Centaur Stage is a weekly video series produced by Cosmic Centaurs, and this second season is all about the magic of teams. Each Thursday afternoon, on LinkedIn Live, at 3:30 PM UAE-time, Marilyn Zakhour, CEO & Founder of Cosmic Centaurs, is joined by incredible guests who share insights, opinions, and perspectives about what makes teams cohesive, high-performing, and happy.
This episode of Centaur Stage Season 2 is the second of the fourth and last chapter: growing teams. Marilyn hosted Pieter Manden, WorkMotion’s Head of Trust & Employer Compliance, to discuss the benefits and challenges of hiring globally, with a special focus on the legalities of the process.
Watch the full episode here.
About Pieter Manden
Pieter is WorkMotion’s Head of Trust & Employer Compliance. He is a Dutch certified tax lawyer specializing in compliance around modern mobility. Pieter has 13 years of professional experience with PwC in the Netherlands and Germany. Prior to joining WorkMotion in January 2022, he was responsible for PwC Germany's Remote Work proposition. Pieter speaks Dutch, English, and German, and holds an MBA from ESCP Business School in Paris.
About the Topic
Companies are taking advantage of the new remote work models to hire great talent anywhere in the world. We are now witnessing a surge of telemigration, a term coined by Richard Baldwin, Professor of International Economics in Geneva, to refer to “people belonging to one nation, and working in the offices of another”.
Scaling on a global level has its own set of challenges. Not only because of the barriers to synchronous work and communication, but also because different countries and cities have different labor laws and tax regulations concerning work.
Hiring globally raises questions about local entities. One way to navigate this is to hire ‘Employers of Record, whose roles are to facilitate the recruitment processes. They help you evaluate the cost and benefits of hiring globally and possibly outsource to companies such as WorkMotion.
Key takeaways from the episode
Kicking things off, Marilyn asked Peter to share more about WorkMotion, as many don’t know how organizations like WorkMotion can create value for them.
“WorkMotion is a rapidly growing relatively young company. We help clients make use of the new reality of work”, said Pieter. Although they are based in Germany, they are fully remote, and that’s what they try to enable for their clients too. In order to do this, they have a variety of products, and they hire Employers of Record for their clients who typically avoid having a local presence in the countries they are hiring from. WorkMotion is also diversifying its offerings towards other aspects of the future of work, such as with temporary work from abroad propositions (more static global employment).
The Benefits of Hiring Globally According to Pieter, there are two main benefits to hiring globally.
The first is about the soft aspects: experiencing different cultures, asynchronous work, and flexible work, all of which can improve the employee experience significantly.
“The second is more technical, as it’s about the labor shortage. We are now experiencing a paradox where there is a lot of unemployment on a global scale, yet many countries are currently experiencing labor shortages,” he said. For Pieter, hiring globally is not a magical solution which will fix the problem in one day, but rather, a great long term opportunity to start closing the labor shortage, and provide opportunities for those who cannot find work.
“I’ve worked in Western Europe for the entirety of his career, and labor shortage has always been there”, said Pieter. “In this area of the world, more and more recruiters are looking to hire globally. If you want growth in your economy, you need either more automation - which we’ve seen does not really solve the problem, or more highly skilled individuals, which we’re witnessing a growing demand for”, he continued. “The only good thing about the pandemic is that it made people realize that remote work works. It’s not easy, it’s not for everybody, but for some people maybe it is”, Pieter concluded.
The benefits of hiring globally don’t really change depending on the size of the company, whether it’s a startup, scaleup, or multinational, according to Pieter.
“There’s always going to be someone who's better qualified elsewhere”, he said.
In order to facilitate growth, Pieter shared that employers need to be more step ahead of the curve, and WorkMotion can help them keep up with that pace through their work on the technical side of things.
The Complexities of Hiring Globally
The legal and tax implications of hiring globally are significant. Pieter shared that in general, many companies believe they need some kind of local entity when hiring globally, but that is costly and difficult to do when you’re only hiring one person.
There are other factors that make the process complex, such as the local labor law. “You would have to run a payroll locally, because there’s no such thing as global payroll. All of that local knowledge and experience is a major barrier for employers to want to hire globally”, stated Pieter. He made his stance clear on the matter: “hiring globally is not worth it for everyone, just like remote work is not for everyone.”
Pieter shared two conditions in which setting up local entities and bearing the cost is worth it: when you’re in it for the long run, and if you’re hiring a significant number of employees in a different country, and aiming for a significant presence in that location.
