12 Questions Every HR Leader Should Answer in January

‍

Why This Matters Right Now

It's 10 PM. You're staring at three vendor proposals for Singapore. Your CFO wants ROI projections. Legal wants compliance guarantees. The board wants it done yesterday. The EU Platform Work Directive takes effect in weeks.

You're not alone. Most mid-market companies we work with tell us the same thing: they're making six-figure employment decisions based on vendor sales pitches because there's no one else to ask. You're too big for startup solutions but too nimble to wait for enterprise consulting timelines.

We've watched misclassification penalties triple in the UK and Germany since 2022, with fines now exceeding £50,000 per contractor. One client discovered their contractor setup triggered a £2.3 million tax assessment, plus 18 months of back-and-forth with HMRC. During due diligence or acquisition? We've seen that number hit $14 million when buyers uncover employment risks.

After guiding hundreds of companies through global expansion, we've noticed something: complexity isn't what slows you down. It's having no one to call when Singapore asks for entity documentation at 10 PM your time. Companies with proper advisory support can typically enter new markets in weeks rather than months, often saving £200,000 or more just by choosing the right employment model from day one.

This guide walks through 12 questions we ask every company with 200-2,000 employees. These questions can help you figure out if your global employment strategy can support your growth plans, or if you're heading for expensive surprises in Q1.

‍

Three Big Changes Hitting Your Payroll This Quarter

Remember when "going global" meant opening an office in London or hiring a few contractors in Canada? Today you're managing teams across 12 time zones, navigating employment laws that change monthly, and making decisions that would have required specialists just five years ago.

If you're running global payroll, you're about to deal with three major shifts:

• The EU Platform Work Directive takes effect January 2026, affecting 43 million platform workers. There will be a presumption of employment for platform workers across all EU markets. The burden of proof reverses: instead of workers proving they're employees, companies must prove they're genuinely independent.
• AI governance standards including the EU AI Act create compliance requirements for tools you might not realise contain AI. That applicant tracking system that ranks resumes? That's high-risk AI requiring documentation, bias testing, and human oversight.
• AI-powered government audits are already here. Tax authorities use machine learning to analyse payment patterns and communications to identify disguised employment relationships. The 300% increase in penalties isn't because rules got stricter. Detection got better, with AI-driven programs increasing detection by 40%.

One CFO told me: "We used to worry about getting payroll right. Now we're worried about whether our AI-powered applicant tracking system violates GDPR, whether our contractors in Poland will be presumed employees under the new EU rules, and whether establishing an entity in Singapore triggers tax obligations in three other countries. And we're supposed to figure this out while growing 50% year-over-year?"

Adding more vendors and specialists just creates more conflicting advice. What you need is someone who can give you a straight answer about what actually works in each country.

Where Things Break First

When Everyone Gives You a Different Answer

Let's talk about what really happens when you expand globally. Not the conference presentation version, but the 11 PM Slack messages asking whether you can hire that engineer in Berlin as a contractor, or if you need an entity, or if an EOR makes more sense.

You ask your vendors for guidance, but each gives a different answer. Funny how it always involves buying more of their services. Your legal team can tell you what's compliant, but not what's strategic. Your CFO wants cost projections, but the variables keep changing.

This leaves you in a tough spot. You don't have enterprise-level employment counsel on staff, but you can't take startup-level risks either. So you end up building million-pound strategies from whatever each vendor tells you, hoping it all fits together.

Here's what typically breaks:

Reactive decisions. You establish an entity in Germany because one key hire needs a work permit, then discover you've triggered social insurance obligations that dwarf any savings. Or you keep everyone on contractor agreements, only to face a misclassification audit that freezes operations for months.

Vendor sprawl. By the time you're operating in 10 countries, you're juggling 4-7 different employment providers. Each has different processes, different compliance standards, different definitions of "urgent."

Knowledge gaps. The most dangerous phrase in global employment is "we didn't know." You didn't know that your contractor in France triggered permanent establishment risk. You didn't know that your EOR provider was subcontracting to another company, creating data privacy violations.

The Hidden Costs of Fragmentation

The direct costs of non-compliance are obvious. The hidden costs of fragmented employment strategy might be greater.

Think about how teams naturally evolve from contractor to EOR to entity. We call this the graduation pathway. With fragmented vendors, each transition means switching providers, migrating data, retraining teams. One defence technology company calculated they were spending £50,000 per transition in administrative overhead alone.

But the real cost is speed. Companies using unified advisory enter new markets 40% faster, leveraging streamlined processes that can reduce processing times by 70%. In competitive talent markets, that speed difference determines whether you get the best people.

12 Questions to Ask Before Q1 Hiring Starts

These twelve points aren't a compliance checklist. They're strategic questions that reveal whether you're making employment decisions reactively or strategically. They distinguish between companies that piece together fragmented vendor relationships and those that benefit from unified strategic advisory.

