Disability provisions for remote workers - what do employers need to know?

When Cat Noone, CEO of accessibility software company Stark, approached Boundless founder Dee Coakley to collaborate on a guide to ‘Disability at Work’ in Ireland, it sparked a broader conversation about the state of employment regulations and supports for disabled people in the age of global, remote-based working.

In this post, Dee and Cat discuss what role employers play in introducing good supportive practices as governments adapt to the new reality, the need for organisations to normalise conversations about disability and the talent opportunities available to companies that are truly inclusive in their approach to work…

Acknowledge what you don’t know

Dee: The first thing that I realised, when we started the Irish guide, was how little I knew on the subject of disability at work. It’s a bit shocking to think that you can be a senior leader, building teams, and have so little insight. So I’m starting this conversation by holding my hand up and acknowledging my need to learn more. I think many young companies, in particular, will probably find themselves in a similar position.

Cat: I think everyone needs to start with the willingness to accept that there are things we don’t know about – gaps in our education. In this day and age, people can be reluctant to admit what they don’t know. The reason why both of our organisations are trying to write these guides and compile information is that there is no central location you can trust on the topic of disability at work – it’s a subject riddled with taboo and stigma.

You have to go out there and show a willingness to engage, acknowledge what you don’t know and what you’d like to learn.

Remote working creates greater opportunity

Dee: It’s the right time to be looking into the regulations because the pandemic has changed company attitudes to how work is carried out, and there is a need to stay on top of where the boundaries are in terms of what companies and their employees can and cannot do. The purpose of the guides is to collate and make sense of the vast amount of information out there. Regulation around disability is an important part of that.

Cat: That’s right. By shifting to remote working and digital collaboration, the pandemic has shone a light on the disability ‘gap’ where people were previously excluded. Now, businesses are starting to realise that if they don’t account for disability, they’re the ones that will end up being excluded from the market.

Dee: Accessibility is the key issue here. Before lockdown, the majority of companies were still anti-remote working, especially on a permanent basis. So if you couldn’t make it into the office every day from 9-5, you couldn’t do the job. Now, remote working is making business leaders reimagine their future and reconsider their entire hiring strategy, while at the same time, there’s a massive battle for talent. So one logical approach is to proactively open doors to underrepresented talent.

Cat: It used to be the case that many employers would just say ‘we don’t support remote working’ as a way of avoiding the disabled question. It was a convenient grey area. Now companies don’t have that excuse, there’s growing pressure on them to be more inclusive. It’s forcing employers to educate themselves and to engage with underrepresented groups to educate the wider board.

Giving people the ability to shape their health benefits – including things like physio or different types of therapy – makes a big difference, irrespective of whether they have a disability or not.

Conversations about disability need to happen in the workplace

Dee: I spoke to a journalist recently about inclusivity, and she asked me what I could do personally to encourage and empower disabled people at work. I found it a tricky question to answer, which troubled me. But the truth is, the conversation doesn’t happen enough. I attend many talks regarding underrepresented groups, but it’s generally about women or other diversity issues. Disabled people are rarely discussed. So I’d say talking has to be the first step.

Cat: Absolutely, and it’s a conversation that has to happen internally as well as externally. If we weren’t building an accessibility company, I’d love to think (because of the dynamic we have at work) but I don’t actually know if people would be so willing to come forward about their disabilities. The talking aspect changed for the better once I started to bring it up internally. So often, there just isn’t a system in place to help disabled people succeed.

Dee: Internally, we’re actively having conversations around things like mental health. But it can be challenging to know how to start a conversation about something you don’t feel you know enough about. I increasingly feel that we just have to be uncomfortable with it and do it anyway – because silence is not the answer.

Cat: Do it anyway, and understand that you won’t always get it right. We messed up on social media once by referring to people with autism, as opposed to ‘people with autism / autistic people’—since we were uncertain of the true preference of label, and received a lot of criticism (rightfully so). We apologised, and we learnt from it. And that’s what you have to do. You have to go out there and show a willingness to engage, acknowledge what you don’t know and what you’d like to learn.

Dee: Does the fact that there is a spectrum of different disabilities make it harder for organisations to understand how to have these conversations and effectively support disabled people?

Cat: Yes it does. On a very basic level, you’ll support a d/Deaf person differently from a colour-blind person. We have two colour-blind people in our organisation, so you have to be cognisant of labelling things more carefully, rather than just using colour as an identification method. With a d/Deaf person for instance, you have to find out whether they sign (sign language), whether they prefer captions, what ensures they’re set up for success in working settings like meetings, etc. When office-based working was the norm for everyone in Ireland, it was painfully apparent that disabled people were not set up to succeed. For example, there were health system delays that meant people would be living in pain for months waiting to see specialists, taking a lot of sick days as a consequence and impeding their careers. It’s where working from home has made such a big difference.

Today the onus is absolutely on employers to provide the right equipment and ensure all employees are working in safe environments.

Bespoke benefits will empower disabled workers

Dee: The other aspect of this is employee benefits. As more companies recognise the commercial value of being a good, inclusive, socially-conscious organisation, they’re starting to pay more attention to what their people really need by way of support. For global employers, in particular, it just doesn’t make sense to have a specific pot of benefits and try to cram all employees into the same pot. So we’re now seeing companies put the decision-making in employees’ hands by giving them budgets to shape their own benefits package. Again, this is far more empowering for disabled employees who may want something very specific from a benefits package.

Cat: That’s so true. Giving people the ability to shape their health benefits – including things like physio or different types of therapy – makes a big difference, irrespective of whether they have a disability or not.

Dee: And therapy is such a low-cost benefit to provide too. It’s insane not to offer it!

Cat: Also, with more people working from home, the benefits they want are likely to change. And there are other aspects to working from home that employers must also address, like the equipment they’re using and their general work station.

Dee: It’s been an employer’s responsibility to perform workstation assessments for home workers for many years, but pre-pandemic, there wasn’t a lot of this happening outside of the large corporates. Today the onus is absolutely on employers to provide the right equipment and ensure all employees are working in safe environments.

We messed up on social media once by referring to people with autism, as opposed to ‘people with autism / autistic people’—since we were uncertain of the true preference of label, and received a lot of criticism (rightfully so). We apologised, and we learnt from it.

Breaking down employer misconceptions

Cat: Do you personally think some companies automatically assume that catering to disabled employees’ needs will be more difficult or expensive?

Dee: Potentially, yes, and it’s a misnomer. Of course, different disabilities will dictate different home office needs. But that’s true of all of us. We’re all different shapes and sizes – every workstation is personalised. So employers shouldn’t be afraid if disabled employees will cost more in terms of setup. You are personalising everything as it is. 

Cat: Ultimately, we’re talking about organisations doing what they need to support their people. And people are the most important aspect of any company, irrespective of what you’re producing or selling. So when it comes to supporting disability at work, I sense that we’re all becoming more aware, but now we need to move from awareness into action. And that may mean companies need to sit in their humility and discomfort for a while longer as they learn the information they need to go forward. They may also have to be proactive about offering support instead of waiting for governments to mandate it. What we sadly discovered as we were working on the Irish disability guide is that a lot remains to be done for disabled people to feel equal members of society. Society designs marginalisation into the system at each touchpoint of “othering”.We can do our bit to make them feel like equal members of our companies.

Dee: It’s an educational journey for us all, which is why we’re planning to publish more disability guides for different markets around the world. Employers are crying out for talent, and huge numbers of disabled people have amazing skills and education - just like any other human being. This is not new or surprising. The only barrier to career success is the difficulty of going into an office every day or having to work rigid hours. Fully remote, flexible working changes all of this. It’s a fantastic opportunity to change our working culture.

Don't be afraid that disabled employees will cost more in terms of home office setup. You are personalising everything as it is and everyone comes with different needs.

Conclusion

To understand the current disability rules and regulations in Ireland, have a look at our collaborative guide. Boundless can help you employ anyone compliantly, fairly and equally in Ireland and a growing number of countries around the world - get started here. Stark’s integrated suite of tools helps designers make more accessible and compliant software products. 

Four ways to get your HR house in order for the New Year

As HR and People teams sit down for their end of year meetings and planning sessions, they’ll be reflecting on another confusing and disrupted year. Lockdowns have given way to partial normality, only for further pandemic storm clouds to return in the past few months. Two years on, we are entering 2022 with uncertainty still very much the watchword.

For many, the urgency of responding to the pandemic led to a range of quick HR fixes that have turned into de facto norms. Working from home strategies were introduced quickly and blanket policies rolled out, replicated across geographies with little room for nuance. Many employees have been left unsure exactly what’s expected of them as their place of work has changed (and then changed again).

HR teams are facing a huge backlog of issues resulting from the pandemic, and it’s understandable that some decisions have been postponed in the face of this never-ending crisis. But businesses can no longer allow uncertainty to lead to a lack of strategic action. As they plan for the New Year, HR teams have an opportunity to get their house in order, ensuring that any kinks in the system are ironed out once and for all. So what needs to happen first?

  1. Act on compliance red flags

Did you hire freelance help during the last 12 months? Perhaps what was meant to be a short-term contract has turned into a longer relationship? Maybe one of your employees has taken the opportunity to work from abroad during the enforced period of home working, but their contract hasn’t been changed to reflect local legislation? This is a great time of year to sort compliance issues - or to get a plan in place so that January can begin with a clean slate.

Addressing the employment status of independent contractors needs to top the list of HR priorities in 2022. Companies the world over are hitting the headlines and being served with hefty fines for deliberate or accidental misclassification of full-time employees. And it’s not just a cash hit you’ll take if you get it wrong. The reputational damage can be significant too (see Uber for a lesson in what not to do), not to mention disquiet among employees if they believe that there is unfairness in the way they’re being treated. We’ve written plenty about this issue, and can help if you want to discuss any challenges you have with cross-border workers.

Addressing the employment status of independent contractors needs to top the list of HR priorities in 2022.
  1. Drive employee engagement with flexible working strategies

One of the most hotly debated business issues in the last 24 months has been flexible working. The opportunity to work remotely may have started as a Covid necessity, however, companies have quickly realised that many job roles can be effectively done from home and being in a physical office isn’t always necessary. And it’s not just location flexibility which looks likely to stick around after the pandemic restrictions end. People are finding that they can now be flexible about the hours that they work, with many 9-5 roles fast morphing into a more fluid approach to how and when work is carried out.

