from the use of the information provided in this article.