‘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.
Key findings include:
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 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 within the research.
There has been a degree of convergence in their field of employee payments. 89% of jurisdictions surveyed now have a minimum wage; 87% offer paid maternity leave; 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 Americas, 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 Americas 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 in APAC (36%). 76% of jurisdictions globally require companies to submit employees’ payroll data to the government at least once a month.
There is a huge disparity in the speed at which employers can fire underperforming staff. In the Americas, 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%.
Anne Clifford, TMF Group’s global head of HR & Payroll said: "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.
“We are entering an era of ‘social compliance’ as regulators become more powerful on the local and global scale. We see a clear trend towards businesses being compelled to report more granular employee data, more frequently. While such technological changes may boost reporting efficiency in the long term, there is likely to be a short-term upswing in complexity while these processes are implemented. Furthermore, it is questionable as to whether technology will be able to keep pace with frequently changing legislation.
“As businesses expand and build workforces in new jurisdictions, they must be fully primed for the challenges and complexities they will encounter."
Download the Global Complexity Index 2019 to find out the top 10 most complex and least complex jurisdictions. And get to know the regulations around hiring, firing and paying employees across countries.