To employ someone in another country, you need a legal way to employ them there (your own local entity, an employer of record, or a genuine contractor agreement), the right worker classification, local payroll, tax and social security, a contract and benefits that meet local law, safeguards for moving their personal data across borders, and a plan for how the job can end under local rules. The details change from country to country, but these questions are the same everywhere.
This guide walks through each one, compares the main regions, and lists the 2026 and 2027 deadlines that affect international employers, such as the EU Pay Transparency Directive and the EU Platform Work Directive.
Key takeaways
- There are three main ways to employ abroad: your own entity, an employer of record (EOR) or a contractor. The right one depends on how many people you hire and for how long.
- Misclassifying employees as contractors is the biggest legal risk, and the EU is shifting the burden of proof onto platforms.
- Working time, leave, mandatory bonuses, termination and data privacy rules differ most between countries.
- Put the key deadlines in a compliance calendar: several EU rules take effect in 2026 and 2027.
How to employ people in another country: 3 options
| Option | How it works | Speed | Best for | Main risk |
|---|---|---|---|---|
| Your own local entity | You register a company or branch in the country and employ people directly | Slowest: often months | Long-term presence and larger teams in one country | Setup and running costs, local filings |
| Employer of record (EOR) | A provider that already has a local entity employs the person for you; you manage their daily work | Fast: often weeks | Testing a market or hiring a few people | Ongoing fees; you still need to follow local law |
| Independent contractor | The person runs their own business and invoices you | Fastest | Genuinely independent, project-based work | Misclassification if the person works like an employee |
Many companies start with an EOR or contractors and set up an entity once a country becomes a long-term market. Whatever you choose, the contract has to fit the role. Our guide to employment contract types explains the main options.
Worker classification: employee or contractor?
Every country has its own test, but the questions are similar: who decides how, when and where the work is done; whether the person works only for you; who provides the equipment; and whether they carry business risk. If you control the work like an employer, the person is likely an employee in law, whatever the contract says. Misclassification can mean back taxes, social security contributions, missed benefits and penalties.
The EU is tightening the rules for platform work. Under the Platform Work Directive (EU) 2024/2831, which entered into force on 1 December 2024 and must be written into national law by 2 December 2026, a person working through a digital labour platform is presumed to be an employee when the facts show direction and control. The platform then has to prove otherwise (CXC Global, 2026).
What changes from country to country
| Area | What to check | Example |
|---|---|---|
| Contract | Required terms, language and whether a written contract is mandatory | Many countries require key terms in writing from the start |
| Minimum pay and working time | Minimum wage, maximum hours, overtime and rest periods | EU law caps average weekly hours at 48, including overtime (European Commission) |
| Leave | Paid annual leave, public holidays, sick leave and parental leave | EU workers are entitled to at least 4 weeks of paid annual leave (European Commission) |
| Mandatory bonuses | Extra statutory payments such as a 13th-month salary | Mexico requires a year-end bonus (aguinaldo) of at least 15 days' pay before 20 December (Mexican Federal Labor Law, art. 87) |
| Payroll, tax and social security | Employer registration, withholding and contribution rates | Usually requires a local entity or an EOR to run payroll |
| Benefits | Mandatory and expected benefits such as health cover and pensions | Varies widely; check what is statutory and what is market practice |
| Termination | Notice periods, valid reasons and severance | Ranges from at-will employment to strict dismissal rules |
| Data privacy | How employee data is collected, stored and transferred | The GDPR applies to employee data in the EU |
| Right to work | Visas, work permits and document checks | Check before the start date, not on day one |
Employment rules by region
Here is how the main regions differ for employers hiring in Europe, North America, Latin America and Asia-Pacific.
| Region | What stands out | Watch out for |
|---|---|---|
| European Union | Strong, harmonized minimum standards on working time, leave, information and equal pay, plus the GDPR | Pay transparency rules, platform work rules, works councils in some countries |
| United States | At-will employment in every state except Montana, which has required good cause for dismissal since 1987 (Niskanen Center) | Different wage, leave and non-compete rules in each state |
| Canada | Termination is generally based on notice or pay in lieu of notice rather than at will | Provincial employment standards |
| Latin America | Protective labor codes with mandatory bonuses and strict termination procedures | Severance costs and statutory year-end bonuses |
| Asia-Pacific | Very different systems, from strict employee protection to more flexible hiring markets | Local customs on hours, hierarchy and notice |
Use this as a starting point only. Before you hire in a new country, confirm the current rules with local counsel or your EOR provider.
