Sky Mehringer, Author at HSP Group

Key German Employment Law Update 2025: Timely Target Setting for Performance-Based Bonuses

Sky Mehringer — Mon, 18 Aug 2025 13:01:47 +0000

Employers in Germany should take note of a significant recent development in employment law. On 19 February 2025, the Federal Labour Court (Bundesarbeitsgericht, BAG) issued a landmark decision (Ref. 10 AZR 57/24) confirming that failing to set performance-based variable remuneration targets on time can create substantial liability — potentially requiring payment of the full bonus as damages.

In this case, the court ordered an employer to pay EUR 16,035.94 to an employee after failing to set individual targets at all and only communicating company-wide targets after three-quarters of the target period had passed. The ruling reaffirms that retroactively setting targets — once the majority of the performance period has elapsed — is inadmissible under German labour law because the targets can no longer serve their intended motivational and performance-guiding purpose.

Why the ruling matters

Variable remuneration systems are designed to motivate employees, align performance with company objectives, and provide a measurable incentive. When targets are not set promptly, employees cannot adjust their performance toward them — undermining the incentive’s purpose. The BAG made clear that:

If targets are set too late, they cannot fulfil their intended motivational role.
Unless an employer can prove exceptional circumstances, it is generally assumed the employee would have achieved 100% of the targets had they been set on time.
Late target setting after three-quarters of the performance period has passed is likely to be deemed ineffective, based on prior case law (LAG Cologne, 6 February 2024, Ref. 4 Sa 390/23).

This applies both to unilateral target setting (employer-determined) and mutual target agreements (jointly agreed with the employee).

Risks in common scenarios

One common situation flagged by employment law experts involves employees who leave early in the year — for example, in March — before targets have been set. Although there is no final court decision on this scenario yet, it is possible that courts may award a 100% pro rata bonus if the target setting is considered too late.

What employers should do now

To comply with German labour law and avoid costly disputes, employers should:

Set targets at the start of the performance period
- Ideally in January, or at the start of the business year if it begins mid-year.
- Ensure compliance with any contractual deadlines for target setting.
Follow the SMART principle
- Make targets Specific, Measurable, Achievable, Relevant, and Time-bound.
Document everything
- Record when and how targets were set.
- Keep evidence of when employees were informed of their targets.
Review internal processes
- Establish clear, repeatable procedures to ensure target setting happens on time each year.

Key takeaway

This Germany employment law update 2025 is a clear signal that timely, well-documented target setting is not only best practice but also a legal necessity. Employers should review and, where necessary, strengthen their processes now to reduce the risk of disputes and potential damages.

How HSP Can Help

Navigating these changes can be complex. HSP is here to help you stay compliant and streamline your HR operations. By partnering with HSP, you can ensure that your business remains compliant with these critical updates while minimizing disruption. Contact us today to get started.

The post Key German Employment Law Update 2025: Timely Target Setting for Performance-Based Bonuses appeared first on HSP Group.

EU Pay Transparency Directive: What Employers Need to Know and How to Prepare

Sky Mehringer — Tue, 15 Jul 2025 17:16:13 +0000

The EU Pay Transparency Directive is just around the corner (relatively speaking). Each EU member state (country) has until June 7, 2026 to implement the Directive by incorporating it into its own laws. If your company operates and has employees in the EU—even if you’re headquartered in the US—you need to understand exactly how this Directive affects you today. This blog walks you through the Directive’s core requirements, how they affect employers across the EU, and the steps you should take now to prepare.

What is the EU Pay Transparency Directive?

The EU Pay Transparency Directive is a measure enacted by the European Union to reduce pay discrimination and eliminate pay disparities between men and women. The Directive officially entered into force on June 7, 2023. It requires companies operating in the EU—including non-EU-owned companies—to implement specific pay transparency measures, as well as procedures for reporting, assessing, and remediating gender pay gaps.

EU member states must create their own national laws based on the Directive’s requirements by June 7, 2026. However, some of the requirements (such as pay gap reporting) will come into effect at different times (depending on company size). To add to the complexity, some countries have already enacted similar regulations, some of which are even stricter than those required by the Directive.

If you’re an employer in the EU, take time now to familiarize yourself with the requirements and make sure that you have a solid understanding of how well you are (or aren’t) prepared to comply with them so that you can take immediate steps to address any gaps.

Is the EU Pay Transparency Directive a law?

The EU Pay Transparency Directive is not technically a law—that’s a distinction that is very important for employers to understand. The EU describes it as a legislative act with specific goals all member states must achieve. Thus, the Directive itself is not directly enforceable by the EU. Rather, it is the laws that each country creates to comply with the Directive that your company will need to be in compliance with.

And, because each country can decide how to turn the Directive’s goals into its own laws, employers operating in multiple EU countries will face a complex network of different laws, some of which will be even stricter or broader than the Directive itself.

What are the EU Pay Transparency Directive’s key requirements?

At minimum, all EU member states must ensure that employers meet these key requirements (remember, this is the minimum baseline—each country can choose to make these requirements more strict):

1. Pay transparency measures for job applicants

Employers must share pay levels or salary ranges in job postings or before the interview with the job applicant.
Employers can’t ask applicants about their salary history (current or previous salaries).

2. Employees have the right to access pay information

Employees have the right to request information about their pay level and average pay levels of other employees performing the same (or equal-value) work.
Employees must receive clear explanations about the criteria that companies use to determine pay, promotions and other forms of career progression.

3. Companies must report on their existing gender pay gaps

Pay gap reporting depends on company size (headcount). The timing also varies by company size:

Companies with 250+ employees: must publish gender pay gap information annually starting in 2027.
Companies with 150-249 employees: must report gender pay gap information every 3 years starting in 2027.
Companies with 100-149 employees: must report gender pay gap information every 3 years starting in 2031.

4. Companies face mandatory pay audits if they show significant pay gaps

If your company reports a gender pay gap of 5% or higher and if you can’t provide objective (gender neutral) justifications for the gap or resolve it within six months, you must conduct a joint pay audit with the employee and their worker representative.
Employees are also entitled to compensation (back pay, bonuses, etc.) if your company is found to have a gender pay gap in the audit findings (learn more about penalties in the next section).

