Hiring International Employees: The 3 Best Methods for Compliance & Growth

Are you struggling to find the best way to hire international talent while ensuring compliance? Many organizations grapple with navigating local labor laws, tax obligations, and immigration requirements during global expansion. With decades of experience and a proven track record, Deel is a trusted partner for companies looking to overcome these challenges.

This article explores three effective methods for international hiring: setting up a local legal entity, relocating employees, and using the Employer of Record model. This guidance will help you choose the best path for your organization.

By the end of this article, you’ll have the insights needed to build a compliant, diverse workforce that fosters sustainable growth.

How to hire an international employee

When considering international hiring, organizations have several options at their disposal:

1. Establish a local legal entity: You can set up a foreign subsidiary in the desired location to employ international workers directly.

2. Relocate the employee: Another approach is to relocate the foreign worker to your home country, where they can work as a full-time employee.

3. Use an Employer of Record (EOR): This option allows you to engage and pay remote employees seamlessly, without needing to establish a local entity.

Alternatively, organizations might consider hiring remote international contractors instead of formal employees, offering flexibility while managing costs and compliance.

Choosing the right method depends on your organization’s needs, the nature of the work, and compliance with local labor laws.

Let’s explore these options in detail below.

Option 1: Open a local legal entity wherever you want to hire international employees

A legal entity, also known as a foreign subsidiary or daughter company, is a business set up in a foreign country under the control of a parent company.

While the parent company may own the subsidiary entirely, the subsidiary must adhere to legal and tax obligations of its host country.

Establishing a foreign subsidiary allows you to hire employees in that country. To hire in additional countries, you will need to repeat the setup process for each location.

See also: A Guide to Setting up a Local Entity

Which organizations should open a local subsidiary?

Opening a local subsidiary is time-intensive but enables organizations to establish a physical presence in another country. Consider setting up a foreign legal entity if you:

• Plan to expand to a single country
• Aim to develop a strong local presence
• Need to establish an office or manufacturing facility abroad
• Understand the country’s tax requirements and labor laws
• Have the resources for long-term HR, payroll, and compliance functions

Proceed with caution, as this process requires time and legal expertise. Familiarize yourself with local employment laws and regulations, prepare extensive compliance paperwork, and open local bank accounts.

If you need a faster and more affordable international hiring solution, consider alternative options.

Discover how Elemental Enzymes accelerates regulatory approvals and market entry with Deel Entity Setup.

See also: How to Register a Foreign Entity With Deel

Option 2: Relocate the worker to your home country

The second option is to relocate the foreign worker to your home country or to a location where you already have a legal entity. This generally involves sponsoring a work visa and assisting them with work authorization.

Visa sponsorship is the process of collaborating with government authorities to permit a foreign employee to work and reside in a different country as a nonimmigrant. Organizations often need to register as sponsors to legally support an employee or contractor’s visa application, which entails adhering to local immigration laws.

See also: A Guide to Relocating Employees

Which organizations should consider relocating international workers

Consider relocating foreign workers if you:

• Cannot offer remote work
• Need an employee on-site to fulfil role responsibilities
• Are looking to hire a worker specifically seeking relocation
• Aim to foster a diverse company culture with an inclusive in-person team

Discover how TalentQL relocates talent and supports knowledge exchange with Deel.

See also: Employee Mobility Services: Easy Relocations for International Companies

Option 3: Hire using an Employer of Record

An Employer of Record (EOR), also called an international professional employer organization (PEO), is an organization that engages and pays one or more employees to provide services to another organization. An EOR enables companies to legally work with remote employees in another country without setting up an office in that country or region.

EORs set up local entities in countries around the world. They can engage anyone, anywhere—no need to relocate your employees. EORs handle local tax regulations, labor laws, and payroll, so you can focus on engaging great talent while the EOR takes care of compliance.

For example, a US company can partner with an EOR to easily hire and pay remote workers in Switzerland or Brazil. Likewise, an employer from Belgium can hire a US worker and provide employee benefits required by the US.

One of the major benefits of hiring foreign employees using an EOR is that you gain access to a wider pool of talent in almost any country. If your goal is to go global, an EOR is a safe and fast option.

Deel has the most extensive country coverage, with EOR services in 150+ countries.

See also: Pros and Cons of Hiring with an Employer of Record (EOR)

Which organizations should use an Employer of Record?

Partnering with an Employer of Record (EOR) is beneficial for organizations looking to engage with international talent and expand into global markets quickly and efficiently. Consider an EOR if you:

• Want to avoid the time and cost of establishing local entities for hiring
• Lack the expertise to manage compliant contracts and differentiate between contractors and employees
• Are comfortable with remote work arrangements
• Want to outsource global payroll and compliance along with hiring
• Aim to provide employees with a comprehensive suite of benefits and perks

Discover how ShopBack hired skilled talent without entities with Deel.

See also: How to Test New Markets and Accelerate Global Expansion with an Employer of Record

Bonus option: Hire independent contractors instead of foreign employees

Hiring independent contractors is an accessible option for international recruitment, particularly for organizations with fluctuating labor needs. You don't need a foreign subsidiary, as independent contractors are self-employed and responsible for their own taxes in their home country.

Unlike full-time employees, independent contractors manage their own schedules, use their own equipment, can work for multiple clients simultaneously, and do not typically receive the mandatory benefits or protections afforded to employees on a company's payroll.

See also: How to Legally Hire Independent Contractors Worldwide

Which organizations should hire independent contractors?

Organizations often hire independent contractors for their cost-effectiveness and flexibility compared to full-time employees. Consider engaging a foreign independent contractor if you:

• Need temporary or project-based labor
• Require a skilled worker who requires minimal training and oversight
• Are comfortable with making international payments
• Are confident in classifying workers and creating compliant contractor agreements

Discover how Tiqets hires compliantly around the world with Deel Contractor of Record.

See also: The Benefits of Hiring International Contractors with Deel

Hire international employees and contractors in 100+ countries with Deel

Whether you want to engage full-time employees, relocate international talent, or hire international independent contractors, you must have the right arrangements in place to operate compliantly. Fortunately, with Deel, global hiring has never been easier.

Deel is everything your organization needs to hire, pay, and manage a global workforce. With our all-in-one platform, you can:

• Pay anyone, anywhere, in minutes
• Expand your international team and hire globally
• Consolidate your HR operations
• Simplify, speed up, and scale global IT operations
• Set your team up for success with performance tools
• Attract and retain talent with immigration support

Sound like the ideal solution? Book 30 minutes with a product expert to get your questions answered.