Flexible working practices are shown to bring a range of benefits, including employee productivity and wellbeing gains, not to mention giving employers the chance to cut back on expensive office space. And as flexible working becomes offered by more and more companies, it’s starting to be demanded by employees as a core benefit. Simply put – if HR teams can’t offer flexibility in the year ahead, they’re at a clear competitive disadvantage when it comes to hiring and retention.

However, even progressive-minded companies can fall down when they don’t have clear policies laying out what is expected (and what is provided) for staff working flexibly. How do they tackle overtime and ensure that staff establish a good work/life balance? What do they provide in terms of equipment for a home office? And how can they ensure that staff away from the office are treated in the same way as their in-house counterparts? Comprehensive policies are required to address these questions and ensure all staff feel supported.

Flexible working is becoming a core benefit to employees. HR teams need to offer it, or will be at a disadvantage when it comes to hiring and retention.
  1. Reflect changes to the working world in long-term hiring plans

Most, if not all, HR departments will be reviewing their hiring plans for the year ahead – and they’re facing some tough decisions. Now that flexible working is commonplace, there’s an opportunity for them to access a wider talent pool by recruiting for predominantly remote roles, or remote-only roles. In theory, organsiations have access to an enormous talent pool when it comes to hiring - which isn’t bound by geographic constraints. Of course, if this is on the agenda, understanding the legal and cultural ramifications of making global hires is paramount to success.

Perhaps this is why we’re seeing some forward-looking businesses hiring ‘Heads of Remote Working’, senior execs who are taken on specifically to look after remote strategies, driving effective collaboration and comms across distributed teams. They’re also turning to expert consultants for ongoing advice about how to get the details right when hiring across territories.

With an opportunity to access a wider talent pool by recruiting for predominantly remote roles, HR professionals should understand remote work’s legal and cultural ramifications.

4. Make collaboration technology work for all

How people work together is crucial to success – irrespective of whether they’re in the office or geographically dispersed. Effective collaboration is top of the agenda for HR departments everywhere and, after two years of using piecemeal technology solutions, now is the chance for a broader, holistic review of the market.

Many organisations are making a permanent shift to fully remote or a 'hybrid' way of working where some employees are in the office and some remote. As such, consistency in communication will be key. All face challenges in choosing the right collaboration stack (with plenty of options on the market) - and most want to consolidate tech for a more seamless experience.

But of course, it’s not only remote work environments which need to change to meet the needs of a hybrid future. Outdated conference rooms with people huddled around a speakerphone won’t support future workforce needs, and savvy teams will have to look at redesigning physical spaces to better accommodate hybrid work environments.

With many organisations making a permanent shift to fully remote or 'hybrid' ways (some employees are in the office and some remote), communication consistency will be key.

Strike international employment compliance off your list of tasks for 2021

There’s plenty to do before HR teams head off for a well-deserved Christmas break, and the increasing uncertainty around Covid is a most unwelcome distraction when it comes to ensuring day-to-day business continuity. But it’s important to maintain a strategic view of the year ahead and, if there’s one key priority that no business can afford to lose sight of in 2022, it’s closing those complex and potentially costly compliance gaps. Boundless can help you employ people compliantly in a number of countries around the world, so you don’t have to worry about any local employment challenges. Get in touch now

4 ways to get your house in order for 2022: Act on compliance red flags Introduce flexible working Adjust long term hiring plans according to the changing landscape Make collaboration technology work for all
Tackling the ‘Great Resignation’: why employers need to be location-flexible to keep their staff

All over the world, Covid-19 has led to what's been dubbed the Great Resignation: millions of people, from frontline workers to senior executives, voluntarily calling time on their jobs.

According to research by Microsoft, more than 40% of global employees are considering leaving their employers this year. As well as significantly disrupting ‘business as usual’, experts warn that resignations en-masse will have considerable cost implications for employers.

4.3 million Americans quit their jobs in August 2021 alone as part of the Great resignation

There is plenty of discussion as to why swathes of people are quitting their jobs. What’s increasingly clear is that the pandemic has changed how people think about life, work, and what they want out of both. More employees now recognise that life is too short to be stuck in a job which is unsatisfying or stressful. And as they seek better balance in their lives, many people are taking the bold step of moving location – abandoning cramped urban hubs in search of more space and lower rents – or moving countries, to change their lifestyle or to be closer to loved ones after a significant time apart.

As we can see from the alarming resignation numbers being reported across the globe, this trend is already alive and happening today. And it’s quickly creating a competitive divide within the corporate world – between those businesses that offer location-flexible working, and those that don’t.

According to research by Microsoft, more than 40% of global employees are considering leaving their employers this year.

Flexible working is here to stay

To adequately respond to the challenges ahead, employers must understand the fundamental change in priorities for many of their staff. Job satisfaction is no longer determined by perks, promotions or even salary. Instead, employees crave the flexibility and support which will help them to establish a better work/life balance and take care of their wellbeing. And top of the list is wanting the freedom to choose where they work from.

Indeed, the Covid-induced realisation that most knowledge worker jobs can be done from anywhere is impacting retention across the board. Even with 'top tier’ employers, formerly loyal employees are showing themselves willing to jump ship in search of better location flexibility.

Despite the mass remote working ‘experiment’ of the last eighteen months, a lot of firms are still stuck between old and new worlds when it comes to flexible working. These companies want to keep their staff engaged and loyal, but they’re filling their policies with restrictive caveats – for example, Siemens’ remote work policy mandates days spent in the corporate HQ each week, or limiting the geographic radius in which their employees can work remotely.

The pandemic has changed how people think about life, work, and what they want out of both, recognising that life is too short to be stuck in a job which is unsatisfying or stressful.

While others, like Spotify, are offering the promise of total work-anywhere flexibility to appease workers, they too are creating caveat-tastic policies, leaving many countries out of bounds because of tricky-to-navigate employment legislation, payroll issues and local taxation.

Finally, there’s the problem of equity, with firms allowing some but not all workers to permanently break from the mothership. There’s a real danger that divisions and feelings of unfairness will be created if flexible working opportunities aren’t open to all.

Planning for success amidst the Great Resignation

So, what concrete steps can businesses take to get fully remote, location-independent work right and avoid a potential exodus?

  1. Get a room temperature

There is no shortage of employee surveys that look into the sentiments people have about location and how compensation is affected by it. A recent survey suggested that two-thirds of US knowledge workers would be willing to take a 5% reduction in pay to work entirely remotely. And a YouGov survey shows almost half of UK employees believe they could do their job just as well abroad. While there is a clear indication from those, to know the true sentiments and expectations in an organisation, it will be best to ask directly. Organisations need to understand how and where employees want to work, rather than imposing new working arrangements without consultation. Not only will you know what your employees want, but the bonus is that nothing will make them feel quite as appreciated and cared for as being asked.

Job satisfaction is no longer determined by perks, promotions or even salary. Instead, employees crave the flexibility, which will help them to establish a better work/life balance and improve wellbeing.
  1. Figure out your outlook and philosophy

The next step is to take time and figure out all the minutiae that come with flexibility. Being willing, or not, to offer flexibility is only the first step. You will have to figure out your philosophy when it comes to compensation and benefits - will you offer everyone the same compensation and benefits package, regardless of where in the world they are, will you specify by location, or do something in between? You will have to factor in the fact that employing people in different countries costs differently to you as an employer so thinking about costs will be wise. Putting your philosophy in writing, making it available to everyone and sticking to it is essential.

  1. Pen down actual policies alongside employees

The next crucial element is to involve employees when shaping future policies. They should be invited to feed into scoping sessions, and to express their views on potential plans from the outset. This isn’t just an issue in relation to the current workforce. Approaches to remote and flexible working are strong indicators of a workplace culture – and job seekers will want to understand what an organisation offers and how these policies were reached. Being seen to be collaborative, rather than mandating preferences, can only enhance an employer brand and make it more appealing to work for.

  1. Figure out how to employ people anywhere right

Equally crucial is ensuring that organisations offering remote-only roles have their legal and contractual commitments covered wherever they operate. The only way to be compliant and meet the statutory requirements in each market is by offering legal full time employment to their workers. When employing team members in other countries, companies need to ensure they’re complying with local employment legislation and properly protecting employee rights. In some territories, employment law and employer obligations can even differ from state to state, creating a minefield for organisations that aren’t on top of the details. Furthermore, in each country, there are obligations on a monthly basis, such as filing and paying taxes, running smooth payroll operations and informing authorities about employment changes.

  1. Get help with the complexity

This stuff is really hard, especially in the context of a high growth organisation with many other demands. It will be easy to lose sight of compliance and doing things right as complexity increases exponentially with each new country. It’s where companies like Boundless can help, serving as the local “employer of record” for each remote-based worker - ensuring their contracts are compliant with local employment laws, processing local payroll, filing employment related tax returns and much more. If you’re ready to offer flexibility by allowing people to work overseas, get started here.

How to offer fully remote, location-independent work right:  ✅ Get a room temperature from employees ✅ Figure out your outlook and philosophy ✅ Pen down policies alongside employees ✅ Figure out how to employ people anywhere right ✅ Get help with the employment complexity

A final note on the Great Resignation

Ultimately, we believe that remote working, and a more flexible approach to location, can stem the Great Resignation tide – allowing employers to show they’re driving real change in order to meet current and future employee needs. Even more promisingly, it may help open the door for people otherwise locked out of the workforce, like parents, carers and those with disabilities.  And crucially, once employers get their head around location-independent, remote employment, they suddenly gain access to a vast new global talent pool – which is, of course, great for business.

For years employees have been clamouring for more opportunities to work from home; to work overseas; to live a more flexible and balanced life. Now, Covid-19 has proved the ultimate stress test for remote working. And remote working has passed the test. We can create, communicate and collaborate from anywhere, it turns out. 

However, when it comes to being legally employed to do so, things become a lot trickier. While it may often feel like we are one globalised world, we are still a highly localised world as far as international employment goes. Regulations and laws are fragmented, even in seemingly united unions (such as the US States, Canadian provinces, or EU member countries, to name but a few). This creates many international employment issues for companies to deal with.  