What are the penalties for companies that don’t comply with the EU Pay Transparency Directive?

Penalties for non-compliance will vary widely across EU countries, because each country gets to decide how to enforce the Directive. Penalties could include fines, restrictions on doing business, or even other legal consequences, depending on how each country has designed its laws.

Importantly, the Directive shifts the burden of proof onto the employer in pay discrimination cases. This means that it is now the employers who must prove compliance if accused of discrimination. Further, if an employee is found to have experienced pay discrimination, they are now entitled to full back pay, bonuses, and other related compensation.

Don’t underestimate the complexity of staying in compliance with varying Pay Transparency laws across multiple countries

The most challenging aspect of complying with the Directive is its inherent flexibility. Many employers underestimate the complexity of navigating varying requirements country-by-country. For example:

Spain already requires companies with 50+ employees to report gender pay gaps, making it stricter than the Directive.
Germany currently mandates reporting only for companies with 500+ employees, but will need to make this stricter (will need to drop to 100+) in order to align with the Directive’s 100-employee threshold.
Ireland’s threshold of 150 employees in 2024 is lowered to 50 in 2025—that’s well ahead of the Directive’s 2026 deadline.
Meanwhile, countries like the Czech Republic currently have no private-sector reporting laws. Because they must introduce them by 2026, expect these countries to have the most dramatic changes in laws.

Given these variations, multinational employers will need to develop country-specific compliance strategies for each country in which they operate.

Which actions should you take now to prepare your company for the EU Pay Transparency Directive?

Here are practical steps your company should take immediately to prepare:

Conduct internal pay audits to establish your baseline gender pay gap data, establish reasons for existing pay gaps, and consider any necessary remediation actions.
Review and update job descriptions and classification structures to ensure gender-neutral and transparent pay criteria.
Set up or upgrade systems to track gender-disaggregated pay data efficiently.
Review pay and recruitment policies and procedures.
Closely monitor legal developments in countries where your company operates, and adjust your approach as national laws are finalized.

How can your company leverage the EU Pay Transparency Directive?

Proactive compliance with the Directive can strengthen your brand, mitigate your compliance risks, improve employee morale by promoting equity, and satisfy the expectations of investors and customers.

Why getting expert help is essential for compliance

Because this key EU Pay Transparency Directive’s implementation will vary significantly across countries—and since some EU countries already have measures in place—you’ll need guidance to navigate these complexities successfully, even as prospective laws continue to shift and evolve as they approach their final form. Working with a trusted expert who is actively monitoring each EU member state’s evolving regulations is key. At HSP, we’re tracking country-specific pay transparency requirements closely to help you navigate every jurisdiction effectively. If you need support in understanding how the EU Pay Transparency Directive affects your operations in Europe, and the steps you need to take to prepare, reach out to our experts today.

HSP is an end-to-end global expansion solutions provider focused on helping companies scale their operations overseas effectively and efficiently. We are the only global expansion expert to offer growing companies a full suite of end-to-end solutions designed to help them scale to any size and country.

Our in-country experts have delivered the full spectrum of global expansion solutions—from EoR to entity set-up and management—across more than 100 countries (and counting). HSP brings full payroll, accounting, tax, legal, compliance, and HR services to corporate teams, integrating with in-house staff to both guide and execute across every domain.

Contact us to discover how our full suite of global mobility services can help your company successfully operate overseas in any environment.

The post EU Pay Transparency Directive: What Employers Need to Know and How to Prepare appeared first on HSP Group.

What to Look for in a Global Mobility Provider

Sky Mehringer — Tue, 01 Jul 2025 18:43:07 +0000

Choosing the right global mobility provider can directly affect your company’s ability to successfully expand overseas and retain top talent. An effective provider acts as your trusted strategic partner, providing proactive, country-specific guidance as your company navigates diverse regulatory and operational challenges—from compliance to employee experience—in every country in which you operate. Here are the three most essential criteria to consider when selecting a global mobility provider:

3 criteria for selecting an effective global mobility provider

1. Proven expertise in cross-border compliance

If your company is moving employees across borders, you’re likely to run into the full spectrum of regulations and requirements—immigration, tax, social security, and local employment laws—all of which will vary (and change) widely by country. You need a provider that can provide you with both global guidance as well as the local experts you’ll need to help you navigate across jurisdictions.

Look for: The best local experts will have the experience and country-specific expertise to allow you to both understand the changing local regulatory landscape and proactively manage affairs on your behalf. Whether handling visas and work permits, drafting jurisdiction-specific employee contracts and policies, or providing relocation support and helping you meet local HR compliance requirements, an effective provider will help you achieve the critical compliance that shields your company from costly fines and legal penalties.

Red flags: Make sure that prospective providers are appropriately equipped with both the knowledge and the capacity to handle your needs for international markets.

2. Strategic and advisory services to manage your global mobility framework

Mobility workflows involve many moving parts—timelines, documents, tax filings, policy tracking, reimbursements, to name a few. The ideal provider will guide you on how to make entry into new markets easier and more streamlined, and provide both guidance and hands-on support for your remote work setups to ensure that all of your cross-border employee movements are in compliance and managed efficiently.

Look for: An effective provider is equipped with a robust team of in-house experts who can manage the full lifecycle of your global workforce mobility network.

Red flags: Watch out for providers that don’t offer you end-to-end service and support. This will force you to rely on a fragmented system of providers and vendors, making managing cross-border employees more difficult and potentially error-prone.

3. Global advisory services and hands-on local support

Moving employees across borders involves much more than processes or paperwork—these moves involve adapting to new countries, adhering to local regulations, and understanding new cultural and business norms. A trusted global mobility provider should be well positioned to offer global strategic guidance, ranging from best practices for global mobility policies and standardizing existing processes across countries, to creating critical budget and cost projections. As important, the provider should have a robust team of local experts who can provide onboarding support, cultural training, draft legal documents such as employment policies and employee contracts, and conduct tax filings and provide other regulatory support.

