3 ways to hire international employees without a local entity

  • August 25, 2022
  • Author: Carly Merrett
Reading Time: 3 min

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Hiring international employees doesn’t have to be costly or complicated

When it comes to hiring international employees, setting up a subsidiary can be costly. With the sometimes onerous upfront financial requirements and lengthy set-up process, it’s not always the best solution unless you’re sure you’re staying in that location for the long haul. Still, if you’ve found an excellent talent abroad, what’s the solution?

We’re here to discuss our top three options for hiring international employees and the important considerations in doing so compliantly and cost-effectively.

 

1. Employer of Record (EoR)

An Employer of Record is a third-party employment organisation bridging the gap between you and your international employee. They’re your experts in local labour laws and tax compliance. 

The EoR takes care of the hiring, the onboarding process and international payroll, essentially setting up an international entity on your behalf. This takes on much of the legal and tax risk, leaving you free to recruit and hire the best international employees you can find. 

An EoR is the solution of choice for companies seeking to go truly global.  In WorkMotion’s case, using our WorkGlobal tool means accessing over 160 countries. 

Who should use an EoR?

  • Companies looking to test new markets and who are unwilling to commit to one location straight away
  • Companies that don’t have the local expertise when looking to hire international employees
  • Companies who are looking to hire international employees quickly and compliantly
  • Companies looking for international hiring support, such as onboarding and payroll.

Learn more about WorkGlobal

2. Direct Employment

Another way to hire international employees is through Direct Employment. Unlike an EoR, Direct Employment establish a local presence in the form of a foreign company, not a legal entity. You remain in full control of the onboarding process.

Initial start-up can take up to six weeks. However, once set up, companies can continue hiring from that country very quickly and cost-effectively. 

There are distinct advantages to Direct Employment. First of all, you establish a direct relationship with your employees and unlike establishing a legal entity, companies are able to employ numerous employees with less commitment.

 

3 ways to hire international employees

Who should use Direct Employment?

  • Companies who have specific international hiring plans, and not looking for true global expansion
  • Companies who are looking to hire multiple international employees from the same place but are not looking to set up an entity. 

Learn more about WorkDirect

3. Freelancers or Independent Contractors 

Another option is to consider hiring freelancers or independent contractors. This option is especially useful in fluctuating international markets or when operating on a project-by-project basis, as the commitment is different. 

Different to hiring other international employees, freelancers or contractors work to their own schedule and supply their own equipment — they are in fact self-employed and not employed by the company at all. 

Risks around using international freelancers or independent contractors are pretty low. However, their role must be clearly defined so as to not be at risk of  “fake self-employment”. If you’re expecting your freelancers to operate within the bounds of normal employment, particularly for an extended period of time, then you should employ them.

Who should use Freelancers or Independent Contractors?

  • Companies looking to build and scale up their business quickly
  • Companies looking for expertise on a short-term or project basis
  • Companies requiring flexibility.

The importance of hiring international employees the right way

Instances of non-compliance when it comes to international labour laws and taxes can be very costly. That’s why it’s important you have a strategy about what your hiring goals are and understand the requirements. 

Consider working with an international hiring expert

The best way to mitigate potential risk is to place it somewhere else.  Depending on what best suits your business, an EoR or Direct Employment provider can be that for you.

 

WorkMotion specialises in hiring international employees and has made it our business to understand everything there is to know about hiring in over 160 countries. Our products are designed to help companies get the most out of international opportunities and have taken the pain out of expanding your reach across borders.

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