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The implications and challenges of non-compliance in Global Mobility and how to avoid them

The management of compliance has always been an issue when assigning people internationally. The challenge is to ensure that tax, social security, and immigration legislation in both the home location of the employee, and the location in which they will be working are adhered to.

And delivering the most cost effective and timely solution possible for the employer at the same time as achieving compliance, is always the goal to strive for.

This challenge has become more difficult in the last five years or so, for the following six reasons:

  1. Whilst there are still large numbers of “traditional expatriates” (employees assigned to a foreign location for say, three years), there has been a rapid increase in the use of more “flexible” solutions such as, short-term assignments, cross-border or commuter assignments, or the frequent business traveler.This has been driven by a need for perceived cost-containment in the company, and employee reluctance to accept longer term arrangements, for family reasons such as spousal income or children’s education. These employees have been referred to as “stealth” assignees by some relocation professionals, as they are often not advised to Human Resources, and work outside of any defined policy or compliance guidelines and procedures. However to the regulatory authorities the issues may be the same as for a longer term assignment.
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  2. Multinational companies are now much more likely to be looking at their global workforce, and transferring different nationalities, than in the past when many staff came from the headquarters country. This means that the possible combinations of departure and destination countries, and thus the regulations that need to be understood and adhered to, are multiplied.
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  3. The increased threat of “global terrorism” and outbreaks of epidemics (for example SARS), have forced Governments to become more restrictive regarding entry across their borders, and to increase enforcement action regarding non-compliance. This has also meant frequent, and often rapidly introduced changes in procedures to apply for legal immigration status.
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  4. The increased use of technology such as e-mail, and the growth in business travel means that expectations of time-scales for delivery are more rapid than in the past. This gives Human Resources staff insufficient time to educate themselves in these complex areas. For the regulatory authorities it has meant greater co-operation both internationally, and domestically (for example, between immigration institutions and Revenue institutions) to enforce compliance.}
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  5. Financial scandals such as Enron have brought greater attention to corporate governance in commercial day to day business
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  6. Many employers have reduced staffing levels in their Human Resource Departments, requiring generalists to become involved in specialist activities

Even companies that manage all of their international assignment administration in-house will often outsource compliance aspects to specialist firms because of the complex nature of the ever-changing requirements. These companies however, often understand the risks, at least in principle if not in detail.

However, Companies embarking into the international HR arena for the first time, or making use only of the “flexible” assignment types above, may be unaware of many of the requirements – this is not a defence in terms of the law!

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Download the full article here and find out how to avoid the implications and challenges of non-compliance

Given that the compliance requirements are specific to each country, in an article of this nature we can only cover the main issues and common misconceptions/pitfalls in broad terms.

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