Look for: A single provider who can provide end-to-end guidance and support across every country in which you operate (as well as potential candidates).

Red flags: Providers that support a limited number of countries, or who rely on third-party vendors to provide support. These providers may lack accountability and be unable to provide you with needed oversight, consistency, and responsiveness across your global footprint—particularly if you decide to expand to other countries or if problems arise.

The case for end-to-end global mobility solutions

Global mobility can range from short-term trips to long-term relocations. Many global mobility providers break down services into silos: visa support, payroll, tax advice, etc. This fragmentation can create gaps and needless complexity, and it may raise accountability issues.

Opt for an end-to-end partner that is proven to manage the full cycle of global mobility:

immigration and visas
payroll and tax compliance
local HR requirements and employment law
ongoing compliance and regulatory filings oversight
a full suite of advisory services designed to help you manage your global team

This unified approach reduces vendor overhead, lowers risk, improves employee satisfaction, and gives you transparency and oversight across all of your global operations. Best of all, you avoid the fragmented system of managing separate vendors for payroll, tax and accounting, legal, and HR—making the process seamless for your HR team and your employees.

Short‑term vs. long‑term overseas employee assignments

Different assignment lengths come with different compliance needs and risks:

Short-Term Employee Cross-Border Assignments (a few weeks to months):
Short-term employee assignments require pre-assignment tax checks, work-permit (as well as other possible required paperwork) validation, and carefully tracking days abroad. Your global mobility providers should be prepared to manage timers, taxation trigger thresholds, and alternative visa rules to avoid costly penalties resulting from not staying in compliance.
Long-Term Employee Assignments (6 months to years):
These longer term assignments present deeper challenges—your provider will need to manage home and host-country payroll, tax equalization, benefits requirements and coordination, relocation and eventual repatriation support for when the assignment ends and the employee is transferred back to the home country.

A provider that directly handles—without handoffs to third parties—both assignment types can save you time and prevent costly compliance mistakes when assignment types overlap or switch mid-project.

4 Global mobility provider red flags to avoid

Watch out for global mobility providers that:

Only offer piecemeal solutions (e.g., only payroll or legal)
Lack a centralized technology platform to support all aspects of your global HR footprint
Outsource local expertise or other services and leave you managing relationships with multiple vendors
Don’t support a robust array of countries

This first step is the most important

Expanding globally isn’t just about moving people—it’s about building sustainable operations in new markets. Before you begin researching and interviewing global mobility providers, make sure that you first thoroughly understand your non-negotiables for providers. This first step will ground you and help you evaluate the relative merits of different providers without feeling overwhelmed.

An effective global mobility provider will help you:

Help you establish a framework that can be replicated and managed effectively across all expatriate assignments. Avoid compliance pitfalls by proactively helping you understand requirements, laws, and deadlines in every country.
Streamline cross-border workflows through intuitive, centralized technology.
Create a positive experience for employees abroad through local expertise and effective onboarding.
Provide both global guidance and local support without outsourcing to third parties.

Best of all, our technology platform, GateWay GXM, is the world’s first purpose-built Global Expansion Management (GXM) platform designed specifically to help small to mid-sized companies manage their entire global footprint—entities, payroll, HR, accounting, and tax—all in one place.

Contact us to discover how our full suite of global mobility services can help your company successfully operate overseas in any environment.

The post What to Look for in a Global Mobility Provider appeared first on HSP Group.

5 Signs it’s Time to Switch from an EoR to an Entity

Sky Mehringer — Tue, 06 May 2025 20:22:42 +0000

Simplify your global growth and make smarter long-term expansion decisions.

Expanding internationally often starts with agility and speed — making an Employer of Record (EoR) a practical choice for fast market entry and initial hiring. However, as your business matures in a market, there comes a point when an EoR may no longer be the best fit for your needs. Recognizing the right time to transition from an EoR to an owned legal entity can save your business money, improve compliance, and enhance your operational flexibility.

Below are key signs that it’s time to make the switch:

1. Your In-Country Headcount is Growing Quickly

EoRs are ideal for small teams, but costs rise significantly as headcount increases. Once you have 5 or more employees in a country (sometimes fewer, depending on local regulations), the per-employee fees often become less economical than setting up your own entity. With larger teams, managing operations directly through an entity is typically more cost-effective.

Thinking About Long-Term Market Presence?

Check out our EoR vs. Entity Cost Calculator to compare your options. Get Started.

2. You’re Committing to the Market for the Long Term

EoRs are great for short-term hiring, project-based work, or market testing. But if your company has long-term plans to establish a permanent presence — building brand visibility, opening local offices, or expanding sales and operations — an entity may offer more flexibility to support those goals.

A legal entity signals to customers, employees, and partners that you are invested in the market’s future.

3. You Need Greater Control Over Employee Experience

When hiring through an EoR, employee benefits and policies are typically standardized across the EoR’s broader employee population, leaving little room for customization.

Consider switching to an owned entity with full control over compensation, benefits, and cultural integration if you want to:

offer tailored benefits to attract top talent
provide equity or stock options
align employee policies with your global culture

Switching to an entity gives you greater abilities to customize the employee experience.

4. You’re Facing Compliance Complexity

As your in-country operations expand, you may encounter compliance requirements that exceed the EoR’s scope, such as:

permanent establishment risk (tax exposure triggered by business activity)
industry-specific regulations requiring direct operational oversight
local labor laws requiring specific employment contracts or benefits

Owning your entity allows you to manage these complexities directly, giving you more visibility and control over compliance versus delegating this to a third party.

5. You Want to Build a Stronger Local Brand

EoRs focus on employment compliance, not market presence. If you’re looking to:

establish a local office or physical presence
sponsor visas directly
bid on local contracts requiring a legal entity

Then forming an entity helps you build credibility, strengthen your local reputation, and position your brand for deeper market integration.

Get Expert Help with Your EoR-to-Entity Transition

Switching from an EoR to an owned entity can unlock cost savings, operational control, and long-term growth potential — but the process must be handled carefully to avoid compliance risks and employee disruption.

