How to Hire International Employees: A Complete Guide

Hiring from international talent pools can give you a competitive edge and remove geographical constraints, but it also involves navigating complex regulations, diverse payment systems, and cultural differences.

Our solution handles all these background complexities, from entity setup to payments and legal requirements, so you can focus solely on the work aspect of employees. You find great people, they do great work, and we manage everything else.

In this guide, you’ll discover how to:

• Hire international employees 
• Compare costs between traditional approaches and modern solutions
• Meet compliance requirements across different regions
• Implement efficient hiring timelines and processes
• Scale your international workforce effectively   

Tarmack provides a comprehensive solution to simplify international hiring. Our employer of records services extends across 150+ countries, allowing you to build global teams without establishing legal entities in each location. 

Understanding International Hiring Options

When expanding your workforce globally, you need to consider several different approaches. Let’s explore the main options and what distinguishes each.

1. Direct employment

Direct employment requires setting up a legal entity in each country. This gives you complete control since employees work directly for your company, but it’s resource-intensive. 

You’re looking at several months of setup time per country and significant upfront costs—typically between $10,000 and $50,000 just to get started. You’ll also need ongoing expertise in local employment laws, which means hiring specialists or working with local consultants.

2. Contractor relationships

The contractor route is much faster to implement. You can start working with international contractors almost immediately without setting up entities. It’s also highly flexible, allowing you to scale up or down as needed. 

However, this approach comes with serious compliance risks. 

If authorities determine your contractors should be classified as employees, you could face substantial penalties. You’ll also have less control over work procedures, and your intellectual property might also not be protected in some countries.

3. Employer of Record (EOR)

The third option is using an Employer of Record (EOR) service like Tarmack. 

This gives you the best of both worlds. 

The EOR becomes the legal employer in each country, handling all compliance and administrative requirements while you maintain day-to-day control over the work. You can onboard new team members in a day or two without entity setup costs. The EOR manages everything from contracts and payroll to benefits and tax compliance.

When choosing between these approaches, you need to consider factors like timeline, budget, the number of countries you want to expand into, and your long-term plans. Tip: An EOR makes the most sense if you’re testing new markets or hiring a small international team. For large-scale, permanent operations in a specific country, a direct entity setup might eventually become more cost-effective—but only after you test that market to see if it is a good fit.

Legal and Compliance Considerations

Picture this: You’ve just hired a brilliant developer in Germany, a marketing specialist in Singapore, and a sales leader in Brazil. Each employee is excited to join your team, but suddenly, you’re facing a storm of compliance questions like: 

• How do you ensure proper employment contracts in each country? 
• What about mandatory benefits that differ dramatically between regions? 
• Are you calculating taxes correctly? 
• Is your IP protected? 
• And how do you stay current with constantly changing regulations?

Navigating these complexities is a legal necessity. Every country operates under its framework of labor laws, tax requirements, and employee protection regulations, making international employment compliance a critical hurdle for growing companies.

Key compliance challenges

Employment regulations vary significantly across borders. 

Hiring in France requires a minimum of five weeks of paid vacation annually. Singapore hiring laws mandate 14 days of leave, subject to service length. German employees have strict working hour limits and strong termination protections, while Brazilian companies must contribute to multiple social programs.

These variations impact everything from how you structure compensation to the steps required for compliant offboarding. Without local expertise, you risk violating regulations you might not even know exist.

Read our global hiring playbook for a detailed look at how different countries hire. 

Tax implications

International employment creates complex tax obligations such as:

• Withholding income tax at the correct local rates
• Social Security and healthcare contributions
• Value-added tax (VAT) considerations
• Cross-border payment reporting

Each country has unique filing deadlines, documentation requirements, and calculation methods. Miss these obligations, and you face penalties, interest charges, and damage to your reputation.

Non-compliance risks

The consequences of compliance failures can be severe:

• Financial penalties ranging from thousands to millions
• Back taxes with interest and penalties
• Legal proceedings and potential business disruption
• Damage to employer brand and reputation
• Difficulties with future business activities in affected countries

Tarmack simplifies your compliance by managing all critical aspects of international employment. 

You’ll receive country-specific contracts created by local experts, automated tax calculations based on current regulations, and timely filings with all authorities. We continuously monitor regulatory changes and implement updates before they affect you. You’ll maintain a complete audit trail of all employment decisions and documentation, protecting your business from compliance risks.

