If your employees are working remotely, you really have to be aware of where they are living and working from. You will need to employ them according to local employment laws - not doing so can put your company at significant risk of non-compliance.
Building an international workforce can bring your company tons of benefits including a diverse team, more expertise, access to broader skill sets, and greater productivity and company growth. However, to employ internationally, you need to employ in compliance with local employment law and cultural norms. Compliance is key to mitigating risks that global companies often face, like permanent establishment risk or misclassification. In the long run, employing compliantly means less expenses for your company and more focus on high-priority ROI activities.
In order to employ all your staff correctly, you absolutely have to know where each of your employees is working from. Here we break down some of the key issues to watch out for and how your company can employ the best remote talent compliantly.
Employee Tax Residency
Knowing where your remote employees are living and working helps your company understand where their tax residency is. A tax residency is the country or jurisdiction where an individual is obliged to pay taxes. An employee’s tax residency is usually triggered after a certain number of days. In the UK, for example, the threshold is 183 days. So if your employee that is normally resident in say Turkey works in the UK for over 6 months, they will need to register the UK as their tax residency.
You will need to make sure that the right amount of income taxes are going out of their pay and to the authorities where they are tax residents. With digital nomadism becoming the norm, this can be tricky. This means there’s all the more reason to keep tabs on the current whereabouts of your employees while they are working for you.
Payroll Tax & Social Security Contributions
Whenever an employee is working out of multiple countries, this can mean that payroll tax and income tax have to be paid in both or all countries. However, many countries will have double tax treaties (DTA) to ensure this doesn’t happen or at least that full taxes aren’t being paid multiple times. In the case of payroll tax, this is not a tax that is applicable in all countries.
You will only need to pay social security contributions in one country where an employee is resident. DTAs do not apply to social security contributions, however, thresholds, like 183 days in the UK or the Netherlands, may apply here too. You will need to be aware of each countries’ laws on what social security contributions you, as the employer, must pay.
All countries have regulations on the maximum number of hours employees can work per week, including overtime. Caps on working hours are there to ensure employees are protected against exploitation and that they have a healthy work-life balance.
As always, there is huge variation. In Australia, for example, employees can work a maximum of 38 hours a week. They are allowed to work overtime, however, working hours must average at 38 hours per week over an extended period of time.
Some countries are a little more tricky. In the Netherlands, for example, the maximum number of working hours per week is 60. This is rather high. However, laws on periods of rest between hours, days, and weeks of work are stringent. In practice, this means that the average full-time employee in the Netherlands works between 30 and 40 hours a week. When calculating your remote employees’ working hours, you will need to be aware not only of maximum thresholds, but also the various laws regulating work.
Paid Leave & Vacation Days
All workers are entitled to paid leave, however, this will vary according to which country they are registered in. There are many different kinds of leave around the world including statutory or vacation leave, sick leave, maternity and paternity leave, bereavement leave, among many more. Many of these are regionally or culturally inflected.
The number of vacation days and public holidays that employees are entitled to are stated in national law. In some countries, like Denmark or Brazil, all employees, no matter how long they have worked for a company or how many hours a week they work, are entitled to the same amount of vacation days. Other countries, like Argentina, will offer more vacation days according to how long one has worked at a particular organisation.
Intellectual Property Rights
This is a great concern for many companies whose employees are creating products for them around the world. These products are the cornerstone of many businesses so securing intellectual property rights for employers can be crucial.
Intellectual property law varies considerably from country to country. To ensure a fair solution for both you and your remote staff, you can add additional contracts to the employment agreement to ensure both your needs are met. This will secure your intellectual property rights as well as your relationship to your employees.
Go Remote with PerchPeek and Omnipresent
Our team at PerchPeek can help you stay on top of your staff’s whereabouts. We can help your remote talent relocate to literally anywhere in the world. We provide a broad range of local expertise to make sure your new and seasoned hires find the best country and home to work from.
What’s more, we have partnered with Omnipresent to ensure your company can employ remotely and compliantly across the globe. Compliance improves your staff’s work experience AND safeguards your company against potential risks. Employing non-compliantly can easily lead to hefty fines and legal battles. Omnipresent ensures that no matter where your employees live, that they are employed in accordance with local regulations. In the long-run, you can expect minimised risks, greater employee engagement, and sustained company growth.
Hope you enjoyed reading!