Learn how the experts at HSP Group can guide you effectively through every step of the transition.

Contact us to discover how our full suite of global mobility services can help your company successfully expand overseas in any environment.

The post 5 Signs it’s Time to Switch from an EoR to an Entity appeared first on HSP Group.

What is Global Mobility and How an EoR Can Help

Sky Mehringer — Wed, 23 Oct 2024 20:31:37 +0000

What is Global Mobility?

Global mobility refers to the movement of employees across international borders to foster growth in global markets. Typically, it involves hiring, relocating, and managing staff while ensuring compliance with all legal and tax requirements across all jurisdictions.

Effective global mobility requires a holistic strategy aligned with your company’s growth goals, efficient and streamlined operations for managing a global workforce, and compliance regardless of location. Successful global mobility management frees your company to focus on its primary business objectives by ensuring that all aspects of your international workforce management and mobility needs are met seamlessly and accurately. Managed effectively, global mobility is a critical part of how your company can expand into international markets.

Which types of legal compliance do I need to follow regarding global mobility?

Because the laws and requirements of different countries and jurisdictions vary (and are constantly changing), global mobility is not typically an easy process for most companies. Here are the three most common pain points that you may encounter as you grow your company overseas:

Immigration compliance for employees: Navigating visa and work permit regulations across multiple countries is very complex. Not only does it differ from country to country, but those requirements will inevitably change over time. Non-compliance risks are severe—ranging from legal penalties, delays, and even denied entry for employees. These things can have wide-ranging negative impacts on your reputation, your operations, and employee satisfaction.

Tax and payroll compliance: Ensuring accurate tax calculations and payroll processing across different countries adds another layer of complexity. Similar to immigration requirements, the rules vary depending on location, change over time, and carry fines and other penalties if they are not followed. It is also important to consider whether sending employees overseas to work on behalf of your company could trigger a corporate tax nexus for your organization, which is affected by things including: how long the employees have been or will be in place, the nature of the work being performed, number of employees, economic value generated, and the specific jurisdiction’s definition of permanent establishment.

Employment compliance: Depending on the exact arrangement of the international assignment, you would need to follow both the statutory minimum employment standards of the country to which the employee is assigned as well as that employee’s contractual agreement in the home country. This includes considerations around how long the international assignment is expected to be (short-term versus long-term) as well as benefits, payroll setup, and tax obligations (home country versus host country).

What is an EoR?

An Employer of Record (EoR) is a service provider that handles most aspects of HR tasks (including hiring and payroll) for companies looking to expand their operations abroad. Essentially, an EoR becomes the legal employer of record for a company’s workforce in another country. This allows the company to operate in that country without having to establish a legal entity (a taxable presence in a country).

Many companies choose this option as a fast and easy way to hire workers overseas quickly without the administrative burden. One key distinction is that while the EoR provider handles the administrative tasks related to hiring and managing employees, the daily supervision remains yours. An EoR’s provider’s primary responsibilities are:

Compliance Management: An EoR ensures your company’s adherence to all labor, tax, and employment regulations for each country or jurisdiction in which your company operates.
Payroll Processing: The EoR provider is responsible for producing accurate and timely payroll for all employees, from taxes and social security to benefits.
Employee contracts: The provider will draft and manage employment contracts to ensure compliance with all local laws and norms.
Benefits administration: An EoR also oversees health insurance, retirement plans, and other employee benefits.
HR administrative support: Your provider will assist with onboarding, employee relations, and terminations.
Risk management: EoR providers will handle all employment-related liabilities and legal issues on your behalf.

While an EoR is rarely a viable long-term solution, it does offer growing companies a relatively fast and simple way to move into new overseas markets with initial hires.

For example, your company might need to hire local talent quickly in a new country to determine if that particular market might be a good fit for your company’s expansion goals. By using an EoR, you can quickly hire that employee without setting up an entity in that country. The EoR would, of course, handle compliance, payroll, and benefits.

In the context of global mobility, an EoR would be able to assist you with the immigration requirements when you wish to send an employee to a new country in which your company has no legal entity. In addition, the EoR provider would be able to take on the other burdens associated with employment, payroll, taxes and benefits.

The Role of EoR In Global Mobility

As tax, immigration, and employment laws across countries vary and change, it’s a given that most internal HR teams will have trouble keeping up with the compliance requirements for every employee in each country and jurisdiction. As we’ve noted, running afoul of these laws and requirements opens your company up to significant risk in the form of penalties, fines, and other sanctions. Thus, EoR can be a huge catalyst for your company’s global mobility strategy.

Often, hiring in a particular country overseas means that you’ll be bringing in workers who will need permission (a work permit or visa) to work in that country. If this is the case, those workers must be sponsored by their employers. Typically this requires that the employer establish an entity (at a minimum) in that country. After setting up an entity, the employer can obtain the required permissions on behalf of the employee (for example, obtaining a sponsorship license or applying for a work permit or visa).

While many companies do choose to set up an entity, that may not be the ideal scenario for your particular company’s business plans, depending on your growth objectives and how quickly you wish to enter a new jurisdiction.

This is where EoR can be a good alternative solution—by helping you to avoid common compliance mistakes in global expansion (ranging from local labor laws and tax regulations to employment standards) as well as to provide you with a solution to quick hiring and onboarding.

Additionally, some (not all) EoR providers can also support the immigration process by sponsoring an overseas employee’s work permit/visas and acting as their legal employer. However, it is important to keep in mind that the process to apply for and obtain work permits/visas will ultimately extend the onboarding timeline for an EOR because no employment agreement can be issued or executed until a valid work authorization has been obtained. EoRs also handle payroll, benefits, and employee contracts. They also mitigate risks related to cultural misunderstandings or non-compliance with termination regulations.

