Stay Ahead of Changing Regulations With These 3 Compliance Strategies
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- As your business evolves, so does your compliance risk. Adapting your compliance program to respond to new rules and regulations that can impact your operations, workforce, and business structure, especially when expanding across borders, is crucial.
- Industry advice on staying up-to-date on regulatory changes is unsustainable. Not every company has the resources to invest in an in-house legal counsel or spend hours monitoring regulatory changes.
- Deel’s Compliance Hub actively monitors, flags, and provides regulatory updates and compliance insights, helping you proactively navigate the ever-changing regulatory landscape and promote the deeper integration of compliance into your business processes.
Industry advice on staying up-to-date on legal and regulatory changes locally and around the globe includes:
- Investing hundreds of thousands of dollars in building internal legal counsels or recruiting local law firms
- Or spending hundreds of human hours monitoring regulatory agency websites, subscribing to regional law newsletters, joining industry associations, and attending compliance webinars, conferences, and training sessions
While the first approach is out of reach for many smaller-budget businesses, the do-it-yourself approach isn’t sustainable either, especially with so many legal and regulatory changes occurring across the globe every day—you simply won’t be able to keep up.
Fortunately, technology has evolved, and there are much more powerful and proactive ways to stay on top of ever-changing legal and regulatory compliance that will save you a lot of time and money.
Without further adieu, here are the three sustainable compliance strategies your company can use to practice proactive and continuous compliance as it expands globally.
1. Use software that generates compliance reports to alert you to workforce risks
As your business evolves, your compliance risk also increases. Each country has its own set of rules that can impact your operations, workforce, and business structure.
For instance, when hiring employees in different countries, you must know the laws and regulations that trigger permanent establishment (PE). For example, in Argentina, a foreign company is considered to have PE status if it has more than 50 employees working there for more than 183 days in a taxable year.
In comparison, in Canada, a foreign company triggers PE status if it has more than ten employees working there for more than 183 days in a taxable year. In both scenarios, the foreign company is subject to tax on its income from local sources and must file a tax return.
Similarly, in some countries, what constitutes a contractor vs. an employee can change depending on how long a worker has been with the company, their responsibilities, and their degree of control over their schedule.
For instance, in Brazil, a contractor can work for a company under a fixed-term contract for a maximum of two years before the company must reclassify them as an employee. In Germany, a worker may need to convert to an employee if their income is primarily or entirely derived from the company or if the worker’s role is essential to the company’s operations. In the United Kingdom, however, a contractor’s earnings, in and of themselves, do not directly determine their classification.
Companies involved in global hiring and employee relocations must also consider immigration laws and regulatory requirements that govern visas, sponsorship, work permits, and employment authorization. Organizations are responsible for ensuring their workers have the necessary legal documentation to work in a particular country. They must stay informed about evolving immigration laws, visa expiration dates, and renewal procedures to avoid financial penalties and potential employee deportation.
Instead of relying on the compliance function to conduct regular internal audits and risk assessments to identify and address potential compliance gaps, companies can now rely on compliance software that analyzes your worker data and the latest compliance developments and generates a compliance report.
2. Use technology that automatically detects global regulatory changes impacting your business
61,228 regulatory events took place across 190 countries in 2022, according to Thomson Reuters. This figure translates to an average of 234 daily alerts, signifying the sheer volume of regulations companies need to cope with and the rapid pace at which they change.
While governments and regulatory bodies try their best to announce these changes early and provide transitional periods to give companies time to implement, it’s easy for compliance teams to overlook them, resulting in millions of dollars of legal fees and penalties, not to mention the hard-to-quantify cost of reputation damage caused by the compliance issues.
Rather than relying on manual compliance processes and passively waiting for your legal counsel or chief compliance officer (CCO) to catch regulatory updates, you can now use compliance monitoring tools that proactively scan, collect, and explain the latest regulatory changes globally that impact your businesses.
In addition, the Compliance Monitor simplifies the legal language to provide concise summaries of the impact on your business in just a few sentences, helping you with risk management and saving your HR or compliance department hundreds of hours that would have been spent on compliance tracking.
3. Use an AI-powered worker classification assessment tool to avoid misclassification
As your company grows and you continue to test new markets and talent hubs, correctly classifying workers becomes increasingly complex. Every country has different criteria for worker classification, and the case law is often very specific to particular business-worker relationships and is constantly evolving.
Until now, companies have had to track down country-specific guidelines and classification tests created by governmental bodies to categorize workers accordingly. Now, global companies can use AI-powered classification software to assess the classification of their workers worldwide.
Unlike other more basic tools, Deel’s misclassification assessment is localized in 15 countries and uses award-winning research into localized employment count cases and classification tests to classify your workers with over 90% accuracy.
Answer a few questions, and the software will indicate the worker’s classification using relevant local laws and precedent legal cases.
Unlock continuous compliance with Deel
Deel’s Compliance Hub takes compliance to a whole new level by actively monitoring, flagging, and providing regulatory updates and compliance insights, helping you proactively navigate the ever-changing regulatory landscape.
Alex Bouaziz, Co-founder & CEO, Deel
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