Did you know that a high percentage of employees (74%) have said that having remote work opportunities makes it less likely that they’ll leave their company? Additionally, 16% of businesses around the world have gone entirely remote.
If you run a remote company, you might consider turning your remote contractors into full-time employees. However, if you don’t know how to do this, you might be feeling stressed.
Fortunately, in this article, we’ll review what steps you need to take to make your remote contractors into remote employees you employ full-time.
Finally, you can build up a robust remote workforce. As a result, your business can be more successful than ever. Read on to learn more.
Step 1: Verify the Employee or Contractor Classification
Are you ready to turn your remote contractors into full-time remote employees? First, you must verify the employee or contractor classification. Then, can the person doing contract work for you internationally become an employee?
Whether this can happen depends on their role’s nature. Depending on this nature, they should be classified as either employees or contractors.
Employee Versus Contractor Classification
To ensure you aren’t classifying incorrectly, it’s essential to understand the difference between an employee and a contractor regarding their job’s nature. This will also be helpful when deciding what you expect of your workers once they’re remote employees.
Usually, contractors use equipment of their own. However, they also have little control in terms of behavior over how they complete their work. Additionally, payment is usually based on a project-based, daily, or hourly rate they’ve agreed on. They also are responsible for filing taxes on their own.
Finally, they don’t usually receive benefits.
On the other hand, employees usually work using equipment the employer has provided. So, for example, they might receive a laptop they use for work. Additionally, they complete work according to guidelines instead of working on tasks or specific hours. They’re also paid as per a salary they’ve agreed on with their employer. So instead of paying taxes themselves, taxes come out of their paychecks.
Finally, employees usually get benefits. These benefits could include health insurance or paid days off.
Some tax laws make it impossible for individuals to change their status from contractor to employee. In the US, for example, a contractor can’t be under a company’s financial or financial control if they aren’t receiving benefits.
Step 2: Make the Contractor an Offer (With Both a Salary and Benefits
Once you’ve verified that it’s legally possible for the contractor to be an employee due to their role’s nature, you should make your current contractor an official job offer. This employment offer should include both a salary and benefits.
To ensure that your contractors will likely accept your offer, you should include competitive benefits packages and salaries. In addition, perks such as generous PTO and paid bonuses can also make acceptance more likely.
Don’t Forget to Look Into Foreign Employment Laws
When completing Step 2, don’t forget to look into foreign employment laws. This is because remote workers who live in other countries are legally under the protection of the employment laws of the country they’re in.
To make sure that you’re following these laws, do your research before putting together your offer to find out what these laws are. Usually, this will include finding out what benefits you’re required to provide.
For example, if the contractors you plan on turning into employees are based in Germany, you’ll have to give them 24 days off annually.
Do you find it challenging to ensure you’re following foreign tax and employment laws when turning your remote contractors into remote employees? Then, you can consider partnering with one of two different options.
One option is to set up a foreign subsidiary. The other is to partner with a company specializing in converting and managing employees outside the country. This is a global Employer of Record (EOR) company.
When you partner with a global EOR company, you can more easily hire remote employees. Additionally, you can more easily onboard and pay these employees.
Step 3: Complete the Hiring Process
Once your remote contractors have accepted your offer, including a competitive benefits package and salary, you can complete the hiring process. To do this, have them complete all the correct documentation for hiring and add them to the payroll.
Step 4: Stay Compliant
Your job isn’t done even after you’ve turned your remote contractors into remote employees. So if you want them to continue working for your company, you must consistently stay compliant in various ways. This includes complying, for example, with the local tax and employment laws.
To comply with these laws properly, you must ensure that you provide your employees with the correct tax forms, meet acceptable labour standards, and pay payroll taxes. Do your research so you are maintaining compliance consistently.
You also must ensure that you stay compliant regarding how you classify your employees and track their payroll.
Need Help Turning Your Remote Contractors Into Remote Employees?
Now that you’ve learned how to turn your remote contractors into remote employees, you might have decided that you need help with this process. In this case, you should look no further than Bradford Jacobs.
With years of experience in Global Expansion, we offer Employer of Record and Professional Employer Organization (PEO) services.
So whether you need help with recruiting remote employees, converting contractors into employees, or understanding international employment and tax laws, we can help. Contact us today to learn more about how we can support your business expansion.