Payroll and Compensation Strategies

When you hire international employees, you need effective strategies to handle diverse compensation requirements, currency challenges, and varying benefit standards. What works in your home country likely won’t work globally. This is why you need a structured payroll system that ensures compliance, timely payments, and fair compensation across different regions.

Compensation structures across markets

Different markets demand different compensation approaches. Salary expectations vary based on:

• Local cost of living
• Competition for skills
• Career progression expectations
• Standard compensation practices 

The local cost of living reached the top of our list because of its weight. A senior developer might command $150,000 in San Francisco, €70,000 in Berlin, and ₹2,500,000 in Bangalore. Each represents competitive local compensation, though the absolute figures differ significantly.

The norm for compensation also depends on the culture you are addressing. In some countries, employees expect 13th or 14th-month bonuses as standard practice. Others emphasize variable pay or equity components. You need to balance competitive local offers with internal equity across your global team to attract top talent.

Currency considerations

Managing multiple currencies presents practical challenges:

• Exchange rate fluctuations can significantly impact costs
• Employees expect to be paid in their local currency
• Payment processing fees vary by country and method
• Banking systems have different settlement timeframes
• Financial reporting becomes complex

You must decide whether to set compensation in local currencies or create a global framework with local adjustments. Most employees prefer receiving consistent payments in their local currency rather than dealing with exchange rate risks.

Benefits and employment standards

Benefits requirements vary dramatically by location:

• Health insurance (required in some countries, government-provided in others)
• Retirement plans (mandatory contributions differ by country)
• Paid time off (ranging from 10 days to 30+ days annually)
• Parental leave (from minimal to 12+ months paid leave)
• Termination notice period and severance requirements

To attract and retain global talent, it’s essential to meet statutory requirements while offering a competitive and equitable benefits package.

Tarmack’s unified payroll solution

Managing these diverse benefits requirements is seamless with Tarmack’s unified payroll solution. With our platform, you manage payroll for your entire global team from a single dashboard, regardless of where they live. This ensures your employees receive accurate, timely payments that comply with all local requirements.

Instead of juggling multiple systems, payment providers, and compliance frameworks, you get one unified solution that scales with your global team. Here’s how Tarmack simplifies global payroll management. 

• Pay all employees in their local currency with minimal fees
• Run payroll on the same schedule worldwide or align with local norms
• Access comprehensive market data to set competitive compensation
• Ensure compliance with all statutory benefits requirements
• Generate unified reporting across all countries
• Provide employees with consistent payment experiences

Factors to Consider When Recruiting International Talent

Recruiting international talent requires a strategic approach tailored to each region’s unique job market and cultural norms. Here are a few things you must consider when hiring talwnt across borders:

Strategies for International Recruitment

When you’re recruiting internationally, you need to rethink your entire strategy. Take job boards, for example. While you might rely on Indeed or LinkedIn in the US, these platforms have limited reach in other countries. In Japan, you’d want to use Daijob or CareerCross; in Germany, StepStone; and in Brazil, Vagas.

Your job descriptions need adjustment, too. For example, while ‘product owner’ is commonly used in some regions, ‘product manager’ is the preferred title in many European countries.

Time zones create practical challenges as well. If you’re in New York trying to interview candidates in Singapore, you’re dealing with a 12-hour difference. Offering flexible interview slots and being transparent about time zone challenges go a long way in showing candidates you respect their time.

Cultural considerations in hiring

Cultural norms play a significant role in hiring, from interviews to salary discussions. In the US, interviews tend to be relatively casual and conversational, while in Japan, candidates expect a more formal process. Similarly, in the Netherlands, candidates appreciate direct feedback and straightforward communication, while in many Asian countries, indirect communication is deemed more culturally appropriate.

Salary discussions also vary widely. In the US, it’s common to discuss compensation expectations early in the process. Early salary discussions can seem inappropriate or overly transactional in the UK and Germany.

Resume expectations differ, too. In Germany, candidates often include personal details like birth date, marital status, and even photos – information that would raise compliance concerns in the US. Understanding these differences helps you evaluate candidates appropriately within their cultural context.

Onboarding international employees

Onboarding remote international employees requires extra attention to detail. For example, a software company I worked with had a standard practice of shipping welcome packages to new hires. When they started hiring internationally, they discovered customs fees were sometimes higher than the package value, creating an awkward situation for new employees.