While EoR can help many companies expedite their global mobility, there are two important limitations on how it can be used:

Not all jurisdictions allow EoR to sponsor work permits or visas. Many countries, particularly in Europe, make it illegal for an EoR provider to sponsor work permits or visas. The rationale for this is that the employee’s work is not for the benefit of the EoR itself but rather for the company that contracts the EoR. In fact, we see this restriction on EoR as a growing trend, chiefly because more countries are realizing that allowing foreign companies to use an EoR instead of establishing a tax-paying entity is a missed opportunity to collect government revenue.
Employees employed and sponsored (via work permit) by an EoR are subject to local taxes and social security. If an EoR can sponsor an individual’s work permit and employ them on your company’s behalf, that person will be treated as a local resident employee. This means that they will be subject to local taxes and social security, and will need to be removed from their current payroll and benefits. This is an important factor to consider when determining whether to send an individual overseas and the length of the assignment, particularly when discussing their compensation package for making the move.

Under an EOR employment (with the EOR sponsoring the work permit), it is not possible to set up a traditional expatriate arrangement, whereby an employee remains enrolled in their home benefits and on their home payroll (e.g.,, setup of a shadow payroll) due to the fact that the employee will now be considered a fully local employee. The length of the assignment is important because, if an individual is only going to be overseas for a short-period of time, having that individual under EOR employment may not make sense—it will have longer term impacts on their home country benefits and home country tax status/obligations.

HSP’s Bespoke EoR Services for Global Mobility

HSP Group’s International Employer of Record (EoR) services are tailored to meet the unique needs of your company’s global growth expansion strategy. Our EoR services ensure a seamless expansion into new markets, all while minimizing compliance risks and optimizing your operational efficiency as you expand. We manage the complexities of international staffing and compliance so that you can focus on your core business activities.

We start by determining whether EoR is the right fit for your company, ensuring that your decision is well-informed, cost-effective, and beneficial for your business.
If you determine that EoR is the best solution, HSP leverages its extensive network of EoR providers to find and manage the provider that best aligns with your needs.
Once you select a provider, our experts manage the integration, allowing you to avoid the typical challenges associated with transitioning to an EoR. Best of all, our experts allocate dedicated technical consulting hours to empower your team, enhancing the value derived from your EoR provider and ensuring seamless operations worldwide.

Effortless Expansion With EoR and HSP

As your partner, HSP’s proven EoR services can make exploring overseas markets faster and simpler while reducing your risk of being out of compliance—regardless of where your employees live and work. We also recently came out with a calculator that shows how much money you can save by expanding with an EoR. Check it out here.

Our experts will help you successfully define your global HR strategy to help you seamlessly navigate the complexities of international expansion. Talk to an expert today.

The post What is Global Mobility and How an EoR Can Help appeared first on HSP Group.

Navigating Overseas Expansion into the US: 13 Costly Mistakes to Avoid

Sky Mehringer — Wed, 16 Oct 2024 15:45:03 +0000

Expanding your business into the United States can be one of the most rewarding decisions for your company. As the world’s largest economy, the US offers vast opportunities for growth and profitability. However, the journey is fraught with potential pitfalls that can impede your success and lead to unexpected costs.

In this blog, we’ll summarize key mistakes businesses often make when expanding into the US market. To learn more about the solutions to these challenges, download the full eBook, “13 Costly Mistakes to Avoid When Expanding to the United States.”

1. Choosing the Wrong Business Entity When Expanding into the US Market

Selecting the appropriate business entity is critical. A common mistake is opting for a branch office rather than incorporating, which can expose your entire business to US taxes and liabilities. Instead, forming a subsidiary as a limited liability company (LLC) or a corporation can provide essential legal protections.

2. Defaulting to Delaware

While Delaware is popular for its business-friendly environment, it may not be the best choice for every business. Assess other states based on factors like talent availability, operational needs, and long-term business goals to determine the most beneficial location for incorporation.

3. Misjudging State Requirements

When expanding into the US market, keep in mind that each state has its own set of regulations, which can complicate compliance and operational procedures. Incorporating in a state where you do not operate can lead to additional complexities and costs. It’s often more advantageous to incorporate in the state where your business is physically located.

4. Overlooking Alternative Employment Approaches

Exploring alternative employment solutions such as partnering with a Professional Employment Organization (PEO) can significantly reduce HR and benefits costs while ensuring compliance across different states.

5. Misunderstanding At-Will Employment

The US follows an at-will employment doctrine, but this does not grant absolute freedom to terminate employment at any time. Protected categories and potential claims of discrimination must be carefully managed through well-drafted employment agreements and policies.

6. Neglecting Tailored Employment Agreements

US employment agreements and policies should be carefully crafted to align with state-specific laws and the unique aspects of US labor regulations. Generic or poorly structured agreements can lead to significant legal challenges.

7. Failing to Maintain Compliance

Compliance with US corporate, tax, and employment laws is non-negotiable. If your company is expanding into the US market, know that any lapse can jeopardize not only your US operations but also potentially impact your global business.

8. Leaving Intellectual Property Unprotected

The US is a hotbed for intellectual property disputes. Ensuring robust protection for your patents, trademarks, and trade secrets is crucial to safeguarding your investments.

9. Underestimating Tax Complexity

Understanding the layered structure of federal, state, and local taxes is essential to avoid overpayment and ensure compliance. Misjudgments in tax handling can lead to costly audits and penalties, which jeopardize your successful expansion into the US market.

10. Underestimating Litigiousness

The US is a highly litigious society, and businesses must be prepared to manage legal risks proactively through comprehensive insurance policies and robust legal strategies.

11. Ignoring Immigration Nuances

Navigating US immigration laws is essential for businesses bringing in non-resident employees. Work visa complications can severely disrupt business operations and lead to severe penalties.

12. Overlooking Financial Incentives

Many US states offer financial incentives for businesses to establish operations. Failing to leverage these can mean missing out on significant financial benefits.

13. Expanding into the US Market Without Domestic Expert Guidance

Expanding into the US market is an ambitious endeavor, but with the right preparation and expert support, it can lead to substantial growth and success for your growing company. The complexities of US expansion necessitate expert guidance. Partnering with a knowledgeable advisor like HSP Group can streamline the process, ensuring compliance and facilitating a smoother entry into the US market.