I started Boundless after I had experienced considerable challenges in managing employment for geographically distributed teams at a previous company I was the COO for. I still remember all the things that kept me up at night initially. Employing them the right way turned out to be far more complicated than I had ever imagined. If you find yourself in a similar position now, I know exactly how you feel. 

Fast forward to more than three years after that experience, and I have learned a great deal about the most pressing international employment issues and how they can be solved. Let's dive right in.

Are you based in the US and expanding in Europe? Forget about employment-at-will. There are stringent termination procedures, which sometimes, as is the case with The Netherlands, may require you to get the consent of a court.

So why does international employment come with so many issues?

Because the moment you cross a state line or a country border, (mostly) everything around employment changes, and you have to forget a lot of what you know. I will give you two examples.

Are you based in the US and expanding in Europe? Forget about employment-at-will. There are stringent termination procedures, which sometimes, as is the case with The Netherlands, may require you to get the consent of a court. 

Or are you based in Canada and hiring into France, Germany, or Spain? If you want to put a restrictive covenant, be prepared to pay the former employee 30 to 50% of their salary for the duration of the covenant. 

This is just the tip of the iceberg of international employment issues… 

Payroll

If you are hiring internationally, you will have to consider international payroll. However, before you do that, you will need to look into a host of country-specific items starting with the need (or not) for corporate presence and the process for registering as an employer. You will then need to decide whether to run payroll in-house or outsource it (you should outsource at least until employee 250, here is why).

Next, you have to consider another particularity of international payroll: local net salaries. The same gross salary will equal a different net wage in other countries. Part of that is because of foreign currencies; however, it mainly has to do with local employee and employer taxes, allowances, contributions, and tax credits variations. If an employee is relocating, you will have to address this. 

This is particularly important for employees who are relocating. I would recommend doing your homework and making the gross to net (capping the company cost at its current level) and net to gross (keeping the employee at the same level of take-home pay) calculations. If you are a company that practices the philosophy of equal pay for equal work, you will need to put some thought into harmonisation. 

Another important aspect of international payroll is that remuneration comes with different requirements in different jurisdictions. Primarily this covers minimum wage and pay frequency. Still, there are some more specific cases, such as the cap on bonuses for people in financial services that is in place in The Netherlands (can't be more than 20% of fixed salary). As you can see the topic of payroll should be on the top of your agenda as you try to resolve international employment issues.

You must ensure compliance with the local tax regulations for every state or country where you have employees, registering for (and paying) employer taxes. Those vary significantly (the global average is 15.3%).

Taxes

You must ensure compliance with the local tax regulations for every state or country where you have employees. As mentioned above, you have to register for (and pay) employer taxes in every country where an employee resides. Those vary significantly (the global average is 15.3%). You must then register each employee with the relevant tax and social security authorities to deduct all contributions. 

The percentage of taxes you will have to deduct from employees varies significantly. For example, on a salary of €79,470, a single employee with no dependents or special tax regime may be charged as low as 9.9% in Singapore (conditions apply) and 12.9% in Bulgaria or as high as 46.6% in Portugal and 46.2% in South Korea.

On top of the income and social security taxes, many countries have additional taxes that may surprise you. Brazil, for example, has over 60 different taxes, and every federate unit within the country can enact more tax rules. Moreover, many tax rules are unclear and are subject to widely different interpretations by tax and social security authorities. Navigating all that tax complexity will be a big challenge for you.

Other examples of taxes include Germany, where practising Catholic, Protestant, and Jewish employees may pay what is known as a church tax; Portugal, where employees who earn above €80,882 pay a progressive solidarity tax; Italy, where residents pay regional and town taxes. 

You will have to subtract these taxes from employee payroll and file them with the relevant authority or organisation. If you don't, as their employer, you may be charged with tax evasion or fraud. 

In France, aside from written employment law, employment rights and obligations are provided by case law, collective bargaining agreements, collective company agreements, company's internal regulations, and unilateral decisions of the employer or customary practices.

Employment rights and obligations

Each jurisdiction has specific employment laws that stipulate precisely what the rules are to employ someone there. Those cover both employer obligations and employee rights and extend to all corners of employment: employment conditions, protections, work hours, probation and notice periods, redundancy, employment terminations, and many others. 

However, other governing bodies also specify employer obligations and employee rights in many countries, aside from employment laws. In France, for example, aside from written law, employment rights and obligations are provided by case law, collective bargaining agreements, collective company agreements, company's internal regulations (mandatory for companies that employ 20+ employees), and unilateral decisions of the employer or customary practices. 

Furthermore, some countries' laws stipulate the need to create a Works Council, which governs certain aspects of employment. The Works Councils will often need to be informed or consulted on several employment issues, especially disciplinary ones. Failing to do that may result in companies paying fines and penalties as high as €187,515 in Spain.

Most countries will have provisions about data protection, whistleblower protection, protection from discrimination, a right to a healthy and safe work environment, a written payslip or the ability to join a union, etc. In addition, several countries will give employees the right to request flexible work (United Kingdom, New Zealand, Australia, Germany, and others). 

As stated in the opening of this article, most countries will have very watertight protections against dismissal and corresponding elaborate termination procedures that companies will need to follow. Failing to do that can see employees raise complaints with authorities, courts, and tribunals.

Most countries will have provisions against discrimination, but a number are taking that a step further, particularly regarding equal pay. An example is the Philippines, which has created a comprehensive women's rights law known as the Magna Carta for Women. It aims to eliminate discrimination against women and ensure equality between men and women in all sectors of life, including the workplace and therefore pay. 

If you are interested in learning more, we pay special attention to employee rights both in our very detailed country guides as well as on the blog. The information there can help you deal with many of these international employment issues. 

Most countries will have provisions against discrimination, but a number are taking that a step further, particularly regarding equal pay. An example is the Philippines, which has created a comprehensive  law known as the Magna Carta for Women.

Employment contracts

Every country has particular regulations around employment contracts. The first thing to explore will be the type of contracts permitted in the country, whether a contract is mandatory, and what language it needs to be in. In addition, in some countries, you will have to notify governmental authorities about a new contract signing (France, Spain, Italy). 

An important thing to keep in mind is that while the contract outlines what an employee does, where they will be doing it from, the expectations, etc., it will always carry less weight than the employment rules in the country, as explained in the previous section. This means that if a dispute arises with it (such as in the case of Uber), courts will disregard the agreement and rule based on the law. 

It's also essential to understand that any employee or company changes will need to be added to the contract. This is particularly key when it comes to hybrid and work from home situations. For example, an employee moving to work permanently from their home in Portugal will warrant an additional agreement. Its validity, however, is limited to three years and would need to be renewed after. On the other hand, in Estonia, employers need only to create an amendment to the contract. 

What is important to understand here is that more than the obvious things (the work address) need changing. For example, in the case of a move to WFH, performance, and reporting expectations, working hours and other structural aspects of the job description may also need to be changed. If employers do not update the employment contract accordingly, authorities may deem it void, making the employee an illegal worker. 

While the contract outlines what an employee does, where they will be doing it from, the expectations, etc., it will always carry less weight than the employment rules in the country.

Benefits 

Local benefits can loosely be grouped into government-provided and government-mandated ones. Most countries will have a mandatory national insurance system, to which either the employer or the employee will contribute or, in some cases, both sides will. Once again, regulations vary significantly. For example, in the UK and Australia, employers must contribute to employee pension schemes. In Ireland, on the other hand, all employers with more than five employees must offer access to a pension scheme, but they are not required to make contributions. 

Paid time-off benefits — such as vacations, holidays, maternity/paternity leave, and medical leave — all exist as benefits in one form or another in OECD countries, with the notable exception of the US when it comes to paid maternity.

What further complicates this field are benefits in kind, which employers offer at their discretion. Generally, since benefits in kind have a monetary value, they are treated as taxable income. In most cases, it's the employee that pays that tax. However, in Australia and New Zealand, employers pay it. In Ireland, employees have to pay that tax but have an initial €500 tax-free allowance. 

Suppose you want to harmonise the benefits in kind you offer internationally. In that case, you will have to beware of countries such as Estonia, which has progressive benefits in kind tax that can be as high as 60%–70%, making them very unattractive to employees. 

Paid time-off benefits — such as vacations, holidays, maternity/paternity leave, and medical leave — all exist as benefits in one form or another in OECD countries, with the notable exception of the US when it comes to paid maternity.

Employ internationally with Boundless

Adhering to employment laws, taxes, and employee rights in another country requires a commitment to learning. While you can go at it alone, availing of the services of an Employer of Record can save you a lot of time and stress and be indispensable when tackling these international employment issues. 

As a global employer of record, Boundless can help with your international employment and 17 countries and counting. We collect and make sense of the complex legislative information and embed it in our services and platform. We help you employ anyone legally and hassle-free. Our Employer of Record model acts as the legal employer to your remote workers and takes care of the local employer obligations. 

If you're ready to hire overseas and avoid running into any of these international employment issues directly, get started here.

When the Covid19 pandemic hit us, most knowledge workers became suddenly remote. Whether they liked it or not, they had to stay home and set up some sort of a functioning space where they could do as much uninterrupted work as humanly possible, given the circumstances. 

I was no different. I swapped my 15-minute cycle to the office, with a 15-second walk to the living room where I set up a work desk for myself. This was not my first remote stint, so I had a headstart. After the first few days of working in my pyjamas, I started dressing up for work, took a break for lunch every day, went for walks in the nearby park, and didn't nibble on work stuff in the evening. 

However, working from my apartment in Dublin, isn't technically working from home for me, as my actual home is 2,000 kilometres away. Just as for many others who reside here, this country is my adopted home. As much as we love our adopted homes (I certainly do) there may be a natural inclination to repatriate home in times such as a global pandemic. What's more, having worked remotely for months at this point, people have proved that they can deliver from a distance. 

What that distance is, as well as the exact location, doesn't matter as far as the day to day delivery of work goes. However, when it comes to employment and payroll, the exact location makes all the difference in the world.

As an employer, what are you to do if an employee asks you to move back to their home country? Should you do the right thing and allow them to move back, and if you do, how do you deal with this from an operational perspective? Let's find out below.

