Paying taxes incorrectly or in the wrong place, for example, can open up the organisation to considerable risk down the line. The increase of remote work has also made this more difficult considering there is free movement within the EU as well.
Additionally, there is a lot of specialised talent in the energy sector that is business critical and much of it is made up of independent contractors (ICs). ICs are common in some countries, but aren’t in others.
Legislation regarding the engagement of ICs, what qualifies for a genuine IC and how hiring managers should interact with ICs so they do not open their business up to additional risk can all vary. To manage such risks effectively, having robust vetting processes and ongoing risk assessments, such as re-screening IC relationships, is critical.
Misclassification risk in general is common in the energy sector. Managers may engage talent via Statement of Work, which includes ICs, because it is easier to get approvals or there are contingent headcount restraints.
Having governance in place to ensure the correct buying channel is used is critical and the first step to mitigating compliance and risk.
Q. How can energy organisations best leverage the expertise of their employees and partnerships with talent vendors to navigate the complexities of international compliance?
Energy organisations should consider supplementing the expertise of their in-house legal and HR teams with external vendors who have expertise in the contingent workforce space and the unique regulations regarding these workers. Leveraging these external talent vendors can help with:
Global expertise: Whether navigating large-scale infrastructure projects that span multiple countries or simply looking to expand their talent pool, energy companies often need to manage talent across borders — and every country has unique legislation around labour compliance.
With that in mind, energy companies should partner with talent vendors that have a strong global presence and a deep understanding of international labour laws and compliance requirements.
These vendors can provide valuable insights into local regulations, helping organisations navigate complex compliance landscapes.Technology solutions: Many talent vendors offer technology platforms that streamline compliance management.
These platforms can automate tasks such as background checks, work authorisation, and tax compliance, reducing the risk of human error and ensuring consistency across different regions.Localised support: Talent vendors with a presence in the countries where the workforce is deployed can offer localised support, helping organisations address specific compliance challenges in real-time. This includes assistance with contract negotiations, payroll management and adherence to local employment laws.Risk management: Vendors can help mitigate compliance risks by conducting thorough audits and offering advice on best practices for managing a diverse, international workforce.
Energy companies should collaborate with whatever third-party vendor they choose on developing joint compliance strategies and then regularly review and update these strategies to reflect the latest changes in international laws and regulations.
Q. What role do you see technology and data analytics playing in helping energy companies stay ahead of compliance challenges?
Technology and data analytics play a crucial role in helping energy companies navigate compliance challenges.
AI-driven technologies can provide real-time insights into regulatory changes and workforce composition, enabling organisations to stay agile and responsive.