What is compliance assessment?

The global workplace is more connected than ever. Expanding your business overseas is often the next step on the road to success, and doing so is easier than ever before. However, global mobility is not without its challenges.

International organisations must consider HR, compliance, contracts, tax, and legal issues when expanding into new regions. These critical areas require bold strategies, devised by experts with extensive experience in the area.

This is where Compliance Assessment comes in. It is a service provided by global employment solutions providers, which allows organisations to ensure they are 100% compliant across the board.

According to the EU Commission, it’s estimated that over the next two years, the digital labour sector will increase from 28 million workers to 43 million workers in Europe alone. However, according to a survey by Deloitte and Compliance Week, 40% of companies do not perform an annual compliance risk assessment, therefore, leaving themselves open to serious financial, legal, and reputational risks.

Top compliance risks

While the potential compliance risks are manifold, there are several key factors that pose high levels of risks for organisations expanding abroad.

Permanent establishment and tax considerations

When hiring talent abroad, organisations must take into consideration the risk of triggering permanent establishment (PE). This means that the company would then be obliged to report and pay corporate income tax in the country in which they’re employing staff.

Regardless of the risk of PE, organisations need to consider the tax regulations in-country, and be aware that these regulations can and will differ greatly between countries. Employers will often need to register as a foreign employer in the country of work, or use an Employer of Record to ensure tax compliance.

Worker classification

As the gig economy has expanded, organisations have broadened their horizons in terms of global mobility. But this has naturally given rise to challenges – with a key one being how to navigate employment legislation between countries.

Employment regulations differ greatly from place to place, and it can be difficult to ensure complete compliance when operating in multiple locations. Using a global employment solutions provider can help organisations to bypass complications and ensure compliance.

Visa and immigration issues

Global visa and immigration is an area which can cause confusion and difficulty, as countries have varying stipulations regarding salary, industry, demand, and timelines.

Ensuring a smooth, compliant visa and immigration process when hiring employees abroad is key to ensuring compliance, and using a global employment solutions provider’s Global Visa and Immigration services is one way to overcome this challenge.

Potential penalties for non-compliance

Reputational damage

Companies that fail to ensure compliance, run the risk of damaging their reputation as a compliant employer. In turn, there’s the potential of losing access to talent who will not wish to be associated with the organisation; often losing business deals, partnerships, and connections in the process.

Fines and legal proceedings

When an organisation is found to be non-compliant, the organisation may be subject to significant fines and other penalties. For example, last year it was reported that sports clothing giant Nike was facing fines of up to 530 million USD for misclassification of workers. Last year, T-Force settled a $15.5 million misclassification lawsuit.

Loss of revenue

Aside from potentially crippling fines, the loss of business deals, and partnerships as a result of misclassification disputes can be economically disastrous for organisations.

Mauve can help

Leverage Mauve’s 28+ years of experience, our international network across 150+ countries, and our cross-industry expertise, having partnered with 2,250+ organisations across 70 industries, from NGOs and education, to technology, energy, and engineering.

Mauve’s people-led approach and flexible, bespoke solutions support you to address your challenges, allowing your business to expand and flourish with ease.

Partner with Mauve to compliantly empower your workforce from anywhere. Contact our team today.