Companies that are more diverse have a 35% higher profit potential than average for their industry.
So if global hiring works, HR managers need proper documentation more than ever. You need documents that can protect your company from breaking employment laws across countries — which is an important purpose of employment contracts.
Arte you interested in how they’re used across the globe?
If yes then you can’t miss this post. Let’s dive deeper into hiring a global workforce, the importance of a written work contract, and your HR role in the hiring process.
What is an employment contract?
An employment contract is a legally binding agreement between an employer and its employee. It outlines the terms of employment including both sides’ rights and responsibilities. This contract also helps regulate expectations within the organization and protects in the event of a dispute.
Generally speaking, an employment contract will include details such as
- detailed description of the job duties and responsibilities
- specifics about salary or wage rate (including overtime or bonus pay)
- benefits (if any) like health insurance or vacation days
- confidentiality clause
- termination conditions
- and if applicable, specific remote work terms
However, if you’re into global hiring you should know this — each country has its own set of laws that govern employment contracts. There might be additional requirements that you need to consider like language requirements or even union membership information.
Here are some countries with their own employment laws.
The Fair Work Act 2009 governs Australian employment law – the purpose of this act is to ensure healthy working relationships in the workplace. In this country, all new employees must be given a Fair Work Information Statement (FWIS) upon starting their new job, or as soon as possible thereafter.
China requires that contracts in a foreign language should be translated into Mandarin. However, despite the law requiring employers to bind full-time employees to written contracts — part-time employees don’t have to sign them.
The Labor Law (Law No 13 of 2003) regulates all employment in Indonesia. Its main purpose is to support the country’s anti-discrimination policy. Their recently amended law (Job Creation Law) is the strict regulation of fixed-term employment contracts requiring employers to pay compensation to employees even if they decide to quit early.
In Switzerland, the work week is only limited to 45 to 50 hours. Furthermore, the employee should receive written information regarding the parties, the start date, the position, salary, and possible additional elements, as well as the weekly work schedule within the first month of employment.
In the UK, employees are required to receive detailed information on employment terms from their first day of employment by April 6, 2020. Additionally, employers are obliged to pay the National Minimum Wage to all of their staff employees, but those over 23 are entitled to the National Living Wage (which amounts higher).
Most employees in the US don’t have employment agreements, written or otherwise. They usually have written employment contracts only for executive-level employees. Under at-will employment, employers can terminate their employees without notice or cause and employees can quit their job at any time without giving their employer any advance warning.
Why is a written employment contract needed?
Employers should always use a written agreement with employees — and that multiplies if your new hire is from another country. There are reasons why an employment contract is important and should be written, here are some:
- It protects
A written employment contract helps to protect both parties by explicitly defining the responsibilities of both sides. It specifies the conditions each party must follow and the penalties should either party breach that agreement thereby protecting from legal problems.
- It provides clarity
A written employment contract helps keep expectations clear by setting out specific terms such as salary or wages, hours of work, benefits, and job responsibilities — there will be no misunderstanding on either side about what is agreed upon. This type of clarity ensures that everyone fully understands their rights before signing.
- It supports legal proceedings
In some cases, an employment dispute may end up in court. Aside from protecting your business, having a written employment contract can also support you during costly lawsuits. Having this document written serves as a piece of hard evidence in court. And it can be used to settle matters quickly and efficiently.
- It ensures compliance with applicable laws
There may be certain laws governing how you must treat or compensate employees in a certain country. A written employment contract can specify remote working terms. And it helps ensure that all relevant regulations are adhered to — keeping your business compliant with applicable labor laws.
HR’s strategic role in hiring
HR’s modern role requires you to move from your traditional role to supporting the bigger goals of the organization — and hiring is one of the strategic HR tasks.
Let’s take a closer look at what you can do during hiring.
- Identify the talent needs
Strategic HR starts by identifying talent needs and where your talent gaps are. This also requires an understanding of the business goals. So it may also mean collaborating with stakeholders to assess which skill sets would be necessary for successful candidates.
- Align your hiring system
Once identified, your plan should include precise job descriptions, selection criteria, and methods for sourcing qualified applicants. You can now develop a hiring process tailored to their company’s needs — including pre-screening interviews to evaluate whether they’re a good fit for the job. You also must be aware of local labor laws when hiring global employees.
- Make data-driven decisions
Strategic HR should also focus on making data-driven decisions when it comes to hiring. By studying data from employee records management software, HR teams can better understand what qualities result in successful hires. Data also helps HR teams identify areas where they need to improve their hiring process.
The smart part here is that HR managers can have a handy tool after hiring and employment begins — enter modern CLM like Avokaado. This tool is an HR contract management software best for automating employment workflows when scaling and hiring globally.
Would you like to know more? Let us explain in the next section.
How to automate employment contracts with Avokaado?
Avokaado is an HR platform that automates the creation, signing, and management of employment contracts. Here are two Avokaado things you need to know when hiring and automating employment contracts — even globally:
Draft using a pre-lawyered contract template
You can check out Avokaado’s store of 100+ automated templates — among them are HR documents. Simply select the employment contract template and start customizing it with your specific information by answering the generated questionnaire.
This template includes the following essential elements:
- Employer and employee details
- Position and salary
- Responsibilities of the Parties
- Date when the employee starts working
- Duration of the probationary period
- Describe the agreement regarding remote work
Collect global digital signatures
International hiring was made easier by electronic contracting. With Avokaado, new hires can sign employment contracts instantly anywhere in the globe. That’s because Avokaado is integrated into two eIDAS-compliant digital signature providers. Both of which give legally binding global e-signatures.
Currently, Avokaado allows two signing methods:
Note: We recommend using SignNow e-signature if you’re not sure your counterparty can use an eIDAS-compliant signature.
If you want more information about how to sign electronic contracts with Avokaado, read more in this article: Using electronic signatures for smart e-contracting.
Other notable Avokaado features for your case:
- Add your company branding and style
Want to retain your brand’s distinctive documents? You can with Avokaado. Just set a theme to your employment contract template once. Each time you create a new contract based on that template, the resulting document will automatically have the styles you defined.
- Automate collaboration with the new hire and stakeholders
No more chasing down feedback and approval. If you need some extra input from the new hire or hiring manager you can easily add them as collaborators on your draft. Or if you need to add reviewers, simply add them as collaborators that can approve (or reject) the contract.
- Store the employment contract in a central repository
When you’re done, you can store the electronic employment contract somewhere secure but accessible — Avokaado’s central contract repository. You can access your HR documents 24/7. And your account manager controls the user rights.
Securing your global hiring strategy with employment contracts
Yes, global hiring is normal especially when you’re scaling. Also, hiring internationally means employment contracts that are applicable in multiple countries. Yet, you can secure your global hiring strategy by understanding local employment regulations in different countries.
With Avokaado’s employment contract template, you can rest assured that every international agreement you generate is legally binding, complete, and compliant — so that’s security no matter where in the world you’re doing business. Plus drafting using a template is 78% faster!
Need more information on how we can help you streamline your global hiring process? — book a free demo now!