Implications of employees working in another country short term

Throughout the period of the covid crisis, I have never seriously considered moving back to Bulgaria (among many reasons, one being that I feel much safer in Ireland in how it's handling the pandemic). However, I do plan to spend most of August there and, during some of that time, I will also work. This sort of trip is considered short term and does not affect my Irish employment and payroll. My presence and working from another country while on a relatively brief visit doesn't trigger a requirement for a local corporate entity to employ me, or to process my payroll. 

Since the start of the pandemic, most EU members, as well as many OECD countries, have relaxed a lot of residency rules around short term repatriation (up to around six months). Be sure to check the specific regulations in the country, however, as some countries are quite strict even for shorter periods. Some examples include Canada, Argentina, Jordan and India.

Before your employees leave their usual country of residence, or while they are home, create a simple one-page document that explains their circumstances and what the expected duration of stay in their home country is. Signed by both you and the employee, this document will come handy in the case of future auditing. Set reviews every three months to see where things stand for their return. 

Implications of employees working in another country long term

When we talk about longer moves, potentially permanent ones, or in cases of new hires that were meant to relocate but have instead decided to remain in their home countries, there are far greater implications for the employer. In that case, the employment will need to be adapted completely. Some of the things that may be affected include:

As we have written previously in this publication, when it comes to employment, it's about where the employee resides, not where the company is based. International employment is notoriously hard and complicated because it requires full understanding and compliance with local regulations in a country that the company may not have any existing knowledge about. And, on the payroll side, even just figuring out what registrations with local authorities are required, and doing monthly payroll and tax filing can be a nightmare in a new country. Yet, there is no way around it. 

Employment regulations and laws are fragmented, even in seemingly united unions (such as US States, Canadian provinces or EU member countries, to name a few). While there is some easing of rules due to the Covid19 pandemic, they do not apply for long term stays. Below are the options you have for working with them, some better than others.

employment implications if employees move countries long term

Options for employing internationally

Being non-compliant

  1. HQ country employment payroll

While the person may be in a different jurisdiction, they "appear" in the books of the HQ. They receive their payroll and pay taxes in the country where the company is located. This is a solution that you can apply for short term stays.

Our advice: This may appear as an attractive solution; however, it generally isn't legal in the long term. Past the six months mark (or whatever the specific regulation is when it comes to repatriation due to Covid19) we strongly advise against this option. Employers are legally obliged to provide employees with the rights of the country/state that they live in, and their pay must be processed for tax purposes through the tax system of the government of the country that they're tax resident in. Availing of this option past the legal mark can get a company in serious trouble with local authorities. 

  1. Independent contractor agreements

Probably the most common way to work with people in different jurisdictions, this involves signing people up to fixed term or ongoing service agreements. This means that they are registered as either freelancers, sole traders or limited liability company owners, who file an invoice once a month. 

Our advice: While contracting sounds an easy and quick solution, and seems like it will solve all admin challenges with employees that move country, it is, unfortunately, a hack. We strongly advise against working with remote workers based on independent contractor agreements. In the current climate, it's even further complicated, as employees would have to deal with registering corporate entities or sole trader operations in suboptimal circumstances - many public institutions are not operating as usual. As the recent case against Uber and Lyft by the State of Massachusetts further signals, governments are taking a serious note and action against potential employee misclassifications. While the focus in the media is often on gig economy workers, these rulings also have broader application.

Being compliant

  1. A DIY corporate entity and employer setup 

The company goes the route of becoming a local employer. In doing so it handles the entire set up process. This requires:

Our advice: Think carefully before doing this as it is both expensive and time-consuming. This route can take anywhere between ten weeks and 18 months per country, and would often cost about €10,000 for the initial setup. Most importantly, even after the setup, you still have to take care of all of the ongoing overhead that comes with regular filings. Public service institutions have been affected by the pandemic and many are not operating to their usual capacity, which may further delay you. 

  1. A DIY setup involving intermediaries

A company still goes the local employment route, but instead of doing everything itself, it relies on suppliers to help with many of the above tasks. These intermediaries provide connections to local service providers and guide a company through the process. There's a lot of work that intermediaries can't do on behalf of the company such as rounding up documentation that you’ll need to provide to local partners and the local authorities, and there will be decisions that your team will need to make, to guide the intermediary on how you want to manage your operation in this new country.

Our advice: While not as time-consuming as a full DIY setup, working with intermediaries to do your own infrastructure, still ends up being a lengthy and complicated process. You can very quickly find yourself in a mess trying to stay on top of everything, and you’ll be adding a lot of communication overhead to your plate. Even the same type of service providers in different countries may have vastly different ways of working, and may have different processes and deadlines, e.g. payroll processes vary greatly between many countries. As mentioned in the above point, there is also the added current challenge of public services being disrupted by the pandemic. 

  1. A PEO (Professional Employer Organisation) operating an EoR (Employer of Record) model

A model (and legal status on an employment agreement) that takes care of the employment and legal relationship with an employee. The model is applied through a third party PEO (such as Boundless), which employs people on behalf of the company. The Employer of Record takes care of all employment matters such as:

Our Advice: This is the route to choose to ensure that you can quickly and easily, legally and compliantly employ someone in a different country without headaches or overheads on the side of the company. That is because all the complexity that comes with international employment is taken care of for you. Fees of EORs vary dramatically and have historically been steep for the pockets of SMBs. Boundless aims to change that and provides a much more affordable solution.

As a PEO, we fully own all the entities that serve as EORs and are ready to employ workers on behalf of your company. All you have to do is register on our easy to use platform and input basic employee data. The whole process takes a few minutes, and you can start paying your employee from the following pay period. 

Five more things to keep in mind about international employment

After you have settled on a solution for how you are going to employ your employees, there are a few more things to keep in mind about international employment.

The same gross salary will yield different net pay

This is the most fundamental thing to understand about international payroll. Due to all the varying taxes, tax bands, allowances, contributions and tax credits that apply to both the employee and the employer, the same gross salary number for an individual will produce different net values depending on the country. 

Here is an example. Róisín has decided to move back home to her native Ireland from the UK. Her annual gross salary in the UK is £50,000 (€60,039). After tax, Róisín, who is single, doesn't have children or a mortgage, takes home £37,536 (€45,072). However, if she moved to Ireland on the same gross salary, her net pay will be €41,957(£34,933.5) or €3,115 (£2,602) less. She knows that Ireland is as expensive as the UK and wouldn't like to receive less just because she has decided to move back home because of Covid-19. For her to receive the same net pay, her employer would have to increase her gross salary to €66,087 (£55,024.50). Keep in mind that this is a reasonably straightforward example without much difference in taxation. The differences can be very substantial in other cases, when benefits, income tax bands, tax credits, and allowances are added on. We have put together some great examples of those differences here

salary changes when employees move countries

Take the time to make the gross to net (looking at capping the company cost at its current level), and net to gross (looking at keeping the employee at the same level of take-home pay), calculations for each employee. Then sit down with the employee and take them through the numbers. If the country they are moving to has a different currency, it may also mean that the take-home pay could slightly differ from month to month due to currency fluctuations. If doing these calculations seems challenging, Boundless is happy to help as we have developed our own calculators. Just drop us a line. 

Visa and residence requirements

While most people will be moving back to their home countries, some may be moving to the home countries of their spouses, or other countries they have always wanted to live in. Over the last few months, we have all probably secretly (or not) entertained the idea of moving to places such as New Zealand, South Korea or Vietnam, which all appear to have a really good grasp on the pandemic. Whatever the case or reason, it's important to understand whether your employee is legally allowed to work in that country and whether they need a visa or other immigration considerations.

Personal income tax implications

According to EU regulation, people generally pay social security where they work, but pay all their income tax where they have lived for the majority of the year. 

Hers is an example. Marco moves to Italy from Ireland in May, wanting to be around his parents. Up until May including, he pays income tax in Ireland, which for his salary is 20%. After he moves to Italy, from June, he starts paying income tax in Italy, which is 33%. Since by the end of the year he spent over 183 days in Italy, he owes all his yearly income tax in Italy. Because Italy and Ireland have a double taxation treaty , what he owes to the Italian government is the difference between what he was paying in Ireland and what he would have paid had he been in Italy on the whole income of the year (Irish + Italian) - the income tax paid in Ireland. (See example on graph).

personal income implications when employees move countries

Document everything

Whether your employees are moving to another country for a little bit or for an extended period, one thing you will want to have is a clear policy of how you approach these circumstances. Since the pandemic will not be disappearing any time soon, it is important to document all procedures and make them easily accessible to everyone. In it, you will want to include the possible timeframes (short vs long), country/region combinations, any differences that might apply to different nationalities, visa holders, etc. Give as many variations as possible so everyone feels included and be specific about your approach in each case.  

Be very clear (and document that as well) about your limitations as well. Each person’s circumstances will be different; some employees will be under a work visa, different nationalities will have different rights in different regions. It’s important to be honest and realistic in the expectations you set with your employees. Depending on your company’s internal resources, it might be impossible to have the exact knowledge needed to support them appropriately in a transition of this level. It’s best to make sure they know they should seek tailored tax and immigration advice from a professional in order to avoid potential bad surprises with the local tax office. 

Medical concerns

One thing you will need to keep in mind on behalf of your employees is the fact that if their payroll is still in the country of residence, they may be denied access to the health care system in their home country. Even though they hold citizenship there, since they have been paying social security in a separate country, they may not be covered. For EU citizens, one solution for this is the European Health Insurance Card (EHIC) which allows them to receive healthcare in another EU or European Economic Area (EEA) country. Since these are only valid for up to three months, it is important to understand their plans and transition them to local employment and payroll if they intend to stay longer. 

Conclusion

With heightened awareness of the severity of what is going on, and a natural need to be closer to family and established community, many foreign workers have started asking to move back to their home countries. Alongside that, certain countries are closing their borders for immigrants in an attempt to stop the spread of the virus, so even those still willing to relocate may no longer be able to do so.

For short term arrangements, you should be mostly fine but, in the long run, you will have to set a clear path forward as your employees won't simply be able to remain long term in another country without it having a consequence for both employment and payroll. You can get a sense of local employment, legal, compliance, payroll and tax obligations in our library of comprehensive country guides.

