Hiring

This process sounds really simple – you put together a job description, put it on the internet, collect and select resumes, interview people, shortlist say three, check references and then offer them a job. It would be simple if Governments did not keep passing legislation of all sorts such as non-discrimination based on race, gender etc., regulations governing terms and conditions of employment to name a few pitfalls. Let’s look at some of the pitfalls in this process.

Advertising Jobs Internally

A number of countries require jobs to be advertised internally (or that all existing employees must be made aware of the job) before an attempt is made at external recruitment. So the first pitfall is to just go and place an external ad!

Employee Concerns

If you are hiring in a foreign country you should be ready with answers to questions that, in our experience, inevitably arise from candidates. “Humming and hawing” at this stage is unlikely to impress candidates!

An internal candidate, who you will transfer from one location to another is essentially an expat who will have concerns different to a local candidate. This is not covered here.

Try to be familiar with local terms. For example, if you ask a candidate what “school” they went to, they will tell you exactly that – if you want to know what University they studied at, then you will need to use the term “University” or ask for “higher education” qualifications!
If the application requires an application form to be completed, it is essential to ensure all the questions on the form are legal – it is generally not possible to take the usual application form and simply ask a foreign candidate to complete it. Certain questions may be simply illegal – others may be legal once re-phrased.
What will be the interview process – will someone fly out to interview the candidates or will the candidates be asked to come for interview? If the latter, where will the candidate need to come and who will bear the cost?
The candidate’s qualifications will be local so make sure you understand what they mean.
Once you short list candidates or have selected a candidate, what documents will you require them to submit? Try to make a list of local equivalents.
In what currency will you pay the employee? If US$ (frequently requested) at what foreign exchange level will you pay it? If to be changed depending on exchange rate fluctuations, how will you budget and how will you cope with the many issues of employment law that will arise?
If travel is a component of the job, how will travel arrangements be made and how will the employee be re-imbursed and in what currency?
Will you be prepared to provide a corporate credit card (frequent request)? If yes, how will you get one locally if you are only just setting up in a country and have no trading history? (In other words be careful before answering “Yes”!)
What is your company car policy – do you provide a car or car allowance or some other policy? It is important to ascertain local practice for the position for which you are interviewing.
What benefits will the candidate receive i.e. life assurance, medical illness cover and so on? Will the candidate receive stock options or equivalent?

Negotiating Salary

This is one area where you do not want to get nasty surprises when it comes time to pay the employee. You believe you negotiated a salary of $100,000 but you end up paying $150,000 instead – how can this happen? Many countries have the requirement to pay a 13th and even a 14th month salary. In some countries it is legal to wrap it up in an overall figure (e.g. Italy), in others it is not (e.g. Brazil). So you negotiate $120,000 per year or $10,000 per month and too late realize there are two more payments to be made of $10,000 each taking the salary up to $140,000 instead. When the salary turns out higher than expected, remember it will also impact employer’s social security costs, possibly pension payments among others.

In China, Overtime Pay For Work On A Public Holiday Is 300% Of Normal Salary!

Overtime regulations should always be reviewed before negotiating salary. The seniority of the employee will often determine how and whether they will be subject to overtime regulations at all. If they will be subject to them it is important to understand these as it will impact the total of what you have to pay out. For example, in China, requiring an employee to work on a rest day attracts 200% of normal salary and on a public holiday attracts 300%! There are numerous other matters to watch – we will be happy to advise you of these for each jurisdiction.

Job Description, Especially Title And Non Discrimination Clause

Selecting a job title seems simple enough but it is well to bear a few issues in mind. First the description must not itself be potentially discriminatory but nor must it be seen to encourage activity that is illegal locally. For example, around 30 countries have non-discrimination rules for homosexuals but 81 countries classify homosexuality as a criminal offence. So it is important to understand non-discrimination in a local context to stay within legal parameters.

The description must also be appropriate for the legal entity set up. For example, in certain countries a representative office may not employ very senior personnel.

Interview Process

It is wise to obtain a list of issues that it is legal to ask or discuss at an interview. This varies from country to country. Many international companies seek to obtain and maintain certain information about both job applicants and employees to monitor, say, adherence to their diversity policies. However, in Australia, for example, asking for this type of information, including ethnicity information, is fraught with risk especially during a recruitment process where the person being asked to supply the information may not even be made an offer. (If you are recruiting in Australia do see Willmott v. Woolworths Ltd [2014] QCAT 601 – 11 November 2011)

In many countries one may not ask questions (among other matters) relating to the health, sexual orientation or age of the candidate but in France, for example, it is also not legal to ask questions about the position of the parent. Thus local knowledge is very important. Practices legal in one country may not be legal in another. For example, asking candidates for their Facebook or other social media password would be illegal throughout the EU due to its strict Data Privacy rules. Data Privacy rules also have strict rules as to how information gathered by a prospective employer must be stored and kept secure – these apply whether or not a candidate is offered a job.

Background Checks

In many countries it is only legal to ask for a financial background check if it directly relates to the job – for example, the job requires a high degree of trust as for a high level decision maker, a senior accountant who will be handling large sums of money. However, the right to request a background check may not extend to a full general credit check since in some countries (e.g. the SCHUFA check in Germany) may reveal facts about the employee’s private life. (“SCHUFA : Schutzgemeinschaft für Allgemeine Kreditsicherung e. V”)

Care must be exercised when asking for criminal checks. In general they are only legal where they are directly relevant to the job e.g. criminal driving offences for a driving job. A request for a police report can generally only be requested directly by the candidate, not by a third party such as a prospective employer.

References

When asking for references, it is important to remember that if a question was not legal at the interview, it will not be legal to ask that question of a referee! Checking out the reference is particularly important in countries where it is not legal to terminate someone’s employment just because they lied on their resume about e.g. their qualifications to do the job (an example is Italy).

These are general guidelines, for more information on your specific country or situation, please connect with us.