Strategic Foundation (Points 1-3)

1. Employment Model Decision Framework

Do you have clear, documented criteria for when to use contractors versus EOR versus entity establishment in each market?

Most companies make these decisions reactively, hiring a contractor because it's fastest, then scrambling to convert them later. Strategic companies have frameworks: "We use contractors for project-based work under 6 months, EOR for 1-3 permanent hires, entities when we reach 10+ people or need local IP protection."

If your answer is "it depends on what the vendor recommends," you're making six-figure decisions without strategic control.

2. Graduation Pathway Planning

Your employment relationships should evolve predictably, not chaotically.

Do you know which contractors will likely need to transition to EOR employment in the next 6 months? Which EOR teams are approaching the threshold where entity establishment makes financial sense? Can you make these transitions without switching providers or losing data?

Companies with graduation pathway planning move talent through contractor → EOR → entity stages without disruption. Those without it face expensive, disruptive vendor switches at the worst moments.

3. Cross-Jurisdictional Strategy Coherence

If you establish an entity in Singapore, do you know how that affects your contractor relationships in Malaysia? If you hire EOR employees in Poland, do you understand the permanent establishment implications for your UK entity?

Most companies evaluate each market in isolation, then discover their decisions in Country A created compliance problems in Countries B, C, and D.

Running It Day to Day (Points 4-6)

4. Can you get one clean answer on total employment cost?

Your CFO asks: "What's our total global employment cost including contractors, EOR, and entities?" How long does it take you to answer?

With fragmented vendor relationships, you're logging into separate systems, downloading reports, building spreadsheets. And you're not getting strategic context, just data.

Unified strategic oversight means having one advisor who understands your complete global employment picture and can provide consolidated answers with context. They can answer "should we still be using EOR in Germany with 8 employees, or is entity establishment now more cost-effective?" because they understand your complete footprint.

5. Vendor Consolidation Assessment

Count your global employment vendors. Most mid-market companies juggling 10+ countries work with 4-7 different providers, each with different compliance standards, different response times, different definitions of "urgent." Strategic consolidation can reduce these complexities while cutting vendor costs by 15-30%.

Each vendor relationship multiplies complexity. Strategic consolidation isn't about reducing invoices. It's about eliminating conflicting advice and knowledge gaps.

6. Compliance Documentation Readiness

A government auditor contacts you requesting documentation for all contractor relationships in your EU markets. You have 48 hours.

Can you produce clear business justification for contractor classification, contracts demonstrating genuine independence, payment records showing relationship structure, and documentation that you've assessed each relationship against the Platform Work Directive criteria?

If this would require days of scrambling through emails and multiple vendor portals, you've identified a significant vulnerability.

What Regulators Care About (Points 7-9)

7. Misclassification Risk Assessment

Take your five longest-running contractor relationships. Can you defend their classification under the EU Platform Work Directive criteria taking effect in January?

Under the new presumption of employment, the burden of proof is on you. Do these contractors control their own work scheduling? Work for multiple clients? Use their own tools? Operate independently?

Strategic companies conduct systematic assessments, document the business rationale for each classification, and have clear plans for transitions where needed.

8. Permanent Establishment Exposure Analysis

Do you know which employment decisions create permanent establishment risk in other jurisdictions?

A contractor in France who negotiates contracts on your behalf. EOR employees in Germany who are your only presence in the country. Entity establishment in Singapore that triggers tax obligations in Malaysia.

PE risk is invisible until regulators identify it, and remediation is expensive.

9. How do you find out about changes before they hurt you?

In the past 12 months, how many employment law changes have affected your global operations?

If your answer is "I'm not sure," you've identified a significant gap. Between the EU Platform Work Directive, AI Act requirements, and evolving data sovereignty laws, regulatory complexity is increasing rapidly.

Companies with strategic advisory partners receive proactive guidance about changes affecting their markets. Those relying on vendors receive reactive notifications, usually after decisions have been made.

Human Capital & Culture (Points 10-12)

10. Strategic Advisory Access

When you need guidance on whether to establish an entity in Singapore or use EOR, who do you ask?

If your answer is "our EOR vendor," consider whether you're getting strategic advice or a sales pitch. Vendors are incentivised to keep you on their platform. Strategic advisors recommend what's right for your business, even if that means moving to a different employment model.

11. Employment Cost Efficiency Framework

Most companies know what they're paying for employment. Few know whether they're overpaying.

That entity in Germany with two employees? It's probably costing £50,000+ annually in overhead that EOR would handle for £30,000. Those 15 contractors in Poland? Under the new EU rules, continuing as contractors might create more risk than converting to EOR employees.

Strategic advisory means having partners who can model these scenarios and show you the true cost implications.

12. Advisor Continuity Through Growth Stages

Here's the pattern we see repeatedly: Company starts with contractors (easy, fast). Grows to need EOR (more permanent, more compliant). Eventually establishes entities (full control, long-term presence).

With fragmented vendors, each transition means switching providers, migrating data, rebuilding relationships. One company calculated they spent £50,000 per transition in administrative overhead.

