Spending too much on recruitment, payroll or global HR?
According to a report by Envoy, 87% of US employers are currently recruiting and hiring foreign national employees, which includes expatriates. This makes sense: remote work has expanded talent pools, and local markets often struggle to fill specialized roles.
You might hire an expatriate because you’re expanding internationally and need someone who understands your business, you can’t find specific technical skills locally, or you need bilingual talent to connect with different markets.
But hiring expatriates comes with real risks. Visas can delay start dates by months, employees may face double taxation without proper planning, and relocation costs can significantly impact your budget. Culture shock causes some expats to quit mid-assignment, wasting your investment.
This guide walks you through hiring expatriate employees the right way.
5 Steps to Hire Expatriate Employees
Follow these steps to avoid costly mistakes and set your expatriate hire up for success.
1. Assess Your Need for Expatriate Talent
You likely need an expat if you’re a German automotive supplier opening a plant in South Carolina and need someone who knows your manufacturing processes to train American staff. Or if you’re a London-based fintech expanding to New York and require someone fluent in both your platform and US financial regulations. Or if you need a specialized machine learning researcher, and the talent pool in your region is tapped out.
You probably don’t need an expat if you can train someone internally in six months, if local candidates exist but your salary isn’t competitive, or if the role is primarily remote anyway.
Pro tip: Expatriate hires run 2-3 times more expensive than local employees once you add relocation, housing allowances, visa fees, and tax equalization. What measurable outcome justifies this? Successfully entering the US market, transferring mission-critical knowledge, or filling a role that’s been vacant for months because qualified locals don’t exist.
2. Understand Legal and Compliance Requirements
Getting the legal side wrong can derail your hire before they even start, or expose you to fines, lawsuits, and employee deportation later.
- Work Visas and Permits: Work visas vary by country. Each visa type has different requirements, processing times, annual caps, and costs. For instance, some require proof that no local candidate can fill the role. Others require the employee to have worked for your company in another location first.
- Tax Implications: When you hire an expatriate, you need to understand tax obligations in both their home country and the country where they’ll work. This affects your withholding responsibilities and compensation planning.
For instance, the US and Eritrea tax their citizens on worldwide income. Similarly, if you hire an American to work in your Berlin office, they’ll owe taxes in both Germany and the US. Most other countries, like France and Germany, only tax based on residency. - Employment Contracts and Labor Laws: An expatriate’s employment contract must comply with that country’s labor laws, not just your home country’s standards. You can’t simply relocate someone with your standard employment agreement.
For example, if you’re a US company sending someone to France, French law requires specific termination clauses, longer notice periods, and mandatory benefits that don’t exist in US at-will employment.
3. Create a Competitive Compensation Package
Once you’ve identified candidates, you need an offer that actually convinces someone to uproot their life. Expatriate packages are different from standard employment offers.
- Base Salary: Determine whether to pay based on home country standards, host country standards, or a hybrid approach. For instance, a software engineer from India moving to the US expects US market rates, not Indian rates. An American executive relocating to Thailand may accept lower rates than in the US, accompanied by better benefits.
- Relocation Allowance: Most companies offer relocation allowances to help cover the costs of their employees’ moves. Expect to pay for shipping household goods, temporary housing while the employee gets settled, and initial setup costs, such as connecting utilities. You might even budget for a home-finding trip so they can visit, scope out neighborhoods, and line up housing. These are one-time payments at the start of the assignment.
- Housing Assistance: You can either provide a housing allowance or arrange housing directly for your employee. In expensive cities like London and Singapore, housing costs quickly add up. A common approach is to cover housing for the first few months while they settle in.
- Healthcare and Insurance: You’ll need to provide international health insurance for your employee and their family. Make sure it includes emergency evacuation coverage and dental. In some locations, like the UK, national health coverage is available, but many companies still provide private coverage for their expat employees.
4. Develop Your Recruitment Strategy
You have two main approaches to hiring, each with different costs and timelines.
- Hire Directly: You can post positions on LinkedIn, Indeed, or international job boards and manage the recruitment process yourself. This costs less upfront but requires time and HR capacity, as much as 30% to 40% more time than if you had to outsource these tasks.
You’ll handle screening, coordinate interviews across time zones, verify international credentials, and navigate visa requirements for candidates from different countries. This approach works if you have internal expertise and bandwidth, but expect a longer timeline to find qualified candidates willing to relocate. - Use Recruitment Agencies: International recruitment agencies specialize in expat placement and maintain networks of candidates actively seeking overseas opportunities. They pre-screen for qualifications and cultural fit, understand visa requirements for different countries, and handle much of the administrative work.
You’ll pay 15-25% of the candidate’s first-year salary, but the agency manages sourcing, initial vetting, and often provides placement guarantees. This makes sense if you’re hiring your first expat, entering a new market, or don’t have experience with international recruitment.
5. Onboarding and Cultural Integration
Cultural integration support determines whether your expat succeeds or burns out in six months. Before they arrive, provide a cultural orientation that covers local customs, business etiquette, and social norms in their new location. You should also assign them a local mentor who can answer the small questions that feel too trivial to ask a manager but matter a great deal, such as where to buy groceries or how public transportation works.
Be explicit about job responsibilities and performance metrics from day one. Ambiguity creates stress when someone is already dealing with culture shock. Schedule weekly check-ins during the first 90 days to assess their adjustment and identify any additional support they may need.
Common Challenges and How to Address Them
Even with perfect planning, expatriate assignments can fail. Knowing the common pitfalls helps you prevent them.
Culture Shock and Adaptation
Culture shock hits harder than most people expect. An employee who seemed adaptable during interviews might struggle when daily life feels completely foreign. In addition to regular check-ins, consider extending cultural training beyond the initial orientation and connecting them with expat communities, where they can meet others navigating similar adjustments.
Family Struggles
Family issues derail assignments more than work problems. A spouse who can’t legally work may feel isolated and resentful. Kids might hate their new school or struggle to make friends. Before the move, discuss these realities openly. Some companies offer spousal career coaching or help with securing work permits. Others connect families with expat communities and provide school search assistance to facilitate a smooth transition.
Retention Risks
Expats sometimes leave mid-assignment, wasting your entire investment. Clear communication about assignment length, career progression after return, and what happens if they want to leave early prevents surprises. Some companies use retention bonuses that vest after the assignment completes, or include payback clauses requiring employees to reimburse relocation costs if they leave before a specified period.
Frequently Asked Questions
An expatriate is someone your company relocates from one country to another for a temporary assignment. A foreign national employee is anyone who isn't a citizen of the country where they're working, regardless of who arranged the move. All expats are foreign nationals, but not all foreign nationals are expats.
An EOR is a third-party company that legally employs your worker in the host country, handling payroll, taxes, benefits, and compliance while you manage their day-to-day work. Use one when you're hiring in a country where you don't have a legal entity, or when local employment laws are too complex to manage internally.
You can, but it’s not advisable. Most countries have strict rules about worker classification. If the person works set hours, uses your equipment, and follows your directions, they're legally considered an employee, regardless of what your contract says. Misclassification can result in hefty fines, back taxes, and legal penalties.