2026 and 2027 compliance calendar for international employers
| Date | What happens | Who it affects |
|---|---|---|
| 7 June 2026 | Deadline for EU member states to transpose the Pay Transparency Directive. As of late September 2026, only five member states had fully transposed it (Lockton, September 2026) | Employers in the EU |
| 2 December 2026 | Deadline to transpose the Platform Work Directive, including the presumption of employment (CXC Global, 2026) | Digital labour platforms and companies using them in the EU |
| 20 December, every year | Deadline to pay the aguinaldo in Mexico (Mexican Federal Labor Law, art. 87) | Employers in Mexico |
| Early 2027 | 2026 W-2s report qualified overtime in box 12, code TT. See no tax on overtime | U.S. employers |
| 7 June 2027 | First gender pay gap reports due under the Pay Transparency Directive for employers with 150 or more employees (Pinsent Masons, 2026) | EU employers with 150 or more employees |
Under the Pay Transparency Directive, employers will generally have to share pay ranges with candidates before the interview or in the job ad, stop asking candidates about their pay history, and answer employees' requests for pay information. Exact rules depend on each country's law (Pinsent Masons, 2026).
Employee data and cross-border transfers
HR data moves across borders all the time: payroll providers, HR systems and managers in other countries. Under the GDPR, transfers of employee data out of the EU need a legal basis. Two common tools are:
- Standard contractual clauses (SCCs): pre-approved contract clauses from the European Commission, modernized on 4 June 2021, for transfers to organizations outside the EU/EEA (European Commission).
- The EU-U.S. Data Privacy Framework: since the Commission's adequacy decision of 10 July 2023, personal data can flow from the EU to U.S. companies that are certified under the framework (European Commission).
Keep a simple map of which systems hold employee data, where they are hosted and which transfer tool covers each one.
How to onboard international employees
- Check the right to work and start any visa process well before the start date.
- Issue a local, compliant contract in the language required, with the mandatory terms.
- Register for payroll, tax and social security through your entity or EOR.
- Enroll the employee in mandatory benefits and explain local extras such as year-end bonuses.
- Ship equipment early, allowing for customs, and set up accounts before day one.
- Give privacy notices and collect any consents local law requires.
- Plan the first weeks around the time zone, local public holidays and a buddy who knows the market.
Our global onboarding workflow template turns these steps into a location-based checklist. For remote hires, see our guide to remote employee onboarding and our employee onboarding checklist.
International Employment: FAQ
Often, yes, through an employer of record (EOR), which employs the person on your behalf using its own local entity. Hiring a contractor is another route, but only if the work is genuinely independent.
With an EOR, the person is a full employee under local law, with payroll, benefits and protections handled by the EOR. A contractor runs their own business and invoices you, with no employee benefits, which creates misclassification risk if you manage them like an employee.
The EU sets strong common minimums on working time, leave, equal pay and data privacy. Latin American countries tend to have protective labor codes with mandatory bonuses and strict termination rules. Asia-Pacific is the most varied, from strict employee protection to flexible hiring markets.
An EU law that requires employers to share pay ranges with candidates, bans questions about pay history, gives employees a right to pay information and requires larger employers to report gender pay gaps. Member states had to transpose it by 7 June 2026.
It entered into force on 1 December 2024 and member states must transpose it by 2 December 2026. It creates a presumption of employment for people working through digital labour platforms when the facts show direction and control.
Choose the right hiring model, classify workers correctly, use local contracts, keep a compliance calendar of key deadlines, map cross-border data transfers and confirm local rules with counsel or your EOR before hiring in a new country.
Sources
- European Commission, Working Time Directive: employment-social-affairs.ec.europa.eu
- CXC Global, The EU Platform Work Directive deadline (2026): cxcglobal.com
- Lockton, EU Pay Transparency Directive implementation status (September 2026): global.lockton.com
- Pinsent Masons, EU Pay Transparency Directive: EU member states (July 2026): pinsentmasons.com
- European Commission, EU-US data transfers: commission.europa.eu
- European Commission, Standard contractual clauses: commission.europa.eu
- Mexican Federal Labor Law, Article 87 (aguinaldo): sdv.com.mx
- Niskanen Center, The forgotten origins of Montana's just-cause employment law: niskanencenter.org
