How to handle international employee relocation and stay compliant

Is your business looking to expand its global reach?

Do you have a top performer that needs to relocate internationally for family reasons?

Or do you want the option to allow employees to move to a new role based in a different country?

Employee relocation should be part of the plan for any company with a growing global presence and with the right partner – you can manage compliant relocations with ease.

A successful relocation process comes down to a number of factors, requiring careful planning and a thorough understanding of the key legal considerations.

Remote’s Mobility team has decades of experience in managing international relocations. The team have shared their knowledge in this guide to help you learn the benefits and challenges of international relocation. We will also discuss the unique circumstances behind relocating remote workers, the three major types of relocation, as well as what you need to know about scaling the process of employee relocation for your business.

What is employee relocation?

Employee relocation refers to moving an employee from one location to another. For instance, they could be relocated to a new site within their current city or state. They could also be asked to move to another region, state, or country.

Employees relocate within their companies for several reasons. 

• A brand-new employee may have hiring conditions that involve relocating for their new job

• A long-time employee may want to maintain their current role but move closer to family or community

• A new or existing employee might want to move to another region because of financial or reasons

• You may have team members residing in an unsafe region that need to relocate to avoid conflict or persecution

• An existing employee might accept relocation as part of a promotion or new leadership opportunity

While employee relocation can sound daunting, there are some clear benefits. If you manage to master an effective relocation, you can expect strong loyalty and retention in return.

Top reasons to consider employee relocation

Relocation benefits for employers

Why should you consider employee relocation? What’s the benefit for your business?

• Attract more qualified applicants: Now that most knowledge jobs can be done remotely, employees see remote work as a way to guard against recessions and financial difficulties. With the freedom to work anywhere, remote employees can move to areas with a lower cost of living. Findings from Remote’s Global Workforce Report show that 47% of Millennials expect to see their employers expand remote positions globally. 

• Retain your best workers: Providing location flexibility can go a long way toward ensuring you retain employees, too. Keep in mind: 81% of men and 61% of women would consider relocating to a new country if they were able to continue with their current jobs. 

• Pursue better business outcomes: Sending seasoned employees to oversee expansions makes good business sense. And since the time to fill a role has risen by 18% since before the pandemic, why not take advantage of your talented and knowledgeable employees’ abilities and experience?

Relocation benefits for employees

Employers aren’t the only ones who can benefit from relocation. There are some notable advantages for their employees, too. 

• Location flexibility: Employees who relocate for their company may do so for various reasons, such as moving closer to family or pursuing growth opportunities.

If the relocation isn’t successful, the employee can typically count on the employer’s support. The employee could return to their home country to resume a former role while maintaining their relationship with the company.

• Progression opportunities: Employees may receive chances for promotion or other advancements they might not otherwise have if they are willing and able to relocate. According to our 2023 Remote Workforce Report, 40% of people who relocate within their company are motivated by either a promotion or a salary increase.

The takeaway? Businesses need to offer more opportunities for remote work, which frees up your employees to work in different locations, and employees view the option to move as a benefit of working remotely.

However, to meet that demand and stay compliant with international labor laws, companies may have some work to do.

Challenges with relocating workers internationally

There are several challenges that come with global relocation, but all of them are easy to overcome with right planning and support.

Statutory requirements

Statutory requirements vary greatly, however, from country to country. Overtime laws, minimum benefits, lengths of probationary periods, and hundreds of other details change as soon as an employee crosses a border.

For example, consider an employee who leaves the United States to work in Italy. In the US, they would expect a different type of employment contract outlining their roles and responsibilities. Italy, unlike the US, does not provide at-will employment.

If the employee later moves from Italy to Mexico, they would be entitled to a 13th month salary. The employee’s salary could only be deposited in a bank approved by the government.

Labor laws

Depending on the situation, labor laws might not necessarily support remote workers. Employers are required to provide safe working conditions, but what happens when the place of work is the employee’s home? 

For example, the company needs to determine whether procedures for an employee’s right to privacy conflict with laws about workplace inspections. The employer also needs to determine whether they are required to cover certain expenses for employees working from home in their desired country.

Relocation costs

A significant challenge of employee relocation is the costs involved. 

Remember, employers aren’t obligated to financially assist employees with relocation, particularly in an instance where the employee wants to move to a new region for their own personal benefit. Enabling relocation can be an effective recruitment and retention mechanism and often financial support isn’t required to take advantage of these benefits.

However, when relocation is considered for business reasons, employee relocation packages often involve compensating the worker for some or all of the associated costs of moving to a new location. 

Some employers opt for a one-time payment to be used at the employee’s discretion. Others may reimburse the employee according to terms that were agreed upon before the move. Still others may work with contracted companies, such as movers, and pay them directly for the employee’s relocation costs.

Relocation costs may include, but aren’t limited to, a combination of the following:

• Selling or renting the employee’s primary residence

• Housing allowance for the employee’s new location

• Packing, moving, and storage fees

• Homeowner’s or renter’s insurance

• Partner support with finding a new job

• Family support with enrolling children in daycare or school

• Language classes, depending on the employee’s level of proficiency

Relocation isn’t easy, but as the world becomes more connected, employers must be prepared to deal with the challenges that arise. 

