There is a long list of items that need to be checked off when hiring internationally—whether you’re simply hiring over the border or across an ocean. This is because of the differences in labor laws covering everything from maternity leave to termination to payroll taxes. One that many organizations don’t plan for is employee compensation. 

Surely if an organization is planning to hire in other countries, they have a plan for how much they can offer. What they often don’t consider, though, is that the salary expectations may differ when hiring across borders. 

So, how can you determine the employee compensation you’ll offer? 

Well, there are essentially two options: simply convert the salary you would pay in your country of operation to the country the employee resides in, or do your research and determine a fair salary in that country or province. 

Converting Salary When Hiring International Employees

Your first option is certainly the simplest. First, you would need to determine the salary range you would be comfortable with paying if the employee resided in your country of operation. Then, you would need to determine the exchange rate in the country or province your employee will work from and convert. 

It is important to keep in mind that even when choosing this method, you cannot fluctuate salary based on the fluctuating exchange rate. Once you determine and set the salary, that is what the salary will remain. There are other ways to manage the currency fluctuations. 

This process is your most straightforward option with only two steps. But the salary you determine may not meet the salary expectations for those you’re hiring. Just as each state in the US has different salary expectations, so too does Canada and each of its provinces and territories. This will be especially true if the candidate is a highly skilled contract worker. They know their worth and they will expect to be paid a certain rate. 

While this salary determination process is simple there will still be additional complications to ensure that you are hiring and employing compliantly—whether the worker is an employee or contractor. So, you will want to keep these in mind as well. Or, you can seek outside help from The Payroll Edge; it is, after all, what we do. 

Determining Equivalent Salary When Hiring International Employees

Your second option may be a little more complicated and certainly more time-consuming. Though it’s more complex, this option can also increase the chances of an accepted offer if the candidate’s salary expectations are higher than they would be in your country of operation. The other side of this is that it can potentially save the company money if the candidate’s salary expectations are lower. 

You will, of course, still need to determine a salary range. For this method, you’ll need to determine what an expected salary is for this role in the country you’re hiring in, also known as finding the benchmark. You can begin by looking at average annual wages or salaries by industry and then working your way down. Annual wages in Canada and annual salaries in the US are easy to locate with minimal research. 

There are additional factors to consider. You’ll also want to look at the job requirements, company size, the candidate’s geographic location within their country, and a few other factors. 

Which Way is Better?

There is really no way to say which method is superior. The choice is determined solely by the organization and how it would like to handle the process. That said, it would be wise to check equivalents before making a final decision. You could save the company money and potentially increase the chances of an accepted offer if you ensure that what you’re offering is acceptable. 

Regardless of the choice you make, you want to ensure everything is done quickly and compliantly once you’re ready to begin. The Payroll Edge can remove the complications and replace them with peace of mind. Contact us today!