Ask Atlas: A Practical Guide to HR Practices and Compliance in Europe
Expanding business operations into Europe requires a comprehensive understanding of the diverse and complex HR practices and compliance requirements across different countries.
In our recent Ask Atlas webinar — A Practical Guide to HR Practices & Compliance in Europe — our experts provided invaluable insights into key aspects of managing human resources across the continent, ensuring that businesses can navigate these challenges effectively.
Europe at a Glance
Europe presents a unique and varied landscape for HR practices due to its geopolitical, demographic, and technological trends.
Significant factors that shape the region include:
Geostrategic Changes: The concentration and sources of geopolitical power are evolving, with substantial implications for economic and labor markets.
Technological Acceleration: The rapid development of cutting-edge technologies like AI is influencing the job market and the skills required.
Demographic Shifts: Changes in population size, growth, and structure are impacting labor supply and demand.
Climate Change: Climate-related challenges are influencing policies and economic priorities, affecting industries and employment.
These factors create a dynamic environment that businesses must navigate to remain compliant and competitive.
Onboarding and Offboarding Employees
The process of onboarding and offboarding employees varies significantly between different European countries.
Below are checklists for three of the most popular European markets.
Germany
Onboarding Checklist
Requirement | Details |
|---|---|
Personal Identification | Valid passport or national identity card |
Social Security Information | Social security number for automatic registration with health insurance and pension schemes |
Tax Information | Tax ID (Steuer-ID) and Income Tax Card (Lohnsteuerkarte) |
Proof of Health Insurance | Registration with a statutory or private health insurance company |
Residence Permit | Valid work and residence permit for non-EU nationals; EU Blue Card recommended |
Bank Account Details | Necessary for salary payments |
Employment Contract | Outlines the terms and conditions of employment |
Educational and Professional Qualifications | Relevant diplomas and certificates |
Work Safety Training Documentation | Documentation showing completion of required safety training courses |
Offboarding Checklist
Requirement | Details |
|---|---|
Compliance with Notice Periods | Termination must respect the notice periods stated in the employment contract or statutory minimums |
Final Payroll Processing | Includes outstanding salary, accrued vacation days, and possible severance pay |
Certificate of Employment (Arbeitszeugnis) | Written reference detailing the employee's duties and performance |
Deregistration Requirements | Deregister the employee from social security, health insurance, pension schemes, and unemployment insurance |
Return of Company Property | Arrange for the return of company property such as ID badges, keys, equipment, and documents |
Data Protection | Ensure compliance with GDPR regarding the handling of personal data |
Spain
Onboarding Checklist
Requirement | Details |
|---|---|
Personal Identification | Valid passport or national identity card |
Social Security Affiliation Document | Register new hires with the Spanish Social Security system |
Tax Identification Number (NIF) | National identity number for EU nationals; Foreigner’s Identity Number (NIE) for non-EU nationals |
Work and Residence Permit | Required for non-EU nationals; EU Blue Card needed for highly skilled workers |
Bank Account Details | For processing salary payments |
Employment Contract | Should be in Spanish and detail the employment conditions |
Proof of Professional Qualifications | Relevant diplomas and certificates |
Offboarding Checklist
Requirement | Details |
|---|---|
Legal Framework for Terminations | Ensure compliance with Spanish employment law regarding dismissals |
Final Settlement (Finiquito) | Document summarizing all amounts owed to the employee at termination |
Notification Requirements | Written notice according to the terms specified in the employment contract or statutory minimum |
Social Security Notifications | Notify the Spanish Social Security of the termination |
Company Property | Ensure the recovery of company assets from the employee |
Compliance with GDPR | Handle all personal data according to GDPR guidelines |
United Kingdom
Onboarding Checklist
Requirement | Details |
|---|---|
Right to Work Documentation | Passport or national ID card for EU citizens; appropriate visa and work permits for non-EU nationals |
National Insurance Number (NI) | Necessary for participation in the UK's social security system |
Tax Information | P45 from the previous employer or a completed Starter Checklist |
Bank Account Details | For salary deposits |
Employment Contract | Detailing terms and conditions of employment |
Proof of Address | Sometimes required for background checks |
Emergency Contact Information | Generally requested for HR purposes |
DBS Check (Disclosure and Barring Service) | Required for positions involving work with vulnerable groups or certain regulated activities |
Offboarding Checklist
Requirement | Details |
|---|---|
Notice Period | Adherence to the notice periods as set out in the contract of employment or statutory minimum notice periods |
Final Pay | Calculation of final pay, including outstanding salary, accrued holiday pay, and redundancy payments if applicable |
P45 Form | Issuance of a P45 form summarizing tax deductions for the year |
Exit Interviews | Conducting exit interviews can provide valuable feedback and help resolve any outstanding issues amicably |
Company Property | Arrange for the return of company property |
Data Protection | Ensure the protection and proper handling of personal data under the UK Data Protection Act and GDPR |
Common Pitfalls in Payroll and Benefits Strategy
Designing a payroll and benefits strategy for an international workforce is a big challenge and organisation’s should be aware of the most common pitfalls, including:
Operating with Gross Pay: Employers must consider local tax liabilities and refunds, which are influenced by employees' locations, family situations, and income levels.
Negotiating Annual Packages: It is essential to include statutory and customary payroll elements, such as 13th and 14th-month salaries in Spain.
Local Benefits Awareness: Employers should be aware of statutory benefits like work-from-home allowances in the UK and Spain, and meal vouchers.
EU Framework Agreement for Social Security: Employers must ensure compliance with social security rules, especially when employees work across borders.
The Employer of Record (EOR) Solution
Atlas HXM offers an Employer of Record (EOR) service that simplifies global expansion by handling HR, tax, and compliance responsibilities in any country where businesses do not have a legal entity. Key benefits of using Atlas HXM's EOR services include:
Compliance: Ensures adherence to local laws and regulations, mitigating risks associated with non-compliance.
Cost Savings: Reduces the financial burden of setting up and maintaining legal entities in multiple countries.
Administrative Efficiency: Streamlines HR operations, allowing businesses to focus on strategic objectives.
Flexibility: Provides the ability to quickly hire and manage international talent without the need for local entities.
Case Studies: European Expansion in Practice
Clean Air Fund: A global philanthropic organization, the Clean Air Fund faced the challenge of rapidly setting up operations in several countries. The costs and time required to establish their own entities were prohibitive, so Atlas provided a tailored global hiring solution, ensuring a streamlined and fully compliant process. This partnership allowed Clean Air Fund to leverage Atlas's extensive global presence and expertise, significantly saving time and resources that could be redirected towards their mission of combating air pollution.
inDrive: A ride-hailing service operating in 655 cities across 48 countries, inDrive needed to address potential compliance issues with contractors and navigate complex labor laws across multiple regions. Atlas advised on the correct classification of contractors versus employees and assisted in transitioning contractors to employees to mitigate compliance risks. This streamlined their international people management, providing a single partner for operations across various jurisdictions.