As mentioned above, the cleanest, most affordable, and effective way to solve challenges with newly international employment is to work with a Professional Employer Organisation such as Boundless. We can currently legally employ your workers in Ireland, Portugal, the UK, Denmark, Australia, New Zealand, Estonia, Germany, The Netherlands and Singapore, with many more being added all the time. Get started here.

Global distributed Employment

People. Nothing holds the key to a company’s success and ensures the business survives, thrives, and grows in certain and uncertain times more than the people that work in it. They innovate, build, sell, and care for customers on behalf of the founders.

People are the biggest asset a company has as it brings its vision to life. Their experience as employees matters a lot, from how they are first recruited, to how they are employed and treated.

We have known this for a long time. However, as of not too long ago, we have had to accept the hard truth of how unlikely it is to find the best people within commuting distance of our offices. The chances that a person will possess the right skills, have the right experience, will be sufficiently interested in the role, will have appropriate salary expectation, and availability to start right now, are very slim.

The openness to the idea of remote/distributed/teleworking or however you want to call not working from “the office” was the result of realising this reality. For those who hadn’t opened up to the idea of their employees working from home, the COVID-19 global pandemic forced them to. 

So here we are now, willingly or not, fully remote and distributed for the foreseeable future. According to recent polls, more than half of the workforce does not want to return to an office once this is over. Having tasted this flexibility, many future recruits are going to demand it. They are going to select companies which offer remote work and support distributed workers, even if they are halfway across the globe.

As I have previously shared, I started Boundless after I had experienced considerable challenges in managing employment for geographically distributed teams. While at the time the employees in my previous company going remote was unplanned, it was in no way as sudden or all encompassing as in the time of a global pandemic 

If leaders do not make their companies fit for a world where a remote and distributed way of work is far more prevalent, they risk becoming less competitive employers. A change in how we operate is needed, which goes beyond opening up the recruitment pool and advertising remote-friendly jobs. To attract and retain people, we have to rethink the employee experience in a way that it addresses people’s needs. Let’s explore a vision of what leaders are going to have to do in terms of global employment, and how.

Develop your remote employer brand

Getting the best candidates into your pipeline, and convincing them to come and work with you is all about ensuring that you are perceived as a great company to work for.

what employees need in terms of global employment

More and more, the definition of a great company is that of an organisation, which stands behind the values it puts on posters around the office. There is nothing more off-putting than a company saying one thing but doing another. You do not have to search much to find stories of companies filled with hypocrisy and how much that has tarnished their brand. (Communication, Respect, Integrity, and Excellence were the values Enron plastered on its walls ).

We have also come to understand that what makes a great employer has nothing to do with: 

ping-pong tables
free lunch
beer on tap
or flashy offices ...

(Right now, what defines a great employer certainly isn’t flashy offices or cool amenities!) 

Even before COVID-19, what was becoming abundantly clear is that what employees want and value most of all is respect. Alongside that, they put importance on things such as:

Recognising why these are important to employees and providing them as part of the employee experience, requires leading with empathy. Especially given the current situation - or the fact that, even when things are going great, a new recession, pandemic or another form of crisis is just around the corner - people crave safety, security, and stability. 

How should all that affect how you lead your organisation and how you build your employer brand? 

It’s time to ditch the idea of ping pong tables and focus on allowing your workers to have flexibility about when and where they do their work. That has to come on top of providing legal, secure, and stable global employment for all your employees, regardless of where they are based. I know that providing employment is more difficult for geographically distributed than for co-located teams. Still, I am here to tell you that global employment solutions are now more accessible than ever. Before we get to that, let’s look at your options for hiring someone in a different jurisdiction.

Existing global employment People Ops solutions

global employment requires offering flexibility, safety and security

There are several potential options for running your internationally remote team, which vary in their legality (or lack thereof), cost, and ease of implementation:

The problem with independent contractors

While contracting sounds an easy and quick solution, and seems like it will solve all your admin challenges, it is, unfortunately, a hack. And as such works only in a situation such as a fixed-term project and, in many countries, this project would need to be something that’s not core to your business. 

Most companies will, at one time or another, use fixed-term contracts for specific projects such as creating an inbound marketing strategy, process improvements, fundraising readiness preparation, etc. For such time-boxed projects, there usually is no permanent role in the company and most governments will look at that and say, “yes, that's a legitimate contractor.”

However, there are many scenarios where it is not legal to classify a worker as a contractor. Every government employment agency/tax authority has slightly different criteria for what qualifies as a contract role and where someone should be classified as an employee but, broadly, the following are the key measures that they'll look at:

If the answer to all/most of these questions is yes, then the local government - the employment authorities and the tax authorities - will say this person must be classified as an employee. The general rule of thumb is, if someone looks like an employee and sounds like an employee, then they are an employee!

In 2019, many governments actively started taking action on remote workers being misclassified in multiple jurisdictions. We have anecdotally heard of cases in the UK, Serbia, Canada, Spain, Germany, the Philippines and others. We believe this is only going to continue.

However, the problem with independent contractors spans wider than just the legal repercussions. Building a team using a hack will eventually dilute the value of your employer brand. When your company reaches an inflection point, such as a more considerable funding round, it's common for a new investor — or the existing board — to look at how international employment is being handled, and say that it's time to level-up and ensure that the company is compliant.

This is particularly important when a company is preparing for an exit. An acquirer that is looking to acquire talent is not looking to acquire a bundle of easily terminated service agreements. They're looking to get a compliantly employed, fully engaged, loyal team.

As much as we live in a globalised world and remote collaboration and communication are viable from a technology perspective, the employment of people which is heavily dependent on local regulations remains very difficult. Regulations and laws are as fragmented even in seemingly united unions (such as US States, Canadian provinces or EU member countries, to name a few). One common thing, however, is that according to every jurisdiction, a person working full time for a company needs to abide by its local regulations, regardless of where the employer is located.

the problem when global employment relies on independent contractors

There is another way for global employment

Abiding with stringent governments is only part of the reason why companies need to seek a better way to employ international staff. We see seeking to compliantly hire international workers as an excellent opportunity to be a great employer by:

Above, I mentioned that there it is now more accessible than ever to employ distributed teams compliantly. The solution for that is a global employment platform that too has rethought distributed employment. A global employment platform takes the Employer of Record solution and enhances it with easy to use technology. The team building all that, possesses years of experience in the fundamentals of global employment and can tackle any issue or challenge immediately. All three combined allow for the entire internationally remote team to be operated from one single point. 

The Employer of Record solution gives access to local corporate and employment infrastructure to enable legal employment. At the same time, the technology platform manages HR compliance, payroll and tax filings on behalf of the client company. For this to work well, both the infrastructure and the technology need to be owned and operated by the same entity. This ensures that international workers are compliantly employed, automates all of the hard stuff —minimising the risk of mistakes— and frees you up to focus on your core business. 

This is our vision for Boundless. Solve global employment, make it easy for companies to avail of the abundance of diversity, creativity, and ingenuity of 1bn knowledge workers around the world, and democratise access to well-paid jobs for all. It's with that vision in mind that we have built our team with great internal expertise in global payroll, international business operations, and international People Ops and international employment.

Rethink people ops in a distributed world

It will be long before people will be able to return to offices and, even when they do, how they interact will probably never be the same. Many people will want to remain working from home or from places they have always wanted to live. Now is the right time to develop a considered employer brand, with empathy is a central value, which offers candidates flexibility, stability and security. By rethinking employment and people ops for a remote world, you are laying the right foundations for future growth.

You have the power to provide safety and security by ensuring people are legally and compliantly employed. The good news is that it’s not just on you to carry the responsibility for that. Building the world’s first global employment platform, we are here to help you. Start legally employing today.


The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance.  You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

what is an employer of record

Dee Coakley is a three-time COO, having spent the last 10 years with scaling B2B SaaS businesses (Masabi, Bizimply & Axonista). In her COO roles she experienced first-hand the operational challenges of setting up employees in new countries, and so is now building Boundless.  Boundless is solving the difficulties for small and mid-size businesses of running multi-country payroll and HR compliance with a beautiful solution that removes the barriers to growing teams internationally.

In the current reality of COVID-19, many companies are finding themselves suddenly having to work and manage workforces remotely. The first time I had experience with a remote workforce, it too happened accidentally rather than planned. As I shared in a post, my focus was on figuring out how to keep legally employing our workers even as they moved across geographies. What I would realise in retrospect is that the solution to my conundrum was a  model called Employer of Record (EOR). EOR is a well-established model in the US, often referred to as a Professional Employer Organisation or PEO. 

As you try to navigate the reality of remote working by necessity, there are many aspects of teleworking you will have to figure out. We already shared some tips for remote newbies and ideas on how to succeed as a remote leader. While the legal and compliance side of things may not be high on your list of priorities right now, it will become as employees may decide to go back to their home countries, while future recruits will probably have to be remote and thus could come from anywhere in the world. Similarly to me, you will have to find a way to hire them legally as working with independent contractors long term is a bad idea.

In this post, we explain in detail what an EOR model is and what to expect from such a service provider. Firstly, however, it’s important to understand what employment itself means.

Employment vs. performance management

We often put employment and managing someone's performance under the same umbrella. That, however, isn't the case, as one is a legal relationship, while the other is a working one.

Giving someone the wrong assignment, versus assigning them the false statutory obligation, doesn't carry the same weight of consequences. Employment is a legal status that comes with legal responsibility for ensuring that a person benefits from all of the employment rights in a particular territory, governed by local employment law. Performance management, on the other hand, is a working relationship around the nature of work itself. 

employment is a legal relationship

When both employer and employees are based within the same jurisdiction, the company typically takes care of both the legal responsibility and the performance management. Geographical separation changes that, as a new jurisdiction requires a separate employer registration. To solve this, a company can either take the arduous task of registering as an employer directly, which involves setting up international payroll, or it can employ the services of an EOR. 

The definition of an Employer of Record

EOR is a model (and legal status on an employment agreement) for the employment side of things. The model is applied through a third party Professional Employer Organisation (PEO). While EOR and PEO are often used interchangeably, it's essential to understand the subtle difference between the two terms. 

