Navigating Legal Risks of Building Offshore Teams in the CEE Region

Offshore Development
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5 min

Navigating Legal Risks of Building Offshore Teams in the CEE Region

The rise of remote work erases the geographical barriers that once limited businesses' access to talent. However, with this newfound freedom comes a host of legal risks that must be considered. This is especially true for companies building offshore teams in the Central and Eastern European (CEE) region. In this article, we will delve into the legal considerations of remote work and provide insights on mitigating potential risks.

Remote legal landscape

One of the primary legal risks associated with building offshore teams in the CEE region is compliance with local labor laws. Each country in the region has its legal framework, and companies need to understand the specific requirements and regulations in each location. Failure to comply with labor laws can result in fines, penalties, and legal disputes, which can be costly for businesses.

For example, the Labor Code in Poland establishes many employee rights, including the right to work safely, fair remuneration, and the right to form trade unions. Employers must also ensure that employees are appropriately registered with the Social Security Institution and receive all the necessary health and safety training.

In the Czech Republic, employers must provide employees with a written employment contract outlining employment terms and conditions, including working hours, vacation time, and salary. The contract should also include information about the probationary period, which cannot exceed three months. 

In Hungary, employers must comply with strict rules governing the hiring and firing of employees, including mandatory consultation with employee representatives in cases of mass layoffs.

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Labor laws for remote employees 

Labor laws in the CEE region are designed to protect employees' rights and ensure fair working conditions. These laws cover various topics, including minimum wage requirements, working hours, and overtime pay. Companies must comply with these laws when building offshore teams in the CEE region to avoid legal disputes and reputational damage.

In addition, companies should also be aware that labor laws in the CEE region can vary from country to country, and it is crucial to understand the specific requirements in each location. For example, some countries may have stricter regulations around employee benefits and paid time off than others. It is also important to note that labor laws for remote employees in the CEE region can be complex, as they may be subject to the laws of the country where the employee is located and where the company is based. Employers should seek guidance from local legal experts to ensure compliance with all applicable laws and regulations. 

Working legal landscape 

Another legal risk to consider when building offshore teams in the CEE region is compliance with local labor laws. Remote employees may be subject to different working hour regulations, including overtime and breaks, depending on the country they are working in. Businesses must understand and comply with these regulations to avoid any legal disputes.

In Slovakia, employees are entitled to a 30-minute break if they work more than six hours per day and a one-hour break if they work more than nine hours per day. Overtime work is only allowed in certain circumstances and must be compensated with a premium wage.

In Lithuania, employers must ensure that remote workers receive the same pay and benefits as their on-site colleagues, including minimum wage and overtime pay. Employers must also provide remote employees with the necessary work equipment and ensure that it meets all the required health and safety standards.

Legal risks and mitigation 

Businesses should adopt best practices in remote work management to mitigate legal risks associated with building offshore teams in the CEE region. This includes creating and implementing clear policies and procedures for remote work, including compliance with local labor laws. Additionally, companies should ensure that remote employees are correctly registered and that all necessary taxes and contributions are paid in compliance with local regulations.

Furthermore, companies should consider partnering with local legal experts who know the specific legal requirements in each country in the CEE region. These experts can provide valuable guidance on local laws and help businesses navigate legal disputes. Finally, companies should prioritize communication and transparency with remote employees, ensuring they understand their rights and obligations under local laws and regulations.

Building offshore teams in the CEE region can provide companies with several advantages, including cost savings and access to a skilled workforce. Failure to comply with these regulations can result in hefty penalties, fines, and legal disputes, leading to significant losses for the company. With ALLSTARSIT's Employer of Record (EOR) / Contractor Management service, companies can focus on their core operations and leave the legal and administrative tasks to the experts.

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