The past year or so has completely changed life for so many people. Many of us have seen way more of our homes than we ever thought possible, and we have also longed for simple things like going to a restaurant or a concert.
We have also changed a lot in the way we work. Zoom, Teams and Google Hangouts are all programs most people are familiar with. Many companies now use cloud-based communication and scheduling software like Slack or Asana. Remote work is now a regular part of many enterprises, and remote workers are making up a more significant portion of the workforce than ever before.
There are many benefits to utilising remote workers, but there are also some things to consider before signing them up. They aren’t located in your office, so do they have the same rights as regular employees? What are you responsible for? How do you actually pay them? Read on to find out the best practices to keep you on top of things.
Use an Employer of Record
When it comes to paying remote workers, you can take on that task yourself or outsource it to a payroll provider.
When you outsource this process, the company you have chosen to work with will do most of the work for you. There is, however, a drawback to using an independent payroll provider; there is no specific guarantee that they will also adhere to the tax, labour and immigration laws in the country you operate from or deal with.
To solve this issue, the easiest solution is to use an Employer of Record. An employer of record is a third party that can handle basically all employment-related tasks. The main benefit of using an EOR instead of a payroll provider is that EORs can effectively deal with things like taxes, costs and everything related to your remote workers.
Utilising the services of an EOR is very powerful for businesses of all sizes. It will help a company to spend more time focusing on their projects, customers, services or outputs than the time it takes to put employee infrastructure in place.
Swapp Agency actually specialises as an Employer of Record. If you are wanting access to the Icelandic & wider Nordic markets or would like to take advantage of the talented remote workers and the boom in the gig economy, Swapp Agency can take care of HR, onboarding, payroll and anything else you need.
EORs can take care of as much or as little of the process as you need, but they are a powerful tool because they help you make sure all of your dealings are above board.
Include the Employee on the Home-Country Payroll
In some cases, it is actually possible to just include the remote worker in the regular payroll system in the country your company is based in. The rules and regulations differ depending on which country you are operating in and where your remote workers are based.
The main situation where this can be done is when you have an employee who has been sent to work abroad for a short period of time.
Since their employment hasn’t technically changed, you can usually just keep them on the same company payroll. Since they aren’t spending enough time in the other country to be considered a resident for tax purposes, things aren’t that complex.
Keep in mind that for many countries, there is a limit to how long you can reside without having to pay taxes. If you would like to keep workers for longer than this amount of time but keep them on your specific payroll, you might need to look for a workaround.
In some European countries like France and Estonia, foreign companies can apply for a ‘payroll law compliance option.’ This is where companies that don’t have ‘in country’ premises are allowed to apply for business registrations on a ‘payroll only’ basis.
Another option is to keep remote workers as independent contractors.
When you take this approach, they invoice you for their services, and you pay them the total amount of their invoice. It is then up to the contractor to make sure they have paid relevant taxes. If you aim to do this, you need to make sure that you are following the labour laws of the country your remote worker resides in.
Have a local Partner Pay your Employee
If you have a partner in the country your remote worker resides in, it could be a useful option to have the employee added to your partner’s payroll structure. This would legally make the worker an employee of your partner, but it also means that your partner will handle their taxes and relevant contributions.
It can be an easier option but depending on how international your company already is, it might end up creating more confusion in the long term.
What Do Employers Need to Monitor With Remote Workers?
Although they aren’t physically in an office, it’s important to monitor some things to ensure you are getting the most out of your remote working arrangement.
Of course, just like in an office, you should be paying attention to communication, deadlines and quality of work, but there are some extra things you should note to make sure you are in the best possible position.
Negotiating Pay With Remote Workers
Before you commence a remote working contract with an employee, both you and they need to clearly understand how much they are being paid, for what exactly and when. The amount you should expect to pay a remote worker can depend on two main things; where they are based and how competitive their service is.
You should also consider if your remote employees are being paid a monthly salary or paid per hour or per task. There are, of course, high and low-cost locations in regards to the amount you can expect to pay a remote worker, and you will also need to factor in things like time and cultural differences.
If you tell a remote worker that you need a project finished by the end of the week, this can have many interpretations depending on where you come from. For example, in Australia, this will mean by 5pm on Friday, but this could mean by Sunday in France.
When negotiating, it’s also essential to consider things like; if this is a short term project or long term, if the employee is providing their own equipment and how long they have been successfully providing this service to someone else.