Different types of international relocation

There are three major types of relocation: travel, short-term relocation, and long-term relocation. 

Relocation for travel

Travel always has a specific end date, whether it’s intended for several months or a year. The traveler typically holds a visa, such as a tourist visa or business visa.

The type of work the employee may do is determined by the type of visa they hold. This flexibility allows the employee to maintain their employment while exploring a new location.

Short-term relocation

Unlike travel, which always requires a specific visa, short-term relocation has the employee move to the country as a resident. Short-term relocation is set for a fixed period of time.

Long-term relocation

Under long-term relocation, the employee moves to another country for an extensive amount of time. This can be for a year or two, or even indefinitely. 

The main difference between short-term and long-term relocation is the lack of a fixed end date. Employees who relocate for the long term become residents, though the specific type of residence varies by country.

Issues of long-term relocation may include immigration, international taxation, and compliance with local labor laws.

No matter how much time your employee plans to spend in another country, you need to be familiar with the laws that may affect their employment with you.

Top considerations for global employee relocation

Relocation can be a stressful process for both the employee and employer. Visas, immigration, and other concerns often become complicated affairs. 

Each situation is different, but you can make life easier by understanding more about how relocation works, what to watch for, how to do the paperwork, and how to form a plan.

Remote can help with visas, immigration, compliance, international payroll solutions, and benefits. Let us know about your situation, and we’ll walk you through it from start to finish.

1. Fulfill requirements for immigration and visas

For your employee to move to another country lawfully, you need to understand the specific immigration rules in play. 

Employees must often meet minimum thresholds of residency. Even if your employee takes the responsibility of staying compliant seriously, your business could still face issues if the employee breaks the law unknowingly.

Be careful not to hire someone who does not actually have the right to work in a specific country. Always confirm the employability of a candidate or current employee. Though an employee has a work permit, they might also need sponsorship from the company.

Once you’ve identified the country you want to expand or relocate employees to, investigate the specific requirements for a work visa.

2. Understand international taxation

Any country where the business operates will expect to collect taxes.

Things get complicated when the company operates with employees in multiple countries. 

Income taxes and corporate taxes can get messy, and physical residency and tax residency are not always the same thing. Tax treaties between countries dictate which taxes businesses pay and when.

Be wary of permanent establishment risk. 

Simply having workers in a country isn’t always enough to trigger permanent establishment. Certain actions by employees or the type of role an employee fulfills may be. Permanent establishment is not a one-and-done issue, so businesses must continuously reevaluate their risk factors.

3. Stay compliant with local employment laws

No two countries are alike in employment laws. Noncompliance with local laws can lead to major fines and penalties related to the misclassification of workers and more. 

Companies cannot legally employ someone in another country without having that person employed by a legal entity within that country.

If you have multiple employees in a country and plan to have a long-term presence there, you may want to open a legal entity yourself. Doing so may be expensive and time-consuming. 

Although you will need to manage your own payroll, benefits, and legal work, there are advantages to owning your own business.

Most companies choose to use an employer of record to employ full-time workers in another country. Remote helps you employ team members in other countries legally and easily.

Remote only offers services in countries where we have our own legal entities, so you never have to worry about third parties handling your data or providing a bad experience for your employees. 

Whichever employer of record you choose, make sure your employer of record owns a legal entity in the country and does not outsource to a third-party provider.

4. Offer a clear relocation plan

Develop a clear relocation policy that outlines what you will do to support your employees. This policy might include the following: 

• Relocation package: Consider how you will support your employee’s housing needs. The employee might require temporary or more permanent accommodations, depending on the job. Note how you will support their moving expenses and transportation costs, too. 

• Adjustment period: Provide your employee with a set period to adapt to their new surroundings. They may require more time if they are expected to learn a new language or culture.

• Company support: Include support for learning the new location’s immigration laws and obtaining a work visa. Give your employee updated terms of employment contracts outlining any changes to payments, taxes, and benefits they should expect. 

Employers find more qualified candidates when they offer competitive employee relocation packages to compensate for moving expenses, strong support, and clear, consistent procedures.

Mastering international relocation to grow your business

The world has permanently embraced remote work, and many employees do not want to return to full-time office roles.

Choosing to limit your business to local candidates will cut you off from some of the best talent the world has to offer. Businesses must allow their employees the flexibility to relocate — even internationally — to stay competitive.

Remote is here to make the relocation process easy. With our self-serve platform, you can onboard international employees in minutes.

Remote’s Relocation Guide has everything you need to help streamline the transition for employers and employees.

You can also contact customer service at any time for questions about immigration, visas, or other specifics.

Reach out to Remote today to get started growing your global team.

Relocation for international employees video guide

Check out Remote’s webinar on international relocation, hosted by Nadia Vatalidis (head of people), Filipa Matos (vice president of operations), and Roderick van Vliet (head of legal).

In this hour-long special session, these three international employment experts cover a host of questions on important topics and answer real questions from businesses and HR professionals.

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