The EOR model is nothing new, first originating in the US in the 1960s in an attempt to address the challenge of employing people across state lines. In the US, people are tax residents of the state they live in. Their employer is legally obliged to be registered for taxes in that same state and produce tax returns every year on their behalf. If a small business has multiple employees in multiple states, it can quickly find itself in a reporting and compliance nightmare. PEOs registered in other states acting as the employer of record have been coming to the rescue in these instances.

When using an EOR, a company enters into a three-sided, co-employment contract, signed by the company, the employee and the PEO:

Companies are now more frequently employing people in countries around the world, often in places where it takes far more than merely registering a tax number and filing annual returns to be legally compliant with all of that country’s tax regulations and employment legislation. 

EOR offers an effective solution to deal with compliance challenges and the stress and uncertainty of employing people in more complex/higher-risk jurisdictions. 

the employer of record model first originated in the US

What falls under the responsibility of an Employer of Record?

As the legal employer, regardless of the territory, an EOR handles a variety of compliance aspects such as: 

While these are the duties performed by the EOR for most countries, depending on the territory there may be other aspects to compliant employment. 

Beyond producing the employment agreements and making sure they include all of the obligatory legal terms for that territory, an EOR also makes sure that employees are provided with any required notices or materials. For example, in Ireland, employers have to provide detailed information on disciplinary policies within a specific time frame after the employee's start date.

Once the employee is up and running, the EOR is the official keeper of records and is the point of contact for all employment regulations and HR compliance questions. 

The EOR will process the payroll every month, ensure that the appropriate taxes are filed, tax authorities notified, and payments made, and stay on top of all other statutory obligations. 

what an employer of record could do for you

How are employment agreements ended when using an EOR?

Your company handles the day-to-day working relationship with the employee, and your company is ultimately the party making decisions about your organisation’s strategy, and how that impacts your workforce. As one of the most complex and plain uncomfortable parts of employment relationships, the question of how to end employment agreements under the EOR model is one we are often asked. 

If this situation arises, an EOR can support the company with the local knowledge of how to comply with the relevant country’s employment regulations. In addition, a good EOR should work with the company to ensure that the employment contract is ended in a sensitive manner: advising on the due process that has to be followed in the jurisdiction, and guiding the company in making sure the employee is treated respectfully.

While many US companies operate from "fire at will" states, where an employer can tell an employee, "Don't turn up tomorrow, you're done," in much of the world, employees have rights to be taken through a very clear and fair process, before a decision on ending their employment is made. 

An EOR should have the local knowledge and deep understanding of appropriate steps and will act as an essential advisor for the company throughout this process. I can't emphasise strongly enough how important it is that a company consults its EOR and their local experts before going ahead with ending someone's employment. As tempting as it may be to follow a checklist, it's far too risky for a company to do this without appropriate support. Here are a few reasons:

Do I need an Employer of Record?

In the last year, I have had conversations with many HR advisory firms, and when I have described the Boundless Employer of Record model, many of them told me that companies have asked them in the past, "can you act as an employer on our behalf in your country". You would probably not be surprised to hear that the answer was always no. 

In most countries, the responsibility is far too big, and the risk far too high, for anyone who is not a specialist in this area to take on the EOR responsibilities. 

When EOR expertise is not core to a business, that organisation will rarely be a suitable partner. So, yes, you really need an experienced Employer of Record that owns their infrastructure, to make sure everyone you work with is legally and compliantly employed, and you are safe as an employer. 

Acquiring the local knowledge and establishing that infrastructure takes time, and at Boundless, we only work with established local experts that have been focussed on the territory in question for many years, ensuring we can the best Employer of Record service possible. We're currently focussed on establishing our worldwide employment infrastructure with an already established presence in Ireland, the UK, Denmark, Portugal, or Australia. Alongside that, we are developing the technology that will automate the repetitive administrative aspects of payroll and taxes. The combination of the two will ultimately allow us to solve the pain of multi-country payroll, and decrease international employment costs, for you. Learn how you can start employing anyone, anywhere today.


The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance.  You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

Tips for Remote leaders to succeed

We have just entered some of the most bizarre times of our personal and professional lives. We are all being asked or forced to make changes we could previously never have imagined. How businesses operate and adjust as a result of social distancing in this new reality is drastic. Leaders and managers that may have never worked remotely and away from their teams need to quickly learn how to manage performance without being in the same place as their employees for the foreseeable future.

Workers now have to learn how to stay aligned on projects and in teams that they no longer have no physical interaction with. In an ideal world, when moving toward remote work, you would be advised to dedicate time and resources to planning and training to ensure a smooth transition. The world of 2020 is anything but ideal.

On behalf of Grow Remote, I recently co-hosted a webinar alongside Laurel Farrer (CEO, Distribute Consulting; Founder, Remote Work Association; and Forbes contributor), about some of the concerns that accidentally remote companies are facing. Below is a distilled version of the advice we gave. 

Lead with empathy

It’s crucial to bear in mind the context of why companies such as yours are finding themselves having to work remotely. As much as you may want the business to carry on as usual, the toll the current situation is having on people is immense. Your employees are worried about their health, the health and emotional wellbeing of their families and vulnerable loved ones. Not only do they carry the weight of being a new work-from-home worker and figuring it out but being a school teacher to kids of varying ages and attention span.  The world is in turmoil. It's tough to stay focused when there is so much going on. Some people will be more resilient than others. This is where your emotional intelligence as a leader will become extremely important, and you have to lead with empathy to effectively support your team.

You may be anxious yourself, but it's vital to try and maintain the work environment as a place of calm. Keep reassuring people about the state of the business, their value to the company and the importance of their contribution. Be prepared that people will need to express their anxieties and be proactive with checking in with them so they can express their concerns to you rather than in more public-facing channels. 

The greatest thing that you can do specifically for those team members that are feeling stressed or anxious is to communicate with them. At the time of the webinar, Laurel had two members of her team that were quarantined. Everyone on the team had been sending them messages to remind them that they may be isolated, but they are not alone. The team was there for them. They were keeping up with them on Slack throughout the day, and making sure they felt engaged and remembered. 

Communicate, communicate, communicate

the only thing that changes when you move to remote work is how you communicate

Excellent communication is at the heart of making remote work, work. With the change from co-location to a remote setting, the goals that you have, the deliverables that you're trying to reach and follow through on are not changing. What mainly changes is how you communicate.

You have to be very clear on every aspect of work and expectations and create guidelines on how the business operates, how people are expected to work, how communication will be happening. In remote work, over-communication is just communication because your connection to the world is what you type on your keyboard or what you say over a microphone. Your emotions, contribution, and leadership are all emanated through your written and verbal communication. 

Beyond setting clear guidelines, effective communication will help you find out how people are feeling. With remote work, you need to be a little more literal in your questioning in how people are getting on. They may not be as able to communicate how they are coping with their workload or new working practices when they are remote. It may be very easy and tempting to go invisible when something is going wrong. You must watch out for those cues and make sure that you have a clear view of how they are feeling, what questions they may have, and just how engaged everyone is. You have to continually check in with all of your team members, and over-communicate with them.

Befriend video

The most important piece of advice is to always use video for any check-ins or meetings. It could be via Zoom, BlueJeans, Google Hangouts or Skype. The tool doesn't matter. Be explicit that everyone is expected to always have their video turned on when joining a call. Otherwise, calls will be tough as it will be unclear who is speaking. It will also ensure everyone is much more engaged. It will help create a connection between participants, and will keep people more focussed. It will also help you to read the cues as to how people are feeling that I mentioned above.

misalignment is the biggest remote work killer

Create a simple remote work policy 

As we have talked before on this blog, one of the most important things when it comes to remote is to be a legal and compliant employer. There are quite a few regulations to adhere to and having a remote work policy is a great way to establish practices that will comply with them. This free checklist created by Distribute Consulting is an excellent start for creating a remote work policy. Aside from making sure you are legal, it puts in writing the murky uncertainties around how work is performed: When do I need to be online and when is it okay to be offline? What meetings am I supposed to go to? Am I supposed to have a quiet environment? Am I okay to have my kid on my lap?

All of those questions that cause misunderstandings between workers and managers can quickly be addressed with a good remote work policy. As you create your company's remote policy, think of yourself as a therapist. Think about what people are unsure of, what they are feeling, what they may or may not agree to, etc.

Pay special attention to alignment

The biggest remote work killer that sabotages the sustainability of a remote work policy is misaligned expectations. The more you get on the same page about everything: how to support each other, how to stay engaged, how to communicate in a virtual environment, what people are working on and what they need help with, the better your team will perform. Remote work is still work. What makes it different to co-located office work are the subtle nuances that you need to be aware of and to adjust to make it successful. 

Remote working only works when there is crystal clear alignment. Establishing a set cadence of virtual meetings and ways to track the progress of work is essential. Below are suggested virtual meetings that will help alignment and connection with your team:

Be mindful that it's easy to feel frazzled or just focus on productivity during daily standup meetings. As a leader, it's where your worries about productivity and delivering work may surface in direct or more subtle ways. If you're not careful at those moments, any form of insensitivity can cause a lot of problems and create a toxic culture. 

It’s quite possible that people may say they are not sure about any of the questions you ask - that information is unclear to them, they are not sure how to proceed or simply don’t know. Make sure you do not shut  them down by saying, you just need them to be productive. Make a note that there is an issue and bring it up during a one-to-one conversation in a calm manner.

a clear cadence of virtual meetings will help to succeed even when you are suddenly remote

All these combined will help you as a manager to feel a little more in control in terms of understanding how people are aiming to deliver their projects. They will also keep workers focused and aligned. 

Understand what's important to track

We mentioned this in our previous article - the most important thing to making working remotely feel right for you as a manager is to shift your mindset from observing activity to observing accomplishment. That is as valid for yourself as it is for your employees. This way of looking at things is called "results-only work environment" or "results-based tracking." 