Calculating Pay For Remote Workers
As stated earlier, it’s integral that you have an efficient payroll setup and follow the tax and labour laws of your country and the country of your remote workers. The key to securing the best remote workers is understanding their needs; this is also related to payment.
Not every country has the same pay cycles. In most European countries, employees receive monthly pay. In other places like America or Australia, it’s pretty common to receive weekly or fortnightly pay.
Many systems in a country are influenced by the natural pay cycle. If people tend to get paid fortnightly, they are very likely to pay things like rent on a fortnightly basis.
The financial year can also be different in other countries. This sometimes means that you might have to supply your remote workers with statements or documents to complete their tax returns outside of the usual time you would be expecting to do so.
If it is within your power to take things like this into account when paying remote workers, you will likely increase employee satisfaction and boost retention.
Keeping Track of Hours With Hourly Remote Workers
For as long as people have been working remotely, employers have wondered what exactly is the best way to keep track of their hours.
When employees come into an office, it’s pretty easy to see that they are present because they are physically in front of you; suddenly, when they’re not, you wouldn’t be wrong in wondering if they are indeed working the number of hours they say they are.
There are programs available that will track the activity of a remote employee. They range in their level of intrusiveness, from programs that are more of a ‘clock in clock out’ system, right up to ones that will take regular screenshots and notify you if there hasn’t been mouse activity for a few minutes.
If you decide to go down this route, you need to ensure your employees explicitly know about this before they sign on. The tracking of their hours needs to be in their contract.
Ultimately there is a certain level of trust you need to have in remote workers. Just because you see an employee is in your office doesn’t mean they are the most productive they can be for every single hour of the day.
You obviously want to make sure you aren’t being milked by someone who isn’t providing any output, but at the end of the day, if this is your main concern, perhaps remote workers aren’t for you.
Keeping on Top of Billing Requirements
From the moment a remote employee begins work, they should be taken through an onboarding process just like an employee who works onsite.
As part of this process, information should be collected and stored in an HR and accounting database.
Information like their name, contact information and payment terms should be noted, but you should also take the time to get things like an emergency contact. Just because they aren’t onsite doesn’t mean you don’t have a duty of care as an employer.
During the onboarding process, it’s also good to check if there are currency laws in the country where your remote worker resides.
In some countries, employees are only allowed to be paid in local currency. This means to get paid, there will need to be a currency conversion, and any costs associated with it are typically absorbed by the employer.
Remote Working Trends
In a post-COVID world, most companies have had some form of experience working remotely. The biggest takeaway for many has been the realisation that transitioning to remote work was much easier than initially anticipated.
There are several other trends that we are seeing because of this new shift to remote working. Many businesses have reduced their physical office space to save money, and some have noted greater respect for work-life balance.
Innovations have also been made in cloud-based technologies to assist in the communication, task management and HR of companies which has helped them become more international.
The Future of Remote Working
There’s no doubt remote working will continue to change and evolve as we progress in the future. Many employees have come to feel that remote working actually suits them better. They have discovered more time in their day because they no longer have long commutes to and from an office. They’re experiencing a better work-life balance and saving money because they are having their morning coffees and lunches at home.
Businesses are also reaping the benefits of remote work.
On average, companies are actually seeing an increase in productivity since implementing remote work. They have also been able to think more globally and break into markets they couldn’t have when they only had an onsite workforce.
As the world tries to get back to what could be perceived as a kind of ‘normal’, it would appear that a lot of companies are going to opt for a hybrid work model. This is where remote working is allowed, but employees can still come into a physical office if they need to or want to.
Looking ahead, as trends change and evolve, there will likely be even more variations of the hybrid model and more sectors opening up to the idea of remote work.
As a result, we are possibly about to enter a new era of working smarter where we can capitalise on the interconnected nature of the world. This is an exciting time for both employees and employers.
Remote work might not be for everyone. There are, of course, jobs that cannot be done remotely, but even in those cases, there are still elements that can be done offsite. For example, before covid, we couldn’t imagine dialling into a doctor’s appointment from our living room, but now we can.
One thing is certain though, remote working is a concept that has enabled people and companies to thrive in situations where they previously wouldn’t have been able to. Of course, we might sometimes prefer a face-to-face meeting, but it’s still nice to know that there is another option when that’s not possible.