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How to Pay International Employees: 5 Options for Employers

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In the past, having brick-and-mortar operations was assumed to be the best way to run a business. Remote work was considered a last resort, not a viable option. But, if there is one thing the COVID-19 pandemic has proven, it is that working remotely can be efficient and effective — with no discernible hit to production quality or output.

Remote employees’ work quality has been steadily increasing, as has employee happiness, with managers no longer hovering over their shoulders. Regardless of whether the employee is operating in another location within the city or overseas, companies have become more concerned about delivering output than the times the staff logged in and out. Given the apparent success of this low-touch working arrangement, even when the pandemic winds down, it appears that out-of-the-office work is here to stay.

In this article, we highlight the advantages of having staff located overseas and the different ways of paying international employees. Let’s begin.

Benefits of Employing a Remote Worker

There are many benefits to employing remote workers, both domestically and internationally. These advantages include:

  • Greater productivity: employees can focus on their work better instead of using up the shift socializing with colleagues
  • Reduced overhead and operating costs
  • Time efficiency and low burnout risk; employees no longer need to commute to an office and settle in each day
  • Employee happiness, which boosts employee retention
  • Making smart hires: employers now can bring in skilled talent from anywhere

While all these benefits are great, the one big question that’s usually asked when companies start considering remote work is how to pay international employees. Fortunately, the solution isn’t as complicated as one thinks. There are several ways of paying international employees that will not compromise your overhead costs.

Paying International Employees: 5 Ways to Do It

If you’re expanding your global presence by adding international staff, then you may be wondering how to pay international employees. Here are some tried-and-tested payment strategies.

Home-Country Payroll

If you’re paying international employees through your home-country payroll system, you’re keeping them on your domestic list and paying them in your own currency. Not every country allows this, so circumstances will vary depending on where your remote workers are based.
An advantage to this method is that not much changes for you, at least at the outset. You add the employee to your payroll, pay as needed, and so on. However, different countries have different policies about this sort of arrangement. It can cause wage- and tax-related headaches both for you and your foreign workers.

Local Affiliate Registration

Another option is to pay international employees through an affiliate. An affiliate is a business located in the same country as your workers that you can partner with to pay the employees on your behalf.

This arrangement is beneficial if you can leverage your partnerships with local affiliates and/or build relationships with new ones. However, if you are starting from scratch, finding a local affiliate can be a challenging and time-consuming process.

Shadow Payroll

An employee on assignment in another country remains on your home payroll but will also have a “shadow” payroll in the host country — just to comply with local wage and tax reporting laws.

An advantage of this method is that foreign employees can meet compliance obligations in their home country while being on the payroll of another country. However, this is a rather complicated process that could lead to serious penalties in the hands of those inexperienced with domiciliary rules. It’s an option to pay international employees, but it’s the least recommended.

Independent Contractor

An independent contractor is not on any formal payroll. They set their own hours and work at their own pace. Independent contractors are usually paid per assignment on an as-needed basis.

An advantage of working with independent contractors is that because they’re not full-time workers, there is no need to provide insurance benefits. Independent contractors can take the burden from difficult projects of your in-house team by taking on less-desired assignments — but they might not feel compelled to meet deadlines. Since they are independent contractors, they are free at any time to take their services elsewhere.

Outsourcing

When you outsource, a third-party entity will handle most staffing and administrative needs, including employee recruitment, hiring, vetting, and payroll management.

There are several advantages to outsourcing, including the delegation of difficult headhunting tasks and familiarity with local hiring and human resources policies. If you’re hiring from a country where English is not the first language, the outsourcing company can act as your go-between.

There is one possible drawback to outsourcing international workers, though. It’s that you might never get to meet your employee in person. On the other hand, technology has paved the way for efficient real-time communication and collaboration, almost simulating an in-person office atmosphere.

Avoid International Payroll Headaches With C9 Staff

There are a host of things to consider beyond the hiring process with international employees, such as ensuring that you’re in compliance with local tax laws and pension policies. Along with domestic operations, handling international payroll issues yourself can be a headache. Why not partner with the right third-party outsourcing agency to make everything go smoothly?

C9 Staff has the knowledge and experience your company needs to accommodate talented international employees without any hitches. We can take care of the nitty-gritty when it comes to paying international employees. With our end-to-end managed services, C9 Staff makes finding, hiring, monitoring, and paying international employees easy. Contact our team today to learn more about our services.


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