Hiring remote employees and independent contractors can be difficult, complex, time-consuming, and expensive. You have some options, however, and you may find that you can take advantage of certain of them to hire a remote staff quickly, inexpensively, and compliantly.
If your company is hiring remote employees internationally, you will want to know your options for hiring remote employees. This article focuses on using an employer of record (EOR) platform to handle hiring your employees quickly and without creating legal entities in the countries of your hiring.
What Does an EOR Mean in HR?
Your company’s human resources department takes care of hiring, training, onboarding, terminating, and off-boarding employees. While doing these tasks, your HR department stays compliant with the employment laws of the country where you are headquartered. What happens when you want to hire in a different country, where you must comply with a different set of employment laws and hiring regulations?
You have a few options from which to choose when hiring remote employees in a foreign country. You can expend the time and effort to establish and register a local legal entity in the country, allowing you to legally hire, collect, and remit taxes. This option may be the most expensive and time-consuming.
Alternative and the best option is to partner with an Employer of Record (EOR). With this option, you don’t need your local legal entity. When you use an employer of record, the EOR becomes the legal employer of your workers — on paper — while still giving the company control of your employees. The EOR is responsible for human resources tasks such as hiring, onboarding, payroll management, mandatory benefits administration, and ensuring full compliance with complex local employment laws. This option best suits companies expanding globally and hiring global remote teams.
Benefits of Using an Employer of Record
Using an employer of record has numerous benefits, from saving the time, hassle, and money of establishing a local entity to having your employees’ payroll and benefits administered and fully compliant with local laws.
Compliance With Local Laws
Countries have unique sets of employment laws which govern how companies manage employees. These laws cover hiring and employing practices, minimum wages, and anti-discrimination laws related to hiring, employing, and firing protected classes of employees.
In addition to any supplementary benefits and employee perks you may want, there will be a list of mandatory (statutory) benefits you must provide for employees by law. Each country will have its own set of rules for each of these mandatory benefits.
Failing to pay employees these benefits and failing to abide by the various employment laws, including anti-discrimination laws, can have severe consequences for your business. There may be hefty fines and other penalties and you may be liable for unpaid wages and benefits. Therefore, it is imperative to learn and understand the country’s specific employment laws or otherwise partner with an employer of record to take care of compliance for you.
Most countries have laws about benefits that employers must provide for employees. In addition, if you work with independent contractors, you should know that the law may consider contractors differently from payroll employees. For example, in some countries, independent contractors are not protected by employment laws and are not entitled to some of the same benefits mandated for employees. It is essential to understand the classification laws of the country to avoid the risk of misclassification so that all employees get the benefits and protection to which they are entitled by law.
Some classes of employees are protected from being fired. In many cases, employees cannot be terminated during pregnancy or fired for taking maternity leave. Similarly, employees cannot be passed over in the hiring process or fired for reasons related to their religion, age, national origin, disability, union membership, marital status, sexual orientation, or for making a complaint against the company. It’s important to check each country’s laws, as protections vary by location.
In many countries, employers must pay minimum wages to employees by the hour, day, or month. Many countries will also have an average salary for the position being considered, so you may attract more talented employees by going above the minimum wage, which may be very low in some countries.
Working Hours and Overtime Laws
In many countries, there will be a standard workweek or weekday, the maximum amount of work an employee can perform. There may be a set number of hours per day, a break time built into the law, and specific hours that certain employees can’t work. For instance, young or pregnant employees can’t work night hours in some countries. If work must extend beyond the standard hours, overtime may be due. Overtime hours may be limited as well.
Mandatory leave can include a minimum amount of annual leave, sick leave, maternity leave, care leave, study leave, bereavement leave, and other kinds of leave.
These are just a few aspects of employment laws, the details of which will differ from country to country. Be sure to know the labor laws or work with an EOR to ensure compliance.
Accurate Payroll Management
Be assured that when you use an employer of record in another country, the hours of work that your employees work will be accurately tracked. Biometric devices may be able to help track hours worked. Once all the work hours are all tracked, payroll is then calculated. By the end of the month, before payment is due to the employees, banks are advised to distribute salary deposits to each employee. Payroll in many countries is once per month, but payment frequency may differ by country. In some countries, wages must be paid before the end of the month on a set date.
In addition to paying salaries and wages, taxes and contributions are also part of the payroll. In each country, there are different amounts that both employer and employee must contribute for social security, pensions, insurances such as unemployment or health insurance, work injury or workers’ compensation, and, if not covered by the social security or social insurance funding, maternity and sickness. In most cases, employees will also have personal income taxes that must be withheld and remitted to the tax authority by the due date. An employer of record such as Skuad can help with these tasks.
Save Resources, Money, and Time
Partnering with an employer of record saves time and money and many hassles involved with employment law compliance, ensuring payroll is accurate and timely and ensuring all employees get their due benefits. This is possible without having to set up a local legal entity, which can be a complex, expensive, and time-consuming process, especially if you don’t have local legal staff in the country.
With an Employer of Record like Skuad, you can hire employees in over 160 countries and not worry about hiring and onboarding.
Why You Should Use an EOR
If you are planning to hire in another country, you’ll need EOR HR services to help legally hire. The employer of record will also handle other human resources tasks such as onboarding, safety training, administering statutory benefits, managing payroll, and ensuring the company is fully legally compliant with employment laws.
Skuad – Your EOR Partner
Skuad is a global employment and payroll platform that enables companies to hire and onboard employees remotely in over 160 countries across the globe. Skuad can also help manage and pay independent contractors.
Book a demo today to learn more about Skuad and how we can help you hire remote employees without hassles.