A Guide to Paying Your Remote Workers

The past year has completely changed the lives of so many people. Many of us have seen much 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. The way we work has also changed a lot. Zoom, Teams and Google Hangouts are programs that most people are familiar with. Many companies now use cloud-based communication and planning software such as Slack or Asana. Remote working is now an integral part of many businesses, and remote workers make up a larger proportion of the workforce than ever before.There are many benefits to using remote workers, but there are also some things to consider before hiring them. They are not in your office, so do they have the same rights as regular employees? What are you responsible for? How are remote workers paid? Read on to learn best practices to help you stay on top of things.

Use an Employer of Record

When it comes to paying remote workers, you can do it yourself or outsource it to a payroll provider.

If you outsource this process, the company you work with will do most of the work for you. However, there is a downside to using an independent payroll provider: there is no guarantee that they will also comply with the tax, labour and immigration laws of the country in which you operate or do business with.

The simplest solution to this problem is to use an  Employer of Record. An Employer of Record is a third party that can basically handle all employment-related tasks. The main benefit of using an EOR instead of a payroll provider is that EORs can effectively take care of things like taxes, expenses, and anything else related to your remote workers.

Utilizing the services of an EOR is of great benefit to companies of all sizes. It helps a company focus more on its projects, customers, services or results than on the time it takes to set up employee infrastructure.

The Swapp Agency has specialized as an employer. If you are looking to access the Icelandic and wider Nordic markets or take advantage of talented remote workers and the gig economy boom, 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 your business is compliant.

Include the Employee on the Home-Country Payroll

In some cases, it is even possible to simply include the remote worker in the regular payroll system of the country in which your company is based. The rules and regulations differ depending on which country you operate in and where your remote workers are located.

This is especially possible if you have an employee who has been posted abroad for a short period of time. 

As their employment relationship has not technically changed, you can usually just keep them on the payroll of the same company. As they are not in the other country long enough to be considered a resident for tax purposes, it’s not that complicated.

Remember that many countries have a limit on how long you can stay there without having to pay tax. If you want to employ workers for longer than this period, but they are on your own payroll, you may need to look for a solution.

In some European countries, such as France and Estonia, foreign companies can apply for a ‘payroll compliance option’ This means that companies that do not have a branch in the country can apply for a business registration for payroll only.

Another option is to employ remote workers as independent contractors. In this case, they invoice you for their services and you pay them the total amount of their invoice. It is then up to the contractor to ensure that they pay the appropriate taxes. If you want to do this, you must ensure that you comply with the labor laws of the country in which your remote worker is based.

Have a local Partner Pay your Employee

If you have a partner in the country where your remote worker lives, it may make sense to add the worker to your partner’s payroll. This legally makes the worker an employee of your partner, but it also means that your partner is responsible for taxes and related contributions.

This can be a simpler option, but depending on how international your business already is, it could lead to more confusion in the long run.

What Do Employers Need to Monitor With Remote Workers?

Even if they are not based in an office, it’s important to monitor a few things to make sure you are getting the most out of your remote working arrangement.

Of course, just like in the office, you should pay attention to communication, deadlines and quality of work, but there are some additional things you should consider 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 whether your remote workers receive a monthly salary or are paid per hour or per task. There are of course high and low cost locations in terms of how much a remote worker is paid, and you also need to consider things like time and cultural differences.

If you tell a remote worker that you have to finish a project by the end of the week, this can be interpreted differently depending on the country of origin. In Australia, for example, this means that the project must be finished by 5pm on Friday, in France it could be Sunday.

When negotiating, it is also important to consider whether it is a short-term or long-term project, whether the employee is providing their own equipment and how long they have been successfully providing this service to others.

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 all countries have the same salary cycles. In most European countries, employees receive a monthly salary. In other countries, such as America or Australia, it is common to be paid weekly or fortnightly.

Many systems in a country are influenced by the natural pay cycle. If people are usually paid fortnightly, it is very likely that they will also pay things like rent fortnightly.

The financial year can also be different in other countries. This sometimes means that you have to provide your remote workers with returns or documents for their tax returns outside the usual period in which you would expect them to do so.

If it is within your power to take such things into account when paying remote workers, you are likely to increase employee satisfaction and encourage staff retention.

Time sheets for remote workers employed on an hourly basis

Ever since the advent of remote working, employers have been asking themselves how best to record hours.

When employees come into an office, it’s pretty easy to tell that they are present because they are physically in front of you; if they’re not, it’s not unreasonable to wonder if they are actually working as many hours as they say they are.

There are tools available that will track the activity of a remote employee. They vary in intrusiveness, from programs that are more of a "clock in clock out" system to those that take regular screenshots and notify you when there has been no mouse activity for a few minutes.

If you decide to go down this route, you must ensure that your employees are explicitly aware of this before they commit themselves. The recording of working hours must be recorded 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.

Of course, you want to make sure you're not being milked by someone who doesn’t perform, but if that's your main concern, remote workers may not be 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 may only be paid in local currency. This means that a currency conversion is required for payment, and the associated costs are usually borne by the employer.

Remote Working Trends

In a post-COVID world, most companies have had some form of experience working remotely. The key takeaway for many was that the transition to remote working was much easier than originally thought.

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 the area of cloud-based technologies to support communication, task management and human resources management for companies, which has helped them to become more internationalised.

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 experience a better work-life balance and save money because they have their morning coffee and lunch 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 return to what could be considered some kind of "normality", many companies seem to be opting for a hybrid working model. In this case, remote working is allowed, but employees can still come into a physical office if they need 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.

Conclusion

Remote work may not be suitable for everyone. Of course, there are tasks that cannot be done remotely, but even in these cases there are elements that can be done offsite. For example, before covid, we couldn’t imagine dialing into a doctor’s appointment from our living room, but now we can.

One thing is for sure though, remote working is a concept that has allowed people and businesses to succeed in situations where it wouldn’t have been possible before. Of course, sometimes we would prefer to meet in person, but it’s nice to know that there is another option when that’s not possible.