Employees are critical to every local and international business’s success, and the right labor/talent pool is often why many businesses expand into other countries. But with labor comes labor and employment compliance, and it has two different layers, local and international.
International labor compliance laws apply to almost all international businesses, and adhering to their guidelines and best practices benefits international businesses. The second layer is the labor and employment compliance regulation of the country you are operating in.
Labor and employment compliance is the process of adhering to all the labor laws related to minimum wage, working conditions, benefits, and other aspects of employment, in any given country. The laws govern the entire employee lifecycle, from hiring to termination and everything in between. These laws ensure that, even though employees knowingly and with their consent, join a business, they are not subject to inhumane, cruel, or exploitative employment conditions.
Labor and employment compliance also covers fair hiring practices, which ensure that all businesses adhere to fair hiring conditions and do not discriminate based on race, ethnicity, religion, or other factors. They also cover conditions like sexual harassment and bullying in the workplace. The laws may differ from country to country in their specifics, but many underlying themes are similar.
The International Labor Organization, or ILO, is a UN agency/body that sets and monitors compliance with international labor standards. The UN ensures that all member countries adhere to these laws within their employment domains, but it cannot enforce them directly. However, their existence and compliance with them are critical for a business’s success because UN sanctions and a reputation for not adhering to international labor standards can hinder a company’s ability to conduct business.
Many of ILO’s labor standards are rooted in the conventions they were the subject of. Some of these conventions are (and the underlying international labor standards):
- The Equal Remuneration Convention of 1951 determined that both men and women (working on the same job) would be compensated the same, and wage preference would not be given based on gender.
- The Discrimination Convention of 1958 set the definition of discrimination. The essence was to prevent an employer from rejecting a candidate for a job due to their group affiliations.
- The Child Labor Convention of 1999 outlawed any activity which harmed a child’s health, safety, and morals of the children.
There are several other conventions, securing employees’ right to union (this falls under the right to collective bargaining), maternity leaves, and rights of workers with families, etc. The underlying goal of these conventions and ILO as an international governing body is to ensure good working conditions for employees and labor across the globe.
From an international perspective, adhering to labor and employment compliance would include following the directives set out by the ILO regarding the rights of labor and the employer’s responsibility. This is in addition to the labor and employment compliance standards of any country you are operating in.
In order to ensure labor and employment compliance in virtually any country you operate in, you need to take the following steps (at minimum):
- Understand the labor and employment laws of the country, which may kick in well before you hire an employee. US states like Colorado compel companies to list salary ranges in any job ads they post. Employment laws may also cover interview practices, compensation for travel, discrimination, equal opportunities, etc. Once hired, the labor laws would govern how to manage the lifecycle of an employee, so it’s crucial to become well-versed in the local labor laws (for your business’s HR team).
- Ensure your working conditions are safe and humane and any danger is preemptively accounted for. Even if there are no specific provisions about certain working conditions, it’s best to ensure the safety of your employees by making your working conditions as secure as possible.
- An essential part of labor laws is the protections and benefits the employees get under the country’s labor laws. This may include job protection, outlining reasons for which employees can and cannot be fired. It may also include contracts, payslips, overtime, and learning opportunities. The benefits may include health insurance, mandatory leaves, etc.
- Labor classification is an essential part of labor compliance since it can change the entire framework of their benefits, rights, and responsibilities. For example, an employee may be eligible for a full range of benefits, but part-time contractors may not have the same rights. However, they will have autonomy, and you may not be allowed to deduct tax from their compensation. There may even be provisions in labor laws defining when an independent contractor may qualify as an employee.
- It’s in your best interest to ensure that your employees know their rights and responsibilities. One easy way to do it is to prepare an employee handbook and ensure every employee understands it.
- Adhering to the best local and global HR practices will help you ensure labor and employment compliance. It will also allow you to keep your employees happy and satisfied with their working conditions. This way, you will remain on the right side of the law and get the most out of this precious asset, i.e., employees.
- Obtaining and maintaining work permits may be a responsibility shared by the employee and employer in the country you are operating in. If an employee/worker discharges their duties without the proper permits, you may be held legally responsible for their actions.
One way to ensure labor and employment compliance in another country is to shift responsibility to an entity better equipped to deal with the local workforce such as an Employer of Record (EOR) like Engage Anywhere. Engage Anywhere can hire, manage, and terminate employees or, in other words, take care of every step of the employment lifecycle. Since our expertise lies in this area, businesses can leave labor and employment compliance to Engage Anywhere’s employer of record service and focus primarily on the technical/operational aspects.