As firms struggle to find talent in the UK, many are onboarding staff in locations overseas using an employer of record model. So, what are the benefits?
Global supply chain disruption, rising inflation, and skills shortages are making it harder for firms to find the talent they need within the UK. So, a growing number are starting to onboard and support staff in locations around the world, a trend accelerated by the shift to remote working during the pandemic. Yet hiring in country often comes with additional costs and red tape, and firms are increasingly turning to employers of record to help simplify the process.
These partner companies act as a bridge, employing local nationals or expatriates on a firm’s behalf in countries where they don’t have an entity. Mauve Group, one of the leaders in the space, helps UK, US and EU businesses to onboard staff in 107 countries worldwide. It also helps employers with visa and immigration issues, setting up and managing businesses in new markets, and coordinating project management requests abroad.
“As an employer of record, we employ the overseas worker ourselves, making sure they are registered on the payroll in the country of work, that they’re paid correctly in the local currency, and that the right taxes and social contributions are paid on behalf of that worker to the authorities,” says Mauve Group’s chief executive, Ann Ellis.
“We’re also responsible for making sure the employee has a contract of employment which is compliant with the labour laws of that country, and for taking care of all HR matters. All the client has to do is manage that worker on a day-to-day basis and oversee the responsibilities of their job.”
Demand for Mauve’s services shot up after the Brexit vote in 2016, when companies in a host of industries found themselves struggling to attract the foreign talent they needed in Britain. This was partly due to new immigration rules, partly perceptions of the UK being less welcoming and partly fears about potential barriers to doing business in the future.
The trend has only accelerated since the pandemic struck in 2020 and many foreign workers in Britain returned to their home countries. The normalisation of remote working has also played a part, along with soaring wage inflation, which has made it less affordable to recruit within the UK’s borders.
“The pandemic has made hiring in-country a much more alluring option,” says Ellis. “In part, employers need to meet worker expectations in an increasingly competitive recruitment landscape, and that means giving them the flexibility to work wherever they want. But companies also want to access a much larger talent pool, and the employer of record model allows them to do that in an affordable and efficient way.”
It’s not just about sourcing talent. UK companies are also increasingly looking beyond the EU for opportunities to grow internationally, and here the employer of record model can help. Setting up in international markets can be costly and is not without risk. To hire local talent who can scope out the opportunities, a UK firm will typically have to set up a new company in that country first. Yet this can take months in some places and it costs money to maintain the new company. Moreover, if it all comes to nothing the firm may have to shut up shop again, incurring yet more cost.
“The resource considerations are immense when setting up in a new market, and it might not be worth it,” says Mauve’s global sales manager Annette Ord. “However, as an employer of record, Mauve lets clients dip their toe in a market without committing much resource. In Brazil, it often takes 20 weeks-plus to set up a branch or a limited liability company so you can hire locally, but Mauve can onboard staff in that market in two to four weeks.”
Employers of record are also vital when a UK business decides to stay in a country for the long haul. Every market has its own labour and tax laws and staying on top of them can be time-consuming. Firms who break tax rules unwittingly may find themselves fined or blacklisted.
However, Mauve has spent more than 25 years ensuring UK firms remain compliant overseas. Its team is on hand 24 hours a day to answer queries, both via its hub offices in the UK, Cyprus and Dubai, and through remote employees and external partners on the ground in every market it operates in.
“The last thing you need is to hit regulatory hurdles in a new market, and so Mauve makes sure its clients avoid unforeseen risks,” says Ord. “We stringently follow local laws when setting up our solutions and companies in-country – giving the client confidence in that knowledge.”
Mauve has worked for a wide range of clients including large FTSE 100 companies, major US universities, technology start-ups and NGOs such as Comic Relief and Wateraid. In one example, it helped a UK-based software and business services provider to hang on to valuable workers who decided to return to their home countries during the pandemic.
“They wanted to understand any risks to the company or the employee before they went ahead,” says Ord. “So, our in-house compliance department audited the scenarios of multiple current employees and explained any risks, red flags and guidelines on how to proceed. It resulted in them adopting an employer of record solution for two employees in Ireland and one each in Spain and Sweden.”
In another example, Mauve helped a UK-based scientific research consultancy to relocate an employee to Hong Kong, where the organisation did not have an entity set up locally with the ability to employ. Mauve onboarded the worker through an employer of record solution and continues to employ and payroll the staff members in-country.
Since then, Mauve has helped the organisation to employ workers in India and the US, allowing it to secure scientific talent that meets the specific and unique requirements of the business. As Ellis explains, Mauve’s ultimate goal is to help its clients expand and capitalise on new opportunities, wherever they may be.
“Hiring talent abroad is becoming vitally important to businesses but it needn’t be complicated,” she says. “As an employer of record, Mauve takes the stress out of the process while ensuring firms have the flexibility they need to build their businesses internationally.”
For more information please visit mauvegroup.com
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