Remote Work: Employee or Independent Contractor?

The cross-border attitude of one Remote -Teams can be complicated. As a company, you may be frustrated by the hurdles you must overcome to grant your new employees employee status. And as a job seeker working remotely, you may have to forego all employee rights and entitlements such as holiday pay, maternity leave or even just the provision of work equipment for your work. But cross-border hiring doesn't have to be so complicated.

If you have just received an offer for a remote job, depending on where the company is registered and where you are located, you may be asked to register as a self-employed person just to be included in the team. However, if both you and your new employer are based in Europe, you may benefit from European legislation that allows you to work as an employee of a company in another European country. For those not based in Europe, we'll explain what options you have to negotiate the best terms before accepting a remote work offer.

There are several options that allow you to work remotely for an international company without sacrificing the security that comes with employment. It is advisable to be well informed about the differences so that you can ask your future employer the right questions before agreeing to the terms of your new contract.

Remote work in an international company

Let's take the following example: You are based in Portugal and are offered a position as a remote worker. