Written by Matt Monette, Country Lead and Head of Expansion, UK & Ireland at Deel

With the economy stagnating, the Office for National Statistics said a marked decline in earnings growth in the three months to October has coincided with jobs becoming harder to find.

In its latest health check on the labour market, the ONS said growth in total average earnings had dropped from 8% to 7.2% in the three months to October – a much bigger drop than the financial markets had been predicting. Meanwhile, the number of job vacancies continued to fall, declining by 45,000 to 949,000 in the September to November period.

Right now, the jobs market is to some extent, playing a game of chess with the wider economy. It’s likely that employers and jobseekers are waiting to see how the economy recovers before committing to new roles. This is making it even harder to find talent for currently open roles. 

To alleviate some of these short-term issues, this year we can expect to see more employers turning to global hiring practices, to widen the pool of potential candidates in an increasingly competitive market. Why? Well, with recent layoff news, and skills development varying from market to market, businesses have a very real opportunity to snap up talent from across the globe to fill these open positions. In fact, according to Deel’s Global Hiring Report, the hiring of UK talent by international companies increased by nearly 10% (8.4%) last year alone. And we anticipate this is going to rise. 

But, for HR leaders in charge of implementing global hiring, it’s important to understand the changes and challenges global hiring imposes on the business. Many are faced with confusing labour laws, sending them backwards in their global hiring journey. 

What are the most important compliance considerations people teams need to be aware of when supporting business leaders in their global hiring journeys? 

The role of global payroll in hiring abroad

While it’s positive to see that there has been  a 74% growth in global hiring over n the past 12 months, according to Deel platform data, there are still big barriers to adoption – including compliance. 

Global payroll is one of the more complex processes of global expansion. Businesses have to comply with different labour laws in each new country, different taxes and currency rates as well as different employee expectations regarding health insurance, pension contributions, holiday and maternity leave. And if businesses don’t get it right, they are potentially subject to lawsuits and tax bills topping the tens of thousands. With so much to think about, there’s plenty of room for hiccups, which are rarely well received by employees who just expect to be paid for their work, accurately and on time. 

Businesses also need to consider the data management and security challenges that come with a global payroll system. Payroll involves processing sensitive employee data, such as social security numbers and bank account information. Remote companies are therefore more at risk of exposing this sensitive data and are more susceptible to phishing scams.

Getting to grips with global labour laws 

Compliance should not be an access barrier to new talent pools. One way to pay international workers, while remaining compliant, is to hire non-employee workers. 

Hiring independent contractors or freelancers is a more affordable and less demanding way to hire full-time employees when it comes to payroll. Contractors and freelancers are paid via invoice, one at a time. This means that  employers don’t have to worry about managing recurring payments, payroll taxes, or local employee benefits. 

Alternatively, some companies choose to use an employer of record (EOR) service when going global. An EOR is a third-party company that takes care of global hiring, payroll management and compliance all in one. EOR’s operate by setting up local entities worldwide, and act as the legal employer and global payroll manager of your new hires.

Investing in Continuous Compliance

Alongside tactical solutions for overcoming compliance issues, businesses can consider investing  in continuous compliance as a long term strategy. 

It is no secret that the legal and regulatory landscape changes frequently, often bringing complexity, direct costs, and risks, creating uncertainty that impedes businesses from planning for the future and making long-term investments.

Compliance guidance often suggests substantial investments in internal legal counsel, recruiting local legal firms, or investing significant human hours in managing compliance. However, the alternative and most effective approach involves continuous monitoring and evaluation of a company’s adherence to legal and regulatory requirements across multiple jurisdictions. Deel’s Compliance Hub can support businesses in exactly this. 

Analysing worker data and staying abreast of compliance developments, coupled with the automation of compliance processes, enables businesses to provide real-time compliance alerts. This proactive stance allows them to stay informed about compliance status, instilling confidence as they hire and manage workers across the globe.

Within a complex labour market, disrupted by skills gaps, rapid technology advancement and rising demand for flexibility, companies can widen their access to critical talent by looking further afield. Once companies understand the importance of compliance knowledge to mitigate risk, global hiring can be used as a significant competitive advantage.