Problems With Hiring A Foreign National For Short-Term Assignments

There often comes a time when a company that has expanded its reach internationally want to move certain workers between offices in different countries. Sometimes this happens because of a certain international program which makes it possible for employees to gain experience by working in a different market. At other times, the idea is to bring in an outside talent whose experience and skills can improve business efforts "at home". Quite often, the idea will be to hire a foreign national for a short-term assignment.

So, if you own an Australian company, this is the moment when you, as an employer, need to adhere to laws that are related to immigration and local employment. It is crucial that these laws aren’t overseen, as that may have very negative consequences for the whole company.

The easy part – hiring workers from overseas who are already in Australia

The much easier part is when you decide to hire someone from overseas who is already in Australia for a particular reason and has the rights to work there. This could include.

• Skilled migrants, who have decided to come to Australia using a skilled visa, because the experience that they’ve got is highly sought for in the Land Down Under.

• Visitors that have a working holiday visa, who have come as a part of a working holidaymaker program. This program promotes short-term work for visa holders so that they can find a place in a particular industry.

• Refugees, that is, everyone who has either a refugee/humanitarian (subclass 200) or a protection (subclass 866) visa. They are allowed to live and find work as permanent citizens.

• International students, who have come because they want to gain new experiences. However, there are certain restrictions when it comes to when and how long they can work.

The tougher part – hiring workers from overseas who don’t live in Australia

The tougher situation is when you want to hire a particularly skilled worker who doesn’t live in Australia but wants to come and work for your company.

• First and foremost, there are those workers that you want to hire for a short-term assignment. The so-called 457 visa Australia is well-known for, enables skilled workers from overseas to come to the Land Down Under and work for up to four years.

• You can also sponsor a particular employee for permanent work. There are two solutions for permanent migrations – Regional Sponsored Migrational Scheme and the Employer Nomination Scheme.

• There is also the option of a labor agreement that you formally establish with the Australian government.

Cost allocation

The important question when it comes to short-term assignments is who is responsible for all the related costs, and a lot of companies tend to contest about this issue. The reason why this is so important is that the costs need to be tied to a proper location so that appropriate tax deductions can be made.

What you need to be aware of is that some tax authorities decide to adopt the "economic employer" aspect as an interpretation of the Article 15 of the OECD model treaty. What this means is that you, as an employer, are seen as someone who is in charge of the employee’s daily activities, in order to achieve certain benefits from what they can do. Due to the fact that the number of workers who come from overseas to work in a new country without a permanent residence is on the rise. Therefore, when the tax authorities decide that you are the beneficiary of what your employee is doing, you fall under certain tax accountability. So, even if there is a formal legal relationship between the worker and his home country, you, as the host entity that gains benefit from their work might end up not being exempt from tax.

The best idea to set this in place so that it doesn’t present that much of an issue is to make sure that there is a certain agreement in place. This agreement needs to specifically underline how each and every cost will be taken care of during the period of the short-term assignment. Basically, your company, as the host, and the employee’s company which is outside the country can formulate such an agreement, and determine all that is necessary when it comes to funding. This comes hand in hand with an assignment letter which is a form of agreement between the worker and the home company.

Final words

Basically, inconsistencies when it comes to taxes and immigration are pretty common when it comes to hiring foreign employees for short-term assignments. This is why it is highly necessary that there is an education course that will let both managers and their employees know all the risks related to international work, and what kind of problems may arise is one does not abide by the related laws.

Any kind of infringement when it comes to working permits and immigration simply must not be overlooked, because an employee that is working internationally and doesn’t have all the necessary authorization to do so can suffer severe consequences. That is why every employer should carefully monitor their employees and make sure that it never comes to any tax-related risks.

Also, keep in mind that even if a particular worker isn’t liable for the host country’s tax laws, it doesn’t mean that they are exempt from immigration requirements as well. So, make sure that you have it all fully covered in order for the short-term assignment to be successful and not cause any unnecessary issues.