For more detailed guidance on how to solve for these 13 challenges, and to ensure a successful expansion strategy into the US market, download the full eBook, “13 Costly Mistakes to Avoid When Expanding to the United States.”

Expand Globally with HSP’s Expertise

Our in-country experts have delivered the full spectrum of global expansion solutions—from EoR to entity set-up and management—across more than 100 countries (and counting). HSP brings full payroll, accounting, tax, legal, compliance and HR services to corporate teams, integrating with inhouse staff to both guide and execute across every domain. Contact us today so that we can start delivering your custom solutions.

The post Navigating Overseas Expansion into the US: 13 Costly Mistakes to Avoid appeared first on HSP Group.

Singapore’s Latest Employment Law Changes Effect on EoR

Sky Mehringer — Tue, 03 Sep 2024 20:08:31 +0000

The Singapore Ministry of Manpower (MOM) has recently updated its regulations, prohibiting non-Singapore entities from using an Employer of Record (EOR) to sponsor work permits for foreign workers in Singapore. This change has significant implications for U.S. and other non-Singaporean entities looking to engage foreign nationals in Singapore. Under the new rules, entities without a legal presence in Singapore must explore alternative options for employing foreign talent.

Background on Employer of Record Sponsorship in Singapore

Employers of Record have historically provided a convenient solution for foreign entities wishing to employ workers in countries where they do not have a legal presence. EORs in Singapore could previously sponsor individuals for various work passes, such as the Work Permit, S Pass, and Employment Pass, based on the worker’s qualifications and salary level. This arrangement was especially useful for companies needing to quickly and efficiently deploy foreign talent in Singapore without establishing a local entity.

The new regulations from the MOM specifically prohibit EORs from sponsoring employment passes for individuals working for non-Singapore entities. According to the MOM, doing so constitutes a legal violation, effectively closing this pathway for employing foreign nationals. Companies that have relied on EOR services for workforce needs in Singapore must now consider alternative strategies to comply with local employment laws.

New Compliance Requirements

Under the updated guidelines, non-Singaporean companies must establish a local presence in Singapore to sponsor foreign employees legally. This can be done through several avenues:

Setting Up a Representative Office: Companies can set up a representative office under Enterprise Singapore’s (ESG) Representative Office scheme. This allows businesses to have a limited presence in Singapore, primarily for market research and feasibility studies. However, this option does not permit the company to engage in any trading activities or direct business operations that involve profit-making in Singapore.
Incorporating a Local Entity: Companies may also choose to incorporate a new entity through the Accounting and Corporate Regulatory Authority (ACRA). This option provides more flexibility, allowing the company to engage in a broader range of business activities and sponsor work passes directly for foreign employees.
Short-Term Visit Pass (STVP): For temporary needs, such as attending business meetings or conferences, companies may use a Short-Term Visit Pass. This pass allows foreigners to stay in Singapore for up to 90 days for specific business activities but does not permit long-term employment.

These new regulations require companies to reassess their current workforce strategies and consider the most effective way to maintain a presence in Singapore while adhering to local laws. Companies should also be aware that attempting to use an EOR to sponsor work passes for foreign nationals may result in legal penalties for both the EOR and the foreign company.

How HSP Group Can Support You

Navigating these changes can be complex, but the HSP Group is here to help. We offer comprehensive services to assist companies in adapting to the new regulatory landscape in Singapore:

Evaluating Employment Options: HSP Group can help evaluate the best options for employing foreign nationals in Singapore. We provide detailed insights into various visa types and their eligibility criteria, ensuring companies choose the most suitable approach based on their specific needs.
Setting Up and Incorporating a Local Entity: For companies looking to establish a legal presence in Singapore, HSP Group offers support in setting up and incorporating a local entity. We guide you through the process, from choosing the right business structure to filing the necessary paperwork with ACRA. Our team provides all required services to ensure your business complies with local regulations.
Visa Application Support: Navigating the visa application process can be challenging, especially with changing regulations. HSP Group provides end-to-end support for visa applications, helping you gather the necessary documentation, complete the application forms, and liaise with MOM to ensure a smooth and efficient process.
Local Employment Requirements: Understanding local employment requirements is crucial for compliance. HSP Group advises companies on Singapore’s employment laws, including drafting employment contracts and policies that meet local standards. Our team ensures that all documentation aligns with Singaporean regulations, protecting your business from potential legal issues.
Global Mobility and Expatriate Guidance: For companies that frequently move employees across borders, HSP Group offers global mobility and expatriate guidance. We help businesses develop strategies for relocating employees to Singapore, including tax planning, compensation structuring, and compliance with local labor laws.

HSP Group is ready to assist businesses in navigating these changes and ensuring compliance with Singapore’s employment laws. Our comprehensive services, from setting up a local entity to supporting visa applications and providing global mobility guidance, ensure that your business can adapt effectively to the new regulatory environment. For further assistance or to discuss your specific needs, please contact HSP Group.

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Best Practices For Global HR: How To Stay In Compliance

Sky Mehringer — Fri, 16 Aug 2024 15:45:41 +0000

When managing a globally expanding company, the complexity of staying in compliance and avoiding legal and financial missteps will increase with each new country into which you expand. For US-based companies expanding into new international markets, staying compliant is crucial to avoid costly pitfalls and ensure smooth operations. In this blog, we will explore best practices for global HR compliance and how HSP, an end-to-end global expansion services provider, can help your company stay in compliance as your company continues to grow and establish a global presence.

Why Staying in Compliance Internationally Is So Important

Staying in compliance with each country’s laws and regulations is critical for several reasons. Non-compliance can lead to severe legal repercussions for your company, including hefty fines, legal actions, adverse effects on employee culture and trust, and even reputational damage to your company’s good name and brand. While every country is different, here are some common laws that your HR team should be familiar with:

General Data Protection Regulation (GDPR)

GDPR is a regulation in the European Union that governs data protection and privacy for individuals within the EU. It is known as the world’s strictest data privacy and protection law. One common misperception is that this law only applies to companies based in the EU. This assumption is incorrect—the law also applies to US-based companies that store and manage the personal data of EU residents even if those residents are not in the EU. Non-compliance with GDPR can result in hefty fines, as evidenced by recent news articles about large US tech companies drawing hefty penalties as a result of non-compliance with the GDPR. For this reason, navigating the nuances of data privacy is a critical role of HR teams managing multinational companies.

