U.S. and U.K. tech companies staked much of their future growth on global opportunities when they began the year. According to 1,000 tech businesses included in our 2020 State of Global Expansion report, nine out of 10 said they planned to enter a new market this year. About a third (29%) of the companies already operate in five or more countries, and 70% of them expect to in the next five years. Then the coronavirus hit.

Some industries, particularly those associated with hospitality and travel, experienced a drop in revenues by as much as 90% almost overnight. Supply chains for manufacturers and retailers broke down and business travel halted. Businesses scrambled to protect employees, but also their bottom line.

Suddenly, an unsustainable mismatch between the cost of operating a presence overseas, particularly the cost of personnel, and the income needed to support those expenses forced hard decisions. Business leaders try to learn what options are available to reduce or eliminate their labor expenses, sometimes within months of hiring that same workforce. Others stand by eagerly to initiate global expansion and want to know the risks.

As an international professional employer organization (PEO), we have a global infrastructure in 185 different countries, employing thousands of workers for hundreds of clients in almost every industry. Consequently, we stay close to the vicissitudes of employment regulations around the world and enable businesses to remain flexible and compliant with varying laws country by country. Our clients constantly expand and contract as the market dictates, and so we have a keen eye on how regulations steer business across the globe.

Employers seek to realign revenue with expenses. In the wake of the pandemic, businesses have three main choices to address personnel costs: One is termination. But many countries have indicated that their labor authorities and courts will treat any terminations during the pandemic with extra scrutiny and some countries have even implemented regulations in response to the coronavirus that take terminations off the table. India, for instance, put a moratorium on terminations during its nationwide shutdown and Italy recently extended its prohibition of certain types of terminations through mid-August. Consequently, any termination, regardless of the reason, requires additional care and diligence to ensure it is carried out in a compliant manner that minimizes the risk of legal issues down the road.

The second choice—adopted by many of our clients—is salary reduction. This option is often preferred in situations where the business wants to continue operating and keep its workforce in place, while at the same time making sure its costs are more closely aligned with its revenues. While some countries allow employers to implement unilateral pay cuts, most countries require a mutual agreement with the affected workers. An agreement hinges on details. Will money need to be paid back? How long will the pay be reduced? Must the company reduce the hours worked or just reduce the salary? The details of each country's employment laws come into play if salary reduction is a consideration.

The third choice is a traditional furlough, when a business suspends workers for a time without pay, but brings them back later. This provides reassurance to affected employees, but also creates a greater job shopping moment for them. This option is often used in countries with "at-will" employment laws; however, the majority of the world does not follow this employer-friendly model and this option is generally prohibited in those markets.

Overlaying all of these options are government subsidies. What opportunities are available to get funding back from the foreign government in the form of salary or revenue subsidies?

Employers evaluate these options depending on where they operate, where the employee is located and what laws apply to the employment relationship, including relevant collective bargaining agreements. The treatment of these options can vary as much as the countries themselves. There are countries where action cannot be taken unilaterally; countries that strictly prohibit terminations for reasons relating to the pandemic; and countries that allow reduced salaries, but only when workers enter an agreement. And then there are other countries where government subsidies are available to recover at least some of the costs associated with the loss of revenue or to subsidize the employee for their loss of salary.

On the other end of the spectrum, businesses poised to expand also take these factors into consideration. They place flexibility atop the priority list to implement global growth plans while mitigating risk. Rather than create a foreign entity that burdens them with an investment of time, money and ongoing efforts to stay abreast of varying, ever-changing labor laws and COVID-19 policies, they look for alternative methods to test a market compliantly with the ability to exit quickly if business or societal conditions change.

When the coronavirus first hit, we counseled clients through their legal options. Several clients faced terminations as the only viable option for their business. There was a larger contingent of salary reductions as businesses wanted to protect their workers, remain compliant, and be ready for recovery. Still others, particularly in the tech sector, expanded as demand for their product or service increased with the rise of remote work, using the flexibility of an international PEO to remain agile in an uncertain environment.

Legal teams remain vigilant of the ever-changing regulations to remain compliant and ready for recovery. The global economy starts to slowly open up and businesses that were able to weather the storm or keep a foreign workforce ready through reduced salaries move more quickly. The future of the pandemic remains a mystery, but leaders know they can't remain idle. Businesses that held their powder on global expansion now emerge, cognizant of the importance of flexibility and compliance as they navigate new markets.

Shawn McIntire is general counsel of Velocity Global, the leading provider of global expansion services, where he oversees all aspects of the company's legal affairs.