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It is becoming increasingly complex for multinational firms to employ staff, at every stage of the employee lifecycle – according to a new report.
‘Building a Workforce’, part of the 2019 Global Business Complexity Index which analysed 76 different jurisdictions worldwide in terms of ease of doing business, revealed that half (50%) of countries’ labour laws are difficult to understand.
Here are the key findings:
- Multinational firms face a number of challenges when it comes to recruitment. Hiring staff before having formally established a local legal entity is especially tricky – particularly in the EMEA (Europe, the Middle East, and Africa) region where it is seen as either ‘complex’ or ‘extremely complex’ in the majority of jurisdictions. Once established, hiring workers from abroad remains difficult globally, in fact almost twice as hard as employing someone from within your home jurisdiction, with a complexity rating of 6.4 as opposed to 3.6.
- Overall, 89% of jurisdictions surveyed now have a minimum wage, 87% offer paid maternity leave and 84% offer paid time off. But some elements of employee compensation have marked regional differences. For example, shared parental leave is required in 63% of jurisdictions across the United States, but just 33% in APAC. Meanwhile, APAC leads the way in pension provision – a fund must be offered in 79% of its jurisdictions, compared to 63% in the US and 50% in EMEA.
- Almost half (45%) of jurisdictions surveyed reported that payroll legislation is subject to frequent change. The problem is particularly acute in EMEA (frequent changes occur in 55% of jurisdictions) – although relatively stable across APAC (36%). A total of 76% of jurisdictions globally require companies to submit employees’ payroll data to the government at least once a month.
- In the US, 52% of jurisdictions allow businesses to terminate employment contracts in less than a day. In APAC this figure is just 8% and in EMEA 6%.
“Regulations and statutory reporting that concern the ethical treatment of workers and their data are increasing. However, even within regulatory frameworks, interpretation varies across locations, and processes change. The result of all this is complexity. And to counter that complexity, companies need the flexibility and agility to accommodate rapidly changing employment legislation for every territory they operate in – whether they employ thousands of workers or just one,” said Anne Clifford, TMF Group’s global head of HR & Payroll.