European Union Labour Law – Directives vs. Regulations

While there are many countries that are member states in the European Union (EU) and the EU sets legislative acts, this does not mean that all member states have the same rules and laws when it comes to employment and HR compliance. That’s because there is a difference between the directives set by the EU (guidance based on a certain outcome that, while it must be incorporated into each country’s national laws, is nonetheless open to interpretation and implementation) and EU regulations (which are automatically and equally binding for every member state).

Because the incorporation and interpretation of each directive will vary from country to country, so will employer requirements for working conditions (for example, time off, overtime, working hours, flexible working, etc.,) and the process for informing and consulting workers (in the case of collective dismissals/redundancy, RIFFs, and employee transfers in M&A scenarios, to name a few).

Tips For Global Compliance

Implementing the following tips can help your company achieve and maintain compliance for every country and jurisdiction in which you have a presence:

1. Document Your Company’s Policies & Expectations

Clearly document all company policies and expectations regarding compliance. This documentation should include codes of conduct, statutory policies, compliance guidelines, and procedures for handling non-compliance issues. Ensure that these policies are easily accessible to all employees—especially your HR and legal teams—and are regularly updated to reflect any regulation changes.

2. Centralize HR Information

Centralizing HR information helps in managing compliance across different regions. Utilize HR software to store and manage employee data, compliance records, and documentation. In addition to offering better management through transparency, centralizing your HR information allows you to better track activities and comply with laws and requirements.

3. Stay On Top of Regulations in All Jurisdictions in Which You Operate

Keep abreast of the latest regulations in all the countries where your company operates. This requires continuous monitoring of local labor laws, tax regulations, and data protection laws—many of which are constantly changing and evolving. In fact, this is one of the most challenging aspects of global compliance. Engaging with local legal experts or consultants is one of the best ways to avoid the risks associated with the changing regulatory landscape overseas.

4. Communicate with Employees

Regular communication with your employees about compliance policies and expectations is crucial. Effective communication ensures that employees and internal teams are aware of their responsibilities and the importance of adhering to your company’s policies.

5. Work with an HR Provider

Partnering with a global HR provider like HSP can significantly simplify the process of managing global compliance. HR providers offer expertise in international business compliance, entity management, and consulting and can provide tailored solutions to meet your company’s specific payroll and global expansion needs. HSP’s comprehensive services include global payroll, HR services, and global integration support.

6. Manage Global Payroll

Efficient global payroll management is essential for ensuring compliance with local labor laws and tax regulations. Implementing a comprehensive global payroll system ensures accurate and timely payment of all employees across every country and greatly reduces your risk of non-compliance.

Stay In Compliance No Matter How Big You Grow

Staying compliant in today’s evolving global landscape requires diligent efforts and the right partnerships with trusted experts. By following the best practices outlined in this blog and partnering with a trusted, comprehensive global expansion service provider like HSP, your company can remain compliant across every country and jurisdiction in which you operate while doing so efficiently and cost-effectively.

Our experts will help you successfully define your global HR strategy to help you seamlessly navigate the complexities of international expansion. Talk to an expert today.

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Employment Law Updates in Germany and the United Kingdom

Sky Mehringer — Wed, 17 Jul 2024 20:06:06 +0000

HSP Group is committed to informing you about the ever-evolving landscape of global employment law. We understand that staying updated on legislative changes is crucial for your business operations.

Below, you’ll find an overview of the recent employment law updates in Germany and the United Kingdom. We highlight the key changes and offer recommendations on navigating these developments effectively.

Employment Law Updates for Germany

Currently, when an employee makes a claim against dismissal, the case takes several months through the German courts. If successful, the employer must pay the employees outstanding remuneration that they would have been paid throughout the litigation process. This includes any interest on the arrears if they were out of work during this time.

Current protections are in place to mitigate employees deliberately and ‘maliciously failing to obtain’ work during the litigation period. The burden of proof lies with the employer, however, which is practically very difficult. To mitigate these claims, employers have paid large severance packages.

Recent court judgments have now determined that employers have greater rights to challenge claims for outstanding remuneration during litigation. The courts ruled that employers can demand information from the employee on the placement proposals submitted by the employment agency and the job center and become proactive themselves and make the dismissed employee reasonable job offers.

In light of this recent case law, we recommend that employers ensure that they are being proactive. This will help bolster their argument against outstanding remuneration should they find themselves in a position to defend these claims in the future. The steps include:

Interim Reference Letters

Companies must provide an interim reference letter to employees being terminated for operational reasons (redundancy) at the same time as, or shortly after, the termination letter. This means the employee has a reference available to them without delay so that they can commence their job search as soon as possible. A German-compliant reference letter must be drafted in line with a specific standard, format, and grading system and must be in German. We therefore recommend seeking guidance to ensure that the reference letter meets the required standard.

Job Advertisements

Proactively send suitable job advertisements to the employee, referencing the Federal Labor Court 7 February 2024 judgment 5 AZR 177/23. Accurate records of job adverts and when they are sent to the employee should be kept.

Regular Requests for Jobseeker Notifications

The employer should regularly request the employees’ jobseeker notification and the job center’s placement attempts. Employers should also check employees’ disclosed job applications in detail.

Please note that only employees working for an employer with over ten employees and over six months of continuous service can make a claim under the German Protection Against Unfair Dismissal Act. Claims must be made within three weeks of the employee’s termination. In our experience, a number of employees who do not strictly meet these criteria still submit a claim. Therefore, we recommend that all companies with local German employees familiarize themselves with the above legal updates.

How HSP Can Support You

HSP will be happy to advise and support any German termination processes to ensure compliance with Germany’s strict termination procedural requirements and the recommended post-termination steps outlined above, including a legally compliant reference letter.

