Problems with Hiring a Foreign National for Short-term Assignments

Foreign Worker Logistics

If you're a young entrepreneur who owns a business, you know how much work and willpower it takes to get there. But starting a business is not the end of the road. It won't grow by itself - it needs to be carefully maintained. After you've built your killer office, the next step is to fill it with killer employees. And there's always a chance you won't be able to find people with adequate knowledge or set of skills in your own country, which means that you'll probably have to hire some foreign experts.

While real experts are always proud to be called overseas, most of them don't like the idea of abandoning their families for a couple of years, especially if small children are involved. Even if you could make it possible financially for their families to tag along, most spouses and children are not crazy about being uprooted. Some people are not that attracted by the possibility to gain a new perspective and learn a new language, especially if they're in the middle of building a life of their own.

Luckily, due to an overall global rise in business travel, in recent years a new approach emerged - an option of short-term assignments that won't make a family stay alone for too long. Not only this tactic is more bearable for the employee since it's less disruptive to the family, but it's also much less costly to the employer.

Nevertheless, these significant changes in business activities are getting increasingly difficult to define and track in accordance with the scope of regulations such as employment, tax, and immigration laws. In order to keep pace with an internationally mobile workforce, you need to account for these risks by rethinking how you'll structure the employment process, policies, and arrangements accordingly.

The Demands

In order to meet the needs of your foreign experts with short-term tasks, you'll need to go a lot further than taking care of common workplace injuries. Short-term tasks are considered the ones below twelve months, which is not actually that short. During this time a lot can happen - employees have been experiencing various difficulties, from child behavior issues, across depression, to marriage troubles. Of course, the most significant of these stressors is a financial one - an employee usually leaves a number of tasks - bill paying, child and elder care, household help, etc. - the family must take care of and pay for.

So it is quite understandable that your new short-term employees will have some particular demands. You'll have to negotiate flexible terms and always keep the communication open. A cross-cultural training shouldn't be their demand, but yours - if they receive it there will be no trouble with working and communicating with the locals and they can hit the ground running, which is exactly what you need in these short-term arrangements.


International Flags

This is the word we frequently hear in the business world, but it could be fatal when it comes to your short-term foreign employees. Using short-term business visas is a common solution for this kind of a brief overseas assignment, due to its obviously easy and attractive use. However, there may be some severe legal consequences if the business visa limitations are exceeded.

There are ways to 'reset the clock' by a visit to the home country and even extensions might be available, but it's still crucial to track cumulative days and stay within their limit according to the country regulations. If you don't, you'll be risking the triggering of a permanent establishment or tax residency. You also need to pay attention to the migration climate at the moment because frequent trips may come under increasing scrutiny.

The Math

Keep in mind that, even if the initial use of visa was compliant, overextending or overusing it brings numerous risks - your foreign employee may simply stay for a long enough period to become resident in the host country. The common period of stay without resulting in tax residency is 183 days, and if the tax treaty between the countries doesn't exist the limit will go even lower, to between 30 and 90 days. If this status occurs it will add complexity and cost to bring the assignment of the employee into compliance with a formal work permit, because you'll have to meet local payroll together with withholding requirements. Just one day overdue can set all this in motion, and pay attention if your country is rolling 12 month period or considers a number of days in a calendar year.

The Risks

The misuse of visa for longer stays exposes both - you and the employee - to a financial risk. He will inadvertently become subject to local income tax (including social security contributions) and you could easily become obliged to pay the statutory share of his social security. This could lead to a double taxation for the employee, especially if there's no tax treaty.

And there are immigration authorities, which are increasing scrutiny of frequent business trips so they can determine if they fit the requirements for obtaining a valid work permit. If these laws are breached the employee could be prevented from entering the country and lose the right to re-enter his own, while you could be subjected to heavy penalties, fines, and other legal remedies.

So if you want to keep the business opportunity and your revenue, you must approach these requirements very carefully. It is a pretty costly process, so you need to be sure it will provide desirable results. Experienced migration agent in Sydney knows he needs to share the financial risk, offering a 'free refund' performance. It's the only way to obtain a guarantee that you won't spend your money without getting the assessed outcome.

Know Exactly What You Need

Know What You Need

Of course, you'll know what tasks you want your foreign employee to accomplish, but you can easily decide to offer him some additional ones if he shows the wider set of skills. This could be a crucial mistake since his short-term assignment will become non-compliant when the type of his business activity changes. Most countries limit this activity to attending conferences or meeting, sales, or marketing. If his activity creates revenue it may violate the limitations and cause permanent establishment risks.

Today short-term assignments take many shapes and forms, so you'll need a written short-term policy that will provide a framework and discipline that enables equity of treatment amongst assigned and thus reduces the chance of a foreign employee to negotiate his own package. This tool is not only cost-effective but also makes sure that the scenario mentioned above won't happen.

It's advisable to have a separate policy document for each category of the short-term assignment so the employee won't try to leverage of the best parts of other packages to suit his particular circumstances. And don't forget to evaluate it regularly against industry trends and your business goals so you can make sure it fits its purpose.

The Interplay

Every employee who goes on short-term assignments overseas is issued with an assignment letter which outlines the benefits in the form of reimbursements, allowances, etc. he'll be entitled to receive during the period of his assignment. On the other hand, he already has an underlying employment contract with his company, and you must pay close attention to how those two interplay. The employee remains the employee of his home company, but certain benefits and rights are hibernated or suspended and replaced by relevant conditions and terms contained within an assignment letter. This hibernation of a home company contract can complicate the potential dismissal, and the last thing you need is an incompetent employee who you can't get rid of.

As you can see, this game has many rules, from personal to legal ones. While it is important to keep the communication open and to be flexible during the negotiations, you also need to keep precisely defined terms on paper. It is mandatory that you don't make this move (especially not to invest in it) before you're sure it's in compliance with all the laws and regulations.

Guest Author

Nick Brown

Nick Brown is a blogger and a marketing expert currently engaged on projects for Media Gurus, an Australian business, and marketing resource. He is an aspiring street artist and does Audio/Video editing as a hobby.