“What we saw before the pandemic is that tech firms would set tech centers in some countries, when they’d want to hire people from there. It was not always very successful. If you’re very scattered in your hiring, which is great from an employment perspective, then setting up an entity in each of those countries is not worth it”, said Pieter. That is because employers would then have to find out if the individuals are a good match, and when they’re not it would be a loss for the company. “That’s exactly the gap we’re trying to close with WorkMotion”, Pieter concluded, “you can hire, you can test, build up your business, and until the point you build your local entity, we’re totally with you.”
Employer of Record vs Professional Employer Organization
There are different setups you can choose if you’re hiring globally. In Pieter’s perspective, the most simple one is hiring an Employer of Record, because it means you have the least local presence. When WorkMotion helps clients by hiring Employers of Record for them, they practically employ the employees for them, with their name on the contract, and the employee is leased out to the client on a full-time basis. In this situation, the client bears all the costs, and WorkMotion handles the payroll and other forms of payments.
Pieter then explained that with Professional Employer Organizations, which involve direct employment solutions, the clients are registered locally but only as employers.
In those situations, the employee will have the name of the company they work for on the work contract. “If you are the employer, you are responsible for taxation and other regulations, but that is outsourced to us (WorkMotion), we still handle payroll and payments. In the US, this is known as co-employment. Other than that, you don’t need a local presence of knowledge other than one simple registration as an employer in the country.”
The next step for organizations after hiring a Professional Employer Organization would be to actually establish an entity in the country they are hiring in.
Local Labor Laws
When it comes to local labor laws, WorkMotion consults between clients and talent, and helps them make decisions. “We have a lot of information available about the matter and salary benchmark tools, integrated in our platforms. Clients can search for job titles and get guidance on what’s generally recommended as a salary, depending on local labor laws’”, said Pieter. On the benefit side, WorkMotion can also tell clients what’s mandatory in what countries, and what’s recommended and generally accepted.
Pieter then shared that since the client is registered as the employer, they are formally required to pay for social security, which WorkMotion does on their behalf (although the client is still responsible for it). However, if the client’s presence presents a corporate tech presence, it’s not something WorkMotion usually handles because it’s in the gray area.
“We live in a very special time, where employers need to grab global hiring opportunities, and employees don’t really care where they are working from. Employers need to work with those new rules, as national or international legislators are trying to adjust around these rules”, stated Pieter.
Personal Taxation in Telemigration
According to Pieter, If you don't spend 183 days a year in a European country, then you can claim not to be a local tax resident as an employee, and that is a standard rule in every tax treaty. It relates to personal income tax, and some other taxes too, but not everything is covered. “I don't think that threshold is going to change anytime soon. The only thing that will change is an additional explanation of overseeing people working temporarily from another location”, shared Pieter. In his perspective, countries introducing for remote work visas need to work on better structured solutions for this new wave of global employment.
Global Teams: Onboarding & Tools
Onboarding in global teams is a critical process, which leaders should take very seriously. “You need to be aware of the change you are establishing. Hiring your first individual from another country is a big transformation. The key is to trust in one another, and avoid micromanagement”, said Pieter.
Working from Anywhere
WorkMotion has a Global Index of Cities best facilitating Remote work on their page.
When it comes to telemigration, Pieter stated that “we will see societal shifts that we have not witnessed before. Working from anywhere is going to be the new normal.”
He continued, “Of course it is not for everybody, but society, companies, and employers will see a massive shift on that end. Not in the short term, but in a decade or two from now. There isn’t a greater time to be a part of HR other than now. With this employee driven change, employers should embrace this new reality”
Joining WorkMotion & Working Remotely
Pieter has been working remotely for years, and joined WorkMotion during a time of significant growth. “To contribute to a company’s growth, you need to be far ahead of the game, but you also need to have your feet on the ground and be humble”, shared Pieter.
When it comes to remote or hybrid work, he believes that everyone needs to find their own pace and adjustment. His pace involves being flexible with allocating time for work, by going for runs during the day (and blocking this time in his calendar), and focusing on work during the evening when his kids are in bed. Pieter sets up his own flexible schedule, and shares it with his team to make sure others feel comfortable doing the same. “It’s very important because lots of people struggle with remote work, either because they lack the feeling of trust, or can’t manage themselves to just do it”, concluded Pieter.
🔥 Rapid Fire
The one thing every team needs is…”Trust.” The one thing a team needs to avoid…”Micromanagement” A good team leader is…”Inspiring.” The best book on teams is…”Remote is The Way, by Iwo Szapar” What’s your favorite team ritual? “Socializing and drinking together!”