Looking at work through this lens is a significant shift. It's hard, and it is scary, which is why, under normal circumstances, it never happens on a whim. Right now, you are going to have to take a leap. The more that you can get into the mentality of watching results instead of watching activity, it will become more natural. During the webinar, Laurel gave an excellent example to illustrate how to think about that:

"When I bring my car to the car wash, I don't need to watch it being washed for me to know that the people are doing the job. I don't really care if they washed it in the parking lot or in the garage. I don't really need to know what kind of soap they use. What I care about is that my car is ready at the time they told me it would be and it's clean. I trust them to do the job that I hired them to do."

Get some training 

You are probably overwhelmed with the new way of work and do not feel like you have the time to go through any training sessions to get better at this. The reality is, however, you need it more than ever now. Enrol in a course with companies such as Workplaceless. It will help you align on your expectations from remote and help you to understand how to be on the same page with people from a distance. 

why output is the only thing that matters in remote work

In the end, make sure you practice self-care for yourself too

In the situation we are currently in, it's very easy to fall into overdrive mode, where you are focusing on dealing with all the overflow of new things you have to do. However, if you don't take care of yourself, you can quickly burn out. Self-care and self-management are crucial here. If you know you are the personality type that tends to zero in and hyper-focus on work, it will be easy for you to work 12 hour stretches without eating, without showering, without exercising. That is not sustainable. But you also have to be focused and disciplined to work. It's all about a balance between the two. Be in control of your time, your tasks and your energy. 

I hope these pieces of advice can help in you becoming a better leader from a distance. Remember you are not alone in any of this. There are multiple resources out there, that many other businesses with experience working remotely are creating to help you at this time. If you have any questions, do not hesitate to get in touch through twitter: @boundless_HQ or email us at ask@boundlesshq.com. Learn more about the growing number of countries we support and how you can start employing people in them here.


To learn more watch the full video of the conversation I had with Laurel

The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance.  You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

Albeit a common practice when working with remote workers, hiring them as independent contractors can have financial, strategic, reputational, and ethical repercussions.

This is the first of two posts on the subject of employment best practices. In the second post we explore the inequalities that can arise for your remote / international team.

As I walked onto the WebSummit Main Stage for my pitch about Boundless in November 2019, I had two questions for the crowd of nearly fifteen thousand. I asked the first out loud: “How many of you employ remote workers?” Blinded by the light, I could barely make out the hands that went up, but that was beyond the point; Remote working has exploded in the last few years so much that it made my question almost rhetorical.

My second question, however, was much more controversial, which is probably why I didn't directly pose it to the audience. "How many of you have these people working for you as independent contractors?" It's Remote Work’s “Gotcha Moment”; most distributed companies are breaking employment laws by having full time independent contractors. 

The reality is that in most countries around the world, it's not legal or wise to have someone working as a full-time independent contractor long term. 

Employment laws grant a set of rights to someone who provides a company with their full, undivided attention day in and day out. An independent contractor is stripped from all those rights, which creates a problem.  

Regardless if a company has decided that someone is an independent contractor, the tax or employment authority will beg to differ if it deems that to be a misclassification. As a result, it will not only force the company to change the status of the individual but also will require backdated payments and very likely enforce penalties . And that's only one of the problems that a company hiring independent contractors faces. 

Before you post your next remote job online, read this post to learn why distributed employees should not be independent contractors. And if you want to dig deeper into how to be a fully compliant distributed company, check this 10-step guide.

Independent contractor vs employee classification

Understanding the distinction between an employee and a contractor is essential to get to the gist of the problem here. Employment is a legal relationship that is complex and requires fulfilling a plethora of regulations and protections that extend far wider than paying someone a salary. Contracting, on the other hand, is governed by a commercial agreement which governs the exchange of services for a fee. 

Establishing and monitoring an employment relationship is necessary for the protection of employees, assuring all tax is filed and reported and employment laws abided by.

Governmental bodies in every country actively seek to make sure individuals are employed the right way and receive all their rights. One way most of them would see employment "done wrong" is if a company hires full-time workers as independent contractors because that directly strips them from those rights. It’s also seen as evading taxes and other payments they would be obliged to pay as an employer of people. 

To negate that, employment authorities around the world have developed elaborate processes, checklists and questionnaires that help them determine the nature of the relationship.

Below is a list of some of the questions commonly asked by authorities when validating classification of workers as independent contractors v employees

  1. Does the individual have one client or more? If they have multiple clients, the likelihood is that they are legitimate independent contractors. 
  2. Does the individual use their equipment? If they are using the company's equipment, they will not be seen as an external service provider. 
  3. Is the work managed? Does the individual carry out their work assignment autonomously, without receiving permanent instructions or does a manager guide any of the work and assign tasks regularly?
  4. Is the individual required to participate in specific recurring meetings?
  5. Is the payment the same every month? If it is, it looks more like a salary.  
  6. Does the individual work from their own office, or does the company make arrangements for their workspace? An independent contractor would be working from their own space.
  7. Does the individual retain the right to subcontract some of the work? An independent contractor would be able to hire anyone they want.
  8. What is the extent of financial risk? Can the individual make a loss on the contract, can the agreement be terminated without compensation? Is there an obligation to improve any defective product at their own expense?

As you can see, all of these questions aim to establish the relationship between the individual and the company. Under some legislation, if even only two or three of the questions lean towards employment, an employer may be accused of misclassifying individuals. 

How the relationship is defined in a contract doesn't matter: The story of Uber in the UK

An important thing to understand is that classification specified in the contract won't be taken into consideration when authorities will review the working relationship. Let's give a real example so you can see this more clearly. 

In 2015, James Farrar, an Uber driver in the UK, filed a lawsuit against the ride-sharing company for an unlawful denial of employment rights and benefits. Just like all other Uber drivers, he was forced to be self-employed. According to his contract, he was running his own taxi business and Uber, a technology platform, was merely connecting him with customers. However, he claimed that the realities of how he was required to work for Uber meant he wasn't an independent contractor. The case was reviewed by the Central London Employment Tribunal in 2016, which found that Uber:

• interviews and recruits drivers;

• controls essential passenger information and does not share this with the driver;

• requires drivers to accept trips;

• sets the default route to be taken;

• sets the fare and the driver can only decrease it; the driver is not free to increase it;

• imposes conditions on drivers regarding the type of vehicle they can use, instructs them how to do their work and controls how they perform their work;

• uses rating systems to effectively performance manage/discipline drivers.

These factors indicated that Uber had a level of control over James that was consistent with him working for Uber, rather than providing a service. Drivers like him were not acting independently and autonomously, the way a self-employed contractor would. In October 2016, the tribunal delivered its verdict: James and all other Uber drivers were not independent contractors. They were entitled to workers' rights for the time the app was on and drivers accepted trips. 

As is evident in the Uber case, the contract wording didn't matter, and Employment and Tax Tribunals will always investigate allegations of a potential discrepancy. It does not matter that the parties may not have intended to misrepresent the true nature of their relationship. They are still responsible, and measures will be taken.

Penalties for employee misclassification when hiring independent contractors

Following the Employment Tribunal's decision, Uber appealed in a series of courts and lost each time. The UK Supreme Court is currently reviewing the case, and the employment status of its UK drivers remains unresolved. If found guilty, Uber will be forced to pay minimum wage and provide holiday and sick pay to all of its UK drivers going forward. [Update: On February 19th, 2021, the UK Supreme Court rejected Uber's appeal and ruled that Uber must classify its drivers as workers and not independent contractors in a unanimous vote. The practical effects of the ruling are not yet clear.]

In some cases, an employee that has won a Tribunal hearing will also backdate their claim to cover the period of the employment relationship. The financial repercussions of that can be dire for the company.

This is what happened to Sash Window Workshop, a window cleaning company in the UK. Conley King joined the company in 1999, working on a commission-only basis, receiving no pay when he was on holiday or was ill. When he left in 2012, he brought various claims to an employment tribunal, including a claim that he had been subjected to a series of unlawful deductions from wages for over 13 years.

The tribunal found that under the UK working time legislation, he was a "worker", and therefore entitled to annual leave with pay, or payment in lieu of leave. Once again, the judgment made it clear that Sash Window Workshop's ignorance on the employment status was no defence for not paying his holiday or sick pay. The company was forced to pay all his holiday time accrued, which was more than an annual salary. This became a landmark case that will be taken into account in all future cases when a contractor brings a company to court in similar circumstances. 

What’s important to understand here is that the danger of that happening, isn’t limited to gig economy or other service provider companies. Tech companies are as vulnerable and can be brought to Tribunals and courts by their independent contractors who deem they are not being employed fairly. The same rules apply, regardless of the industry or the line of work. 

Founders carry personal liability, including imprisonment

The repercussions and penalties of misclassifying employees extend beyond the organisation and can impact company Directors directly. In certain jurisdictions, they may be liable both for severe financial penalties as well as prison time. Below are two examples from two countries within the EU.

In France employers that misclassify employees face a fine of up to €45,000 for the company's legal representative (president or managing directors) and up to €225,000 for the company as a legal entity. In addition, the employer can be imprisoned for up to three years.  

In Germany employers face fines of €30,000 for each hidden personnel leasing, up to €500,000 if the company is found to have done it intentionally. 

In addition to that, an employer would be required to retroactively pay social security contributions for the employee without being allowed to deduct the employee's contribution from their salary for up to 4 years. In case of intentional misclassification, that could go up to 30 years, as well as a late payment fine, which generally equals to 1% of the due amount per month. 

Moreover, the managing director in charge may be personally held liable under criminal law for wrongful non-payment of the employee's social security contributions. If found guilty, they could face a prison sentence of up to 5 years or personally be charged with some of the above fines. 

Beyond financial penalties for hiring independent contractors

Beyond these financial penalties, companies with poor employment practices face non-financial ones such as a tarnished reputation as this becomes public knowledge. That is something that is already costing Uber and many other gig economy employers far more than whatever penalty courts impose on them. The more a company grows and the more high profile it gets, the higher the likelihood that these poor employment practices will garner the attention of the media. A recent investigation by The Verge, found that Pinterest had slashed holiday pay for its contractors, something the company used to offer historically. After the story went public and contractors raised the issue, Pinterest reverted their decision. You can argue, however, the damage had been done.

As public companies, Pinterest and Uber have to answer to boards, which often times would include VCs that have backed them. The higher the profile of the investors that sit on those boards, the bigger the pressure will be to avoid getting similar negative publicity or worse, getting tangled into messy legal cases. 