Different time zones impact onboarding, too. Create asynchronous onboarding content or adjust meeting times to accommodate global team members. Some companies create “overlap hours” where everyone, regardless of location, is expected to be available for synchronous communication.

Documentation becomes even more important with international hires. Clear written policies, recorded training sessions, and accessible resources help international employees who might not have the luxury of tapping a colleague on the shoulder for quick questions.

Hidden costs of global expansion

When companies first look at international hiring, they typically focus on salary benchmarks. But that’s just the tip of the iceberg.

A tech startup, for example, that wanted to hire three developers in Germany initially thought they’d need to pay competitive salaries — around €75,000 each. They didn’t realize that establishing a legal entity in Germany would cost them roughly €40,000 upfront in registration fees, legal consultation, and banking setup. Then, they’d face annual maintenance costs of about €25,000 for local accounting, tax filings, and compliance management.

Benefits add another layer of complexity. In many European countries, employer contributions for social security, healthcare, and other mandatory benefits can add 25-40% to the base salary. In Brazil, this “tax wedge” can exceed 70% of the base salary. A company hiring a mid-level professional at $50,000 might actually end up with total employment costs closer to $85,000.

There are also practical operational costs: multiple payroll systems, currency exchange fees, international banking charges, and the administrative time spent managing everything. You could spend about 15 monthly hours per country on compliance and payroll management.

Traditional vs. Modern Strategies

The traditional approach to international hiring involves the following:

• Setting up legal entities in each country
• Establishing local banking relationships
• Hiring local accounting and legal support
• Implementing country-specific payroll systems
• Building in-house expertise for each market

A company expanding to three countries typically costs $150,000-$300,000 in the first year alone, not including employee salaries. And that’s assuming nothing goes wrong.

The modern approach uses Employer of Record (EOR) services like Tarmack. Instead of creating your legal infrastructure in each country, you leverage an existing network. The EOR becomes the legal employer while you maintain day-to-day work control.

Here are the differences with a real example: A marketing agency wanted to hire team members in the UK, Singapore, and Australia. They compared approaches:

Traditional approach (first year):

• Entity setup: $120,000 ($40,000 × 3 countries)
• Annual compliance: $75,000 ($25,000 × 3 countries)
• Banking fees: $9,000 ($250 × 12 months × 3 countries)
• HR/Finance admin time: $60,000 (estimated cost of time spent)
• Total: $264,000 + employee salaries

Modern approach with Tarmack:

• No entity setup costs
• No direct compliance management costs
• No separate banking fees
• Minimal administrative time
• EOR fees: ~$54,000 ($150 × 12 months × 3 employees)
• Total: ~$54,000 + employee salaries

The difference? Over $200,000 in the first year alone.

Efficiency gains beyond direct savings

With a traditional approach, a marketing agency may take about four months to set up its first entity before it can even make an offer to a candidate. With Tarmack, however, they can hire their first international employee in less than a week.

This creates real competitive advantages. In today’s talent market, waiting 3-4 months to formalize an offer often means losing candidates to faster-moving competitors.

The administrative efficiency is substantial, too. Instead of managing relationships with multiple vendors across countries and reconciling different systems, you get a single dashboard and unified reporting.

Tarmack’s Approach to Global Recruitment

At Tarmack, we’ve built our global recruitment platform to address all the above challenges. We maintain relationships with local recruiters who know which universities produce the best engineering talent and how to approach passive candidates appropriately.

We also handle the compliance aspects that often trip up international hiring. For example, when you make an offer to a candidate in Germany, our system automatically generates contracts that comply with German labor law, including appropriate notice periods and mandatory benefits. This prevents situations where you might make promises that conflict with local regulations.

Hire Smarter and Grow Faster with Tarmack 

International hiring creates opportunities and challenges for your business. You gain access to global talent but face complex regulations, administrative burdens, and hidden costs.

Tarmack offers a comprehensive solution that addresses these challenges. Our platform enables you to:

• Hire in 150+ countries without establishing entities
• Be fully compliant with local regulations
• Pay employees in their local currencies
• Access global talent networks
• Significantly reduce costs compared to traditional approaches

By choosing Tarmack, international hiring goes from a complex, resource-intensive process into a strategic advantage for your business.

Please take the next step in your global expansion journey by scheduling a consultation with our team. 

Navigating global markets can be complex. That’s why we work with you to identify the right target countries and develop a strategic approach tailored to your unique business needs. Try Tarmack now.

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