The Why & How of Managing Global Mobility Compliance
Maintaining global compliance is essential to success for companies operating businesses in multiple international locations. This article will explain global compliance, why it matters, and how your company can best manage it when operating globally.
What is Global Compliance?
Global compliance refers to the process of following all local laws, regulations, rules, and standards that govern the country in which a company operates.
Common Global Compliance Rules:
In most jurisdictions, employers must observe laws surrounding employee tax and withholding requirements. Therefore, it’s vital to be well-informed of varied tax rules, such as rates and remittances, in each country where you operate a fixed place of business.
Every country has a standard way of preparing a company’s financial statements. Fortunately, many countries have adopted international standardized principles and rules for preparing and presenting financial information. Researching the financial reporting requirements of your international locations can ensure proper reporting of financial documents and help you avoid potential fines and penalties.
Established employment laws often involve minimum employee entitlements, including minimum wage, annual leave, PTO, and equal opportunity laws. Additional prohibited grounds of discrimination vary by country but may include gender, ethnicity, sexual orientation, age, and disability.
Factors impacting Global Compliance:
Limited jurisdictional knowledge
Understanding the laws that govern a jurisdiction can be difficult for businesses entering new markets with a different language, culture, or enterprise processes. However, developing strategies and programs to help master the laws in new jurisdictions can help your business sustain compliance.
Managing the various facets of global compliance with limited resources or in-house teams with minimal expertise can be challenging for companies undertaking international expansion. A surefire method for managing global compliance is partnering with a global compliance partner like Ineo, who can ensure your company remains in global compliance.
Disorganized information systems
The risk of non-compliance increases when internal teams store data and information separately. Having internal teams and systems that are transparent and integrated can help minimize discrepancies that often lead to non-compliance issues.
Ever-changing rules and regulations
International laws and regulations are constantly in flux, experiencing ongoing changes and updates. As a result, staying abreast and compliant with these changes can be difficult for companies operating businesses in multiple jurisdictions.
Your organization’s compliance officers and decision-makers can remain up-to-date on non-compliance risks by anticipating changes in the market and being prepared to make updates to avoid charges.
Consequences of Non-Compliance
It’s important to consider how you’ll manage compliance when operating a business with multiple international locations. Failure to oblige local tax laws can result in significant consequences that can negatively impact your business and its ability to continue expanding internationally. Here are a few possible consequences to consider below:
Fines and penalties
Whether accidental or not, a non-compliant business can accumulate hefty local government fines and penalties; the price tag may be particularly steep when combined with potential legal costs. Fines and penalties are assessed case-by-case and aren’t necessarily a guaranteed outcome; however, it’s in your business’s best interest to avoid accruing fines by remaining compliant with regulations.
In severe cases, failure to comply with regulations and standards can result in imprisonment or criminal penalties. For example, it’s considered a criminal offense in the UK for a business to neglect local health and safety laws, as companies have a common duty to maintain a safe working environment for employees. Violation of this law can incur fines of up to £20,000. However, unlimited fines or imprisonment could be considered if the transgression involves the endangerment of human lives.
Breach of contract
Compliance is often a requirement of contractual agreements, and failure to fulfill this requirement could be regarded as a breach of contract. The consequences of contract infringement vary in severity but may include court injunctions, contract termination, or substantial fees.
Depending on the industry, businesses must have specific licenses approved by regulators, such as financial services licenses. When a company becomes non-compliant, regulators can revoke these licenses or approvals.
Failure to comply with international rules and regulations can damage your business’s reputation and create barriers to customer retention and future business relations. Therefore, it’s critical to avoid reputational damage due to non-compliance as, in the future, potential business partners may analyze your safety and track records.
Creating a global compliance program
Managing global compliance is imperative for operating a successful business internationally and preventing compliance mistakes. However, compliance management can be challenging due to evolving regulatory systems and differences across jurisdictions.
While there is no one-size-fits-all solution to managing global compliance, your organization can follow some steps to ensure your mobility program remains above the board.
Incorporating compliance into your business practices, training, and overall culture can help ensure that your business and employees are well-informed and following compliance rules and regulations. Determine how your business will handle compliance management in any new location and clearly communicate with employees tasked with establishing these processes to monitor compliance.
If you’re running multiple businesses in different territories, try implementing regular compliance training for all employees. Consistent training effectively communicates updated information to employees, and your mobility program can adapt compliance training exercises as you expand to new locations.
Be knowledgeable of local standards
Educating yourself and your employees on the local standards for your business’s different jurisdictions is key to maintaining global compliance. From internal policies and practices to federal or state laws such as taxes and employee safety, being well-informed on the policies of your jurisdictions will help you integrate global compliance in your organization.
Identifying key areas that pose a risk to your company’s compliance is a significant part of an effective global compliance program. Performing periodic risk assessments can help you stay current with new trends and changes to industry standards.
Take the guesswork out of global compliance with Ineo
There are many rules to abide by when managing global compliance. Working with a global compliance solutions provider can help you curtail risk, navigate compliance complexities, and provide peace of mind. As international mobility experts, Ineo offers comprehensive global mobility management software, outsourced mobility financial management, and specialized mobility tax services.
Contact our industry experts today to learn how we can help you keep your mobility program in the good graces of any country’s compliance requirements.