Typically after funding rounds, the investors will join the company board. As executive or even non-executive members, they will be seen as having direct control or influence over the decision-making, potentially making them liable if the company fails to be compliant. That is why they will often push hard for the company to be legal and compliant. If they feel uncomfortable with the level of compliance, they could abstain from investing further. 

Fast-growing and scaling companies that have not yet gone public are as susceptible to investor caution as, even at the point of Series A or B funding, conversations on the topic of employment compliance could come up in the due diligence process. Likewise, basic due diligence relating to acquisition or acquihire, will aim to establish that the team is employed in a compliant manner.

By hiring independent contractors you subcontract your knowledge

Beyond the financial and legal repercussions and potential legal cases, there is another reason why you should be very hesitant to hire people as contractors. If you do, it will mean that your company’s knowledge, expertise and experience behind your technology will have come from outsourced service providers, rather than your own team. This can be viewed as a real negative by potential funders and acquirers. 

People invest in teams and, when prospective acquirors come knocking, more often than not, as well as acquiring your product/technologies, they will also want to acquire all of this expertise, and the bright minds behind your technology. Suppliers working for you via service agreements are not really on your team.  So, when you talk about "your team and the expertise within”, contractors don’t fall within this.

The question of what’s ethically right

Beyond any of the legal, financial, and knowledge base considerations in not hiring your remote employees as contractors, there is another, arguably more consequential reason than any of the others combined: it creates a class system in your ranks. A two-tiered system of employees and contractors creates a sense of second class citizenship, which will naturally bring negative feelings sooner or later and eventually impact company culture. 

A friend who used to work for a big multinational in Dublin always told me how important getting his proper employment contract was to him. He had started as a contractor and was promised an employment contract down the line. That contract would not only give him a lot more protection but would also grant him access to learning and development resources, allowing him to do his job better. 

As he waited, alongside many others like him, they felt increasingly less important to the company. In any situation like that, contractors would view full-time employees with increased resentment and never fully integrate. Such a class system should never be allowed to have a presence in the office. 

Your success as a company depends on the output of people, their engagement and contribution. All these will deteriorate if people feel underappreciated. If you think that your contractors are happy and this doesn't apply to them, think again.

I hope all this has helped paint a picture why hiring independent contractors on a full-time basis is a bad idea. If you currently work with contractors in Ireland, the UK, Denmark, Portugal, or Australia, Boundless can help you avoid these pitfalls and employ them full time compliantly. See more.


The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance.  You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

how to pay remote workers

Every company has their story of how they became remote and distributed. At my last company, we became a distributed organisation organically, rather than proactively. 

From the founding of the company, we had seen ourselves as an Irish company, with both feet firmly set on Irish soil. We had a great office at a wonderful location in the heart of Dublin. We reaped the benefits of co-located teams, by having lunch together, and running regular collaborative working sessions where we ran experiments to test new innovations for our product. We knew that eventually, we would have to open an office in the US to serve our customers there but, until then, we were a Dublin-based company, and everyone sat in the same time zone, in the same office. 

That is until one of our most gifted developers got tired of the rain, wind, and darkness in Dublin. One day, he handed in his notice, fully expecting that his decision to go back to his home country for more exposure to sunlight would be a deal-breaker for us. It wasn’t. We loved working with him and valued his contribution. If he were going to write code from a few thousand kilometres away, it wouldn’t make a difference to us. Surely we would find a way to make remote work, work (hint: we didn’t refer to him as a remote worker at the time).

It was a one-off thing and we figured how to sort out his case. That was until a few more of our employees followed suit, moving to their much warmer homes or adopted new ones. People had lots of different reasons for moving on – some wanted to be closer to family, others wanted the experience of living in a new city for a couple of years. Within a few months, we had “team remote,” distributed across several European countries.

Is it difficult to employ and pay someone abroad?

Yes, usually far more than most founders and C-level executives would assume. Preserving company culture, and making sure everyone feels part of the team in the same fashion as when everyone shared office space, is often top of mind concern for them. Yet the difficulty comes from a lot of other angles as I would find out. 

As a COO, my immediate concern was getting my head around the tax system, employment legislation and challenges of payroll in each new geography. Maybe it’s how I was brought up but, despite it being the less glamorous part of running a business, being compliant and ‘doing the right thing’ has always been hugely important to me. I would never want to deal with government agencies investigating for tax fraud or void employment contracts. Plus delayed salaries or feeling less equal than fellow colleagues in another country can be toxic to company culture. As the COO, I felt responsible for figuring all of this out, and for ensuring that we avoided these pitfalls. However, I was ill prepared for just how challenging navigating this was going to be.

Non-compliant ways of employing abroad

Popular belief and practice suggest that companies will either treat employees that live in another country as contract workers or if they have moved from the HQ country, will keep them on the payroll there. Both seem as “easy” solutions when a company doesn’t have an office in that country and doesn’t have an easy way to navigate local rules and regulations. No taxes, international payroll, or complications; just an invoice and a bank transfer at most. 

If it only were that easy. Neither of these options offer a sustainable long-term solution to international employment.

Keeping employees on the company's home country payroll longterm is not viable because aside from breaching the law as employers, it could also potentially deprive these employees from availing of healthcare, social welfare, pension and other services available to employed residents. It would be pure negligence on the part of the employer to leave their employees unprotected if something happened to their health, ability to work or employment security.

While contracting is sometimes legal for a short period, that solution is rarely a compliant option for full-time workers in the long run either. Employment laws and tax regulations in most countries around the world are unambiguous on that point: if someone gives you 40 hours of their week, are told what to do and how to do it, and are paid the same amount each month, they cannot be viewed as independent contractors and instead have to be adequately employed. You are their employer and, as such, have to comply with the regulations of their geography. (Employing and paying them properly is a small part of what it takes to be a compliant remote company; read our 10-step guide to learn what the others are.)

Consequences of non-compliance

It is your duty to make sure that the employee has compliantly been accounted for when it comes to income tax, social security, pension contributions, health insurance, and anything else that the country of their residence requires. Most companies have a good understanding of how to take care of all of this for their HQ countries, and how they manage to comply with the requirements of foreign countries – navigating local intricacies and red tape – is their problem to figure out. If they don’t, fiduciary and reputational charges may swiftly follow.

I knew what was at stake, but I didn’t know how exactly to manage the challenges of international employment. Believe me I committed to doing things the right way but, as soon as I lifted the lid on all of this, it got pretty tricky, pretty quickly. 

Recently, governments have become even more stringent with employers “employing” full time independent contractors. This year, we’ve heard first-hand stories spanning from Canada, through to Serbia, and all the way to Thailand, of governments sending official letters to companies employing contractors, notifying them that they have until the end of the tax year to reclassify their contractors as full time employees. For employers that fail to meet these deadlines, a multitude of potential repercussions await them: from paying tax bills and holiday pay for years of unlawful employment in the UK, to jail time in France.

Figuring out the salary should be easy, right?

But back to my experience a few years ago… My first stumbling block was figuring out what our employees’ current net salary based on the Irish tax system would translate into at their new location. I had to make the gross to net (looking at capping the company cost at its current level), and net to gross (looking at keeping the employee at the same level of take-home pay), calculations for each employee. In Ireland and the UK, there are a variety of high-quality online tax calculators available. I assumed the same would exist in other EU countries.

It didn’t at the time.

The next best — and expensive — thing was to find an international payroll processing bureau that would be able to help me. I remember sending a plethora of emails with the simple question of gross to net calculations for a specific salary. My emails ended up in what I could only equate to a black hole, remaining unanswered for weeks on end. I would send reminders again and again.

In retrospect, there were two reasons for the massive delay. One was that countries like France have a far more complex tax structure, which can be profoundly different depending on where in France the employee is based, for example. The second one was that these service providers probably didn’t have direct access to this information, and were sourcing this from third parties.

Weeks later, I would eventually get the numbers. It was only at this point that we were really in a position to understand if employing this person from their chosen country was a realistic option. Given the huge variances between different countries’ tax regimes – even within Europe – having an employee move to another country can have a significant impact on the employee’s take-home-pay, and/or the cost to the company. After receiving initial numbers, I would spend time with the employee, their manager and our finance team, to arrive at a workable solution, in terms of their new salary arrangements.

Getting a tax registration takes just filling out a form, right?

As each of the countries that our team members moved to were within the EU, we decided to avoid registering entities unless absolutely necessary, and to go with the seemingly easier option of simply registering as an employer for tax purposes in each country. But even having “to fill out a tax number form” turned out to be more painful than I could have imagined. In each country, the process was different, and even with the help of local partners, it took up to ten months in some cases. Some of the forms were very extensive and asked for a level of detail about our business that was very difficult to answer as a small company.  

Although we used intermediaries to support us with this process, they were often far from forthcoming with information, and I was left having to do a lot of painful research myself. Despite all the pain, we did eventually manage to make it work, and we successfully retained all our staff that moved abroad. But the experience was so exhausting and frustrating that I never want to wish it on anyone.

What I should have done from the start

In retrospect, I now know that what I needed was an Employer of Record service - a company that would be the legal employer locally of our employees in the country. We would have still assigned tasks and overseen our employee’s work, but the legal compliance and payroll would have been taken up by Professional Employer Organisation that acts as the Employer of Record. The lack of quality information available online about all of this meant that none of the search queries I used ever produced Employer of Record as a solution to my problem, so I ended up in a position where I had to overcome a lot of the hurdles that international payroll and compliance poses myself. 

The choice shouldn’t be the lesser evil between non-compliant and painful service providers. 

Remote has to work better than that if it is to fulfil its true potential. As the world becomes ever more open, and remote employment a viable solution, many companies are becoming distributed proactively, rather than organically. However, solutions like an Employer of Record are still unreachably expensive for many SMBs.

I co-founded Boundless, with the aim to change this. We make it a lot more affordable to employ compliantly through an Employer of Record, while building a layer of SaaS-delivered tech on top of this corporate and legal infrastructure to ensure that running multi-country payroll is as smooth and painless as running payroll locally. 

Leave your email below to learn more about how we could help you employ anyone, anywhere.


 The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance.  You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

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