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Hiring around the world? How having no legal entity can impact recruitment

By Persephone Kennedy

As a growing company you want to get the best talent in your team, and quickly. It's key to staying competitive after all. But what happens when you're expanding into a new territory and don't have an office or legal entity in the country you're hiring in?

The short answer is it can be a bit of a nightmare. But the long answer is that it doesn't always have to be…

What do companies do in this situation?

We're not lawyers, so we're absolutely not here to tell you what's best for your company. But in this situation - if direct hiring is an impossibility - more and more client companies are considering globalisation partners in the form of professional employment organisations or employers of record, PEOs or EORs for short.  Both provide options for hiring with the globalisation partner supporting solutions that are compliant in the market concerned. 

But how does having no legal entity affect the recruitment process?

We won't beat around the bush.  Direct hiring is always preferable, and sometimes using these methods can be perceived a little bit like using a 'middle-man'.  When you're hiring someone in a location where you don't already have a legal entity, it can create uncertainty for candidates, as well as affecting their hiring experience.?? 

Imagine a candidate being offered a job, being over the moon, but then experiencing months of delay due to the set-up of a legal entity.  It can be a pain from a candidate experience perspective, and from experience, it can be hard work to keep your chosen candidate 'on the hook' and engaged with the role.  We've worked with clients who've had this exact situation and have found it tough to navigate the challenges.? 

But it doesn't have to be this way…

Getting past this

We get it. It's not always possible to have a legal entity set up and ready to go in every country where you *might* hire someone. But there are a few ways to make the experience less of a headache:

  1. Do your research! When deciding on a globalisation partner, make sure to fully understand their presence in the market you’re hiring into.  A strong track record and understanding of the local market is key.  This means your partner of choice can provide the best quality support to your chosen candidates – whether it’s answering questions or supporting them through the specific onboarding process. It’s also worth exploring the contract types and benefits different globalisation partners offer.  In many markets the contract arrangements and benefits can still be first class and fully reflective of the employment experience that clients want to offer were they hiring direct in their home market!
  2. Get the arrangement in place ASAP. The earlier you can have the globalisation partner up and running, the more seamless onboarding will be.  Forward visibility of headcount in locations where you might need this sort of arrangement can help to ensure a much smoother process when the time comes to onboard candidates in new locations.  By engaging a partner well in advance, candidate experience can be high quality and transparent from first engagement with them.
  3. And on that topic, be clear from the outset. Regulations mean that clarity on the type of contract from the outset is essential.  This is just yet another reason to get the arrangement set up before engaging with candidates, so that you can be clear that they fully understand (and are comfortable with) the situation and the process from the get-go.  This is particularly important if you’re hiring someone who doesn’t have previous experience with this kind of arrangement. As a recruitment company, we can also help by doing some of that communication for you, making it clear from the start of the process with the candidates we approach.#

Have you ever hired someone through an umbrella company or gone through the process of setting up a legal entity? How was your experience? Let us know!  

You can get in touch with me on persephone.kennedy@fmctalent.com

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