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Dealing with expatriate recruitment
Published on Sunday, 06 Jun 2010

When it comes to taking on expatriates, the devil is in the detail. Recruiting talent from overseas not only involves a slew of technical logistics but also requires human resources professionals to give significant consideration to possible culture shock.

“The challenges of recruiting expats are universal,” says Connie Burchfield, director of strategy and development at Lee Hecht Harrison Greater China.

First, human resources (HR) professionals may have difficulty identifying where talent is located, she says. “Many companies [like to] hire people from their home country so that they can communicate with headquarters. For example, a France-based multinational company tends to hire a French [person] and relocate him or her to Hong Kong.” 

However, while this sounds convenient, companies need to help their employees cope with relocation. 

Expatriates need to be briefed if they are to avoid culture shock. Tension can easily be generated when fresh arrivals have to handle a new mission, new teams of staff, a new environment and a new location. 

“Even small things like where to eat and how to get around in the city can create hassles,” Burchfield says. “It is all the small things that can go wrong.”

KPMG’s answer to helping expatriate staff is to provide ample support to prepare them for the transition to their new home.

“Before they arrive, we try to communicate with them as much as possible about what it is like living in the new city. We work with them closely to address their needs and concerns and do our best to help them adapt to the new culture,” says Monnie Pun, KPMG’s senior manager for HR.

Once on board, the aim is for expatriates to work in a supportive environment where colleagues and their managers help them adjust to their new location and work style.

HR’s role is to assist in this preparatory work to foster a diverse work environment where local and foreign staff can learn from each other.

“By ensuring the expats are placed in a working environment that is best for them, HR acts as a custodian to drive effective communication between business units and  expat talent and help manage the expectations of each group,” Pun says.

Other key issues for HR professionals dealing with expatriate recruitment range from contractual arrangements to visa considerations.

As far as contractual arrangements are concerned, there are specific rules for Hong Kong employers hiring expatriates from overseas. “If a Hong Kong entity is hiring an expat from overseas, the HK entity as the employer may directly enter into an employment agreement with the employee,” says Winnie Ng, a consultant at Minter Ellison.

However, if the employee is employed by an overseas associated company of the Hong Kong entity, the entity may enter into a secondment agreement with the expatriate.

“In which case, the employment will still be governed by the employee’s home country,” Ng says.

Alternatively, the overseas associated company may first terminate the expatriate’s original employment agreement and the Hong Kong entity then engage the employee under a new employment contract, she says.

Visa considerations are also key. Among other issues, offers of employment for expatriates should be made conditional on the successful application for employment visas, Ng says. “It is illegal for any person who does not have right of abode to undertake work of any kind without a valid employment visa,” she says.

Expatriates coming here with family members are likely to require assistance from their employers in obtaining dependent visas.

Expatriate benefits packages also come under the aegis of the HR professional, embracing anything from housing to schooling and repatriation reimbursements, annual flight tickets home and medical insurance coverage for the employee and family members.

A recent trend is for employers to offer expatriate benefits packages closely aligned to local employees with the same ranking, Ng says. “It is, however, still the norm that the expat employee receives extra benefits when compared with his or her local counterpart.”

When paid regularly to expatriates under their employment agreement, some allowances, such as housing benefits or education allowances, are considered to be part of their wages. 

Such benefits also need to be taken into account when calculating statutory payments, for instance holiday pay, annual leave pay, maternity leave pay, sickness allowance and wages in lieu of notice. 

“Employers must also be mindful of the Race Discrimination Ordinance that came into force in July, 2009,” Ng says. “When an employer provides additional benefits to expats that are not available to local employees, the employer must ensure that the additional benefits are commensurate with the circumstances of the expat and are not given on the mere grounds of race.”

Finally, employers need to pay attention to taxation issues when dealing with expatriate recruitment.

Among these, for example, is a tax withholding requirement which arises when an employee is likely to leave Hong Kong for more than a month.

 

Visas vital

Thanks to the Hong Kong Immigration Department’s open economic and immigration policy, overseas hiring is relatively easy compared with other big cities. This is to the benefit of Hong Kong companies as it allows more flexibility in workforce planning.

For some companies wishing to open branch offices in Hong Kong, relocating personnel from their home countries can be a plus as the employees already know the business well, says Connie Burchfield, director of strategy and development at Lee Hecht Harrison Greater China. 

“In other situations, expats are needed perhaps because of the expertise that is not found locally,” she says. “The company simply deploys an expat who can transfer their knowledge.”

While some administrative time needs to be spent applying for the necessary visas for expatriate employees, the application process is fairly straightforward, says Winnie Ng, a consultant at Minter Ellison.  “An expat may commence work in Hong Kong only after a valid employment visa has been issued.” 

Employment visas are issued for a limited period of time. If the employment continues after the expiry of the visa, the employer must apply to renew this in order for staff to continue working here.

A boss who employs staff without a work visa is potentially guilty of an offence and liable to a fine of up to HK$350,000, and imprisonment for three years.

However, generally speaking, the government’s rules for issuing working visas are straightforward, Burchfield says.

In most situations, companies will have to explain why an expatriate rather than a local is required.

“In order to justify the need to recruit someone from overseas, a company will need to have a strong business case to support the application. For example, if the person has a specific skill or knowledge which is not immediately available in the local market,” says Monnie Pun, KPMG’s senior manager for HR. 

Staff resources, therefore, need to be planned well in advance because target candidates are unable to start work in Hong Kong until their visa is approved, Pun says.

If the reasons given are valid, a visa is usually granted within six to eight weeks.

“Visa applications can be as fast as six weeks because the Hong Kong government has pledged service quality,” Burchfield says.

 

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