6 Tips to Avoid Surprise Costs When Ending an International Employment Contract: A Guide for U.S. Employers

Hiring a new team member is an exciting experience for any organization! First, this new hire will likely fill a need on the team, which is a huge win! Additionally, hiring someone abroad brings extra excitement – not just from filling an open role but also from gaining cultural diversity, new perspectives, and new skills that can enhance overall workplace dynamics. Plus, someone just got a new job, and that is super exciting for them! 
 
With this being a happy time, you might be wondering, why is it important for employers to think of offboarding from the start? The idea isn’t to start off on a negative note but rather to make well-informed decisions.  

The biggest mental shift for most employers (especially those based in the U.S.) is that at-will employment is exclusive to the United States. In all other countries, how and when a worker’s contract can be ended is a bit more complex. In some cases, workers are also entitled to additional forms of payment (dependent on the circumstances). 

Creating this awareness isn’t intended to discourage international hiring (there are so many pros to expanding your global footprint!). Rather, this resource aims to ensure that if your organization decides to grow abroad, you have the information needed to plan for long-term team and budgeting success. 

Key Takeaways:

1. International employment is complicated. Make things simpler by partnering with an expert. 
2. Understand the local labor laws.  
3. Review the employment contract upfront
4. Budget for estimated termination costs.
5. Explore alternative solutions.
6. Don't act without a plan.

Here are 6 tips to avoid surprise costs when ending an international employment contract: 

1. International employment is complicated. Make things simpler by partnering with an expert.

Sometimes in life, the best choice you can make is to ask for help from an expert. Since 2009, TCWGlobal has partnered with hundreds of organizations like yours to expand their workforce across the globe with ease through our global employer of record and payrolling services. We’d be so appreciative of the opportunity to help you do the same, too! When it comes to navigating the complexities of international onboarding and offboarding, our approach is to keep you informed of the requirements upfront. We’ve got your back!

2. Understand the local labor laws.

Each country’s requirements are unique, and it’s important to follow all local labor laws when ending an employment contract. You can start with the basics, such as understanding any notice period requirements, required severance pay or other payouts, or parameters for when a contract may even be ended. You can reach out to TCWGlobal at any point to request this information, but also, a super helpful resource is usually a workers’ employment contract itself. This brings us to tip #3!

3. Review the employment contract upfront.

Well-drafted employment contracts can lessen risks and confusion by clearly outlining the terms of employment, including conditions that must be met at termination. Most employment contracts will include a section on the notice period required and may have additional details on how the workers' contract can be ended.

 TCWGlobal provides a copy of the employment contract to our clients before a worker signs. This is to provide transparency for our customers while encouraging them to ask any questions upfront during the onboarding process. 

4. Budget for estimated termination costs.

While the exact costs to terminate a contract aren’t always 100% available upfront, having a general idea of what to expect helps companies budget appropriately. For example, if a worker’s contract requires a one-month notice period, having that additional month’s salary budgeted for can be helpful when it comes time to end the contract.

5. Explore alternative solutions.

Change in company need? Skill set not matching up? Maybe that worker is really a stellar team player, and you don’t want to lose them. Before starting the termination process, consider alternative solutions that might be less costly and less disruptive to the business. Especially if the worker is one that could bring a lot of value elsewhere, finding an opportunity to reengage them in another role or set of responsibilities can be a win for all! Before making the switch, contact TCWGlobal to discuss the next steps based on that worker’s current agreement and what changes you have in mind.

6. Don’t act without a plan.

Sometimes, just acting on a leap of faith is the best way to get things started – except in the case of international terminations. If it’s decided that a position must come to an end, planning the next steps strategically is key to minimizing potential risks and added costs. While in the U.S., employment can usually be ended the same day, that rarely is the case elsewhere. Before making any changes, plan ahead to know the options, legal requirements, etc. 

If you’re utilizing TCWGlobal’s International Services, you can reach out to your support team at any time to begin this discussion. This article provides a step-by-step overview of the general offboarding process. We’ll partner alongside you to determine what options are available and create a plan of action. Compassionate and clear communication with all parties is key. 

Wrapping Things Up

On the surface, it might appear counterintuitive to plan for offboarding during the onboarding phase. But while you may not anticipate a need to end an employment contract in the foreseeable future, it is always in a company’s best interest to consider offboarding costs and general procedures upfront. By following the tips shared in this article, such as leveraging the support of a global employer of record like TCWGlobal, understanding local l labor laws, budgeting in advance, and planning before you act, you can set your organization and team up for better success long term.  
 
Being aware of possible costs and the overall process may even influence what countries your organization decides to expand into since some countries allow for greater flexibility than others.  

TCWGlobal knows that providing a thoughtful and supportive experience to clients and workers during offboarding is just as important as the memorable experience we aim for with new hires. If you have any questions about the onboarding or offboarding process for any current or future locations you wish to expand in or need any other support managing your contingent workforce, please contact your dedicated TCWGlobal team or hello@tcwglobal.com. We’ll be happy to assist you!