United Kingdom Updates

Following a few turbulent years, the UK electorate voted for a new Labour Government, which will replace the current Conservative Party government, the primary governing party in power since 2010. Labor has proposed several employment law updates and committed to implementing an Employment Bill within their first 100 days in office. Some of the key changes proposed include:

Ban on ‘zero hours’ contracts.
Implement a two-category employment status framework consisting of ‘Self Employed’ and ‘Workers.’ Currently, there are different definitions of worker and employee, meaning that all ‘workers’ will be entitled to the same employment rights (e.g., sick pay, family leave, holiday pay).
Prohibit ‘fire and rehire’ practices, which employers may impose when employees do not agree to contractual changes to their employment terms.
Right to Disconnect law implemented.
Reduce the length of service required for Unfair Dismissal claims from two years to one year.
Increase the time limit on employment tribunal claims from three to six months.

These changes signify one of the most significant changes to employment legislation in the UK for over a decade. Practically, employers will need to audit their UK employment policies, contracts, and practices to ensure they meet the new legislative requirements.

Worker Protection (Amendment of Equality Act 2010)

From October 2024, the Worker Protection (Amendment of Equality Act 2010) will come into force. The Labour Party has not indicated that it will rescind the Act, but its final version may change employer obligations under the Act. The Act requires employers to take reasonable steps to prevent sexual harassment of their workforce.

Employers will have a duty to adopt appropriate policies and procedures to prevent sexual harassment and to report and investigate any harassment allegations effectively.

In addition, employers will need to continuously monitor and review the effectiveness of their policies and the gender demographic of their workforce to identify any potential discriminatory practices and adopt appropriate measures to eliminate these.

Appropriate training should also be provided to employees and managers in a way that suits their roles and responsibilities in the organization.

Tribunals will be able to uplift compensation for employees who make a successful claim of sexual harassment by 25% where an employer has been found to not comply with their obligations under the Act.

How HSP Can Support You

HSP can provide guidance and assistance in reviewing current policies and procedures or creating new policies for your UK workforce. HSP can also provide training or refresher training for UK employees.

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Legislative Employment Changes in Australia and France

Sky Mehringer — Thu, 13 Jun 2024 15:35:03 +0000

HSP’s mission is to offer our partners complete end-to-end global expansion guidance and support. As part of that work, we closely monitor and communicate to our clients any significant, active changes in legislation that can potentially impact business operations. Last month, we wrote about employment changes in Hong Kong, Ireland, and the UK. This month, we’re focusing on legislative employment changes in Australia and France.

Please see below for a summary of the changes in employment legislation for these two countries to understand how they may affect you and which actions you should consider taking.

Australia’s legislative employment changes

Australia has been undergoing a series of workplace reforms under the Closing Loopholes Bill. The primary areas covered by the latest employment legislation reforms will affect our clients. Please note that no dates have been announced for when these changes will commence. In addition, no further details on the changes have been officially published as of yet. We believe that there will likely be a lead-in time for implementation for many of these changes, so there are no actions for our clients to take at the moment.

Australian employees now have the “Right to disconnect”:

Employees will have the right to refuse contact or attempted contact outside their regular working hours unless their refusal is unreasonable. This is similar to the French ‘Right to Disconnect’ legislation.

A new definition of employer and employee in Australia:

There is a new definition of employment to ensure the difference between employee and independent contractor is clear and up-to-date.

Unfair contracts regime:

The Australian government has now given the Fair Work Commission (FWC) the power to amend, vary, or set aside unfair terms applied to independent contractors.

How HSP Can Support You

The employee/contractor test will reinforce the need for clients to review any current contractor relationships to ensure that they do not inadvertently have any ‘de facto employees’ working in Australia, which could pose Permanent Establishment (PE) and Commercial Agency risks in Australia. In addition, it emphasizes the importance of having a robust contractor agreement in place to mitigate any courts deeming it null and void.

HSP can help you review your contractor relationships to ensure they don’t put you at risk for PE and Commercial Agency risks. We can also ensure that you have a robust contractor agreement in place to comply with changes to Australia’s employment legislation.

Employers will likely be required to adopt a Right to Disconnect policy that specifically outlines the employee rights and employer obligations regarding the Right to Disconnect, similar to France. The legislation may also require employment contracts to be updated to contain wording regarding the Right to Disconnect.

Changes to fixed-term contracts in Australia:

New rules now apply to fixed-term employment in Australia. The employer must supply each employee engaged on a fixed-term contract with a Fixed-Term Contract Information Statement (FTCIS). Fixed-term contracts will be subject to a maximum term of two years and can only be extended or renewed once.

How HSP Can Support You

HSP can review your existing fixed-term contracts for customers, draft fixed-term employment contracts, and provide the FTCIS issued by the FWC.

France’s New Mandatory Profit-Sharing Legislation

Mandatory Profit-Sharing in France:

France’s new mandatory profit-sharing law will apply to employers with 11 employees or more from 1 January 2025. Since 2020, employers with 50 employees or more have had to coordinate profit-sharing schemes for their workforce. The proposals will extend this requirement to employers with 11 employees or more.

The Act sets a deadline of 1 January 2025 to implement a profit-sharing scheme if the company is profitable (has a pre-tax profit of at least 1% turnover for three consecutive years). The obligations under the Act will initially operate for a five-year period, after which the legislature will determine whether the requirements will remain in force.

Employers can satisfy the requirements in several ways. In addition to a standard profit-sharing arrangement (intéressement), an employer could satisfy the Act by operating one of these:

company savings plan (PEE)
pension plan (PER)
value-sharing bonus (PPV).

How HSP Can Support You

HSP can help you ensure that you have a profit-sharing program in place by 2025. We can audit your existing programs to ensure they will comply with the new law. Our team can also help you create or adjust policies to ensure that compliance with France’s legislative employment changes. Employers with 11 or more employees should make plans now to ensure that schemes are in place before the deadline. Companies should audit what they have in place regarding Interessement, PEE, PER, or PPV or work to develop a legal requirements action plan.

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