With unified advisory, your strategic partner remains constant while your employment models evolve. The person who advised on your first contractor in Poland is the same person advising on your entity establishment two years later.

What to Do in the Next 30 Days

This Week: Take Stock

Start by answering these 12 questions with Finance and Legal in the room.

Honestly assess where you stand on each point. The gaps you identify aren't failures. They're opportunities.

Week 2-3: Map Your Employment Model Evolution

Document every current employment relationship by model and market. For each:

• Contractors: How long have they worked for you? Do they meet genuine independence criteria under new EU rules?
• EOR employees: Are you approaching the threshold where entity establishment makes financial sense?
• Entities: Are they right-sized, or are you paying entity overhead for 2-3 people?

Pick who you want in your corner.

Schedule consultations with potential advisory partners. Ask:

• "If the best employment model for our situation isn't one you provide, will you tell us?"
• "How do you help clients transition between contractor, EOR, and entity models?"
• "Can you provide examples of advising clients NOT to use your services because a different approach was better?"

Immediate Action for January 2026:

With the EU Platform Work Directive taking effect in weeks, assess all EU contractor relationships against the presumption of employment criteria. Document why each relationship is genuinely independent. Identify any that should transition to EOR employment.

Next Quarter: Put Your Rules in Writing

Implement Employment Decision Frameworks (Point 1)

Document clear criteria for employment model selection in each market. Example framework:

• Contractors: Project-based work under 6 months, specialised expertise, genuine multi-client independence
• EOR: 1-5 permanent employees, testing market viability, need speed without entity overhead
• Entity: 10+ employees, long-term market commitment, need for local IP or contracting

Build Graduation Pathway Visibility (Point 2)

Map the expected evolution of each employment relationship:

• Which contractors are likely to become long-term relationships requiring EOR transition?
• Which EOR teams are approaching the threshold where entity establishment makes sense?
• What triggers each transition?

Establish Cross-Jurisdictional Review Processes (Point 3)

Before establishing any new employment presence, evaluate:

• Permanent establishment implications for existing entities
• Tax treaty considerations across your operating countries
• Data sovereignty requirements affecting your systems

By Mid-Year: Stay Ahead of Changes

Build Proactive Regulatory Intelligence (Points 7-9)

• Quarterly reviews of all contractor relationships against evolving regulations
• Systematic assessment of PE risk before establishing new market presence
• Proactive briefings on changes affecting your markets

Structure Employment Costs (Point 11)

• Identify entities oversized for your market presence
• Evaluate contractor relationships that create more risk than value under new regulations
• Model the financial impact of consolidating EOR employees into entity structures

Establish Advisory Continuity (Point 12)

Build the partnership that sustains strategic advantage long-term:

• Regular strategic reviews about your global employment evolution
• Proactive market intelligence before you need it
• Evolution support as you graduate from contractors to EOR to entities

Stop Guessing. Start Deciding.

As we enter 2026, these challenges aren't approaching. They're here. The EU Platform Work Directive takes effect in January. AI governance requirements are active. Governments are using machine learning to spot misclassification patterns.

After running through these 12 questions, most companies realise something: their biggest gaps aren't in operations or compliance. They're in having someone independent who can actually answer their questions without trying to sell them something.

If you can't answer Points 1-3 (employment decision frameworks, graduation pathway planning, cross-jurisdictional strategy coherence), you're making six-figure employment decisions reactively, without strategic control.

If you can't answer Points 4-6 (unified strategic oversight, vendor consolidation, compliance documentation readiness), you're managing employment relationships without comprehensive strategic guidance.

If you can't answer Points 7-9 (misclassification risk, permanent establishment exposure, regulatory change navigation), you're perpetually one step behind regulators.

If you can't answer Points 10-12 (strategic advisory access, cost efficiency, advisor continuity), you're getting vendor services when you need strategic counsel.

The path forward doesn't require perfection. It requires partnership. One strategic advisor who understands your journey from first contractor to hundredth entity. One relationship that provides clarity when vendors provide confusion.

Companies using unified strategic advisory enter new markets 40% faster. They save hundreds of thousands through better employment decisions. They operate with confidence, knowing that whatever new regulations demand, they have trusted advisors helping them navigate it.

Your next step is clear:

1. Complete the 12-point audit honestly. Identify the gaps.
2. Focus on the strategic foundation (Points 1-3). Without clear decision frameworks, everything else is unstable.
3. Evaluate whether you're receiving vendor services or strategic advisory (Points 10-12).
4. Develop your roadmap from current state to strategic maturity.

You don't have to figure this out alone. The companies that do well next year won't be the ones who avoided every risk. They'll be the ones who knew which risks to take and had good advisors helping them navigate the tricky bits.

The audit reveals the gaps. Strategic advisory closes them.

If you're ready to stop piecing together employment strategy from vendor pitches, let's talk. We can help you build a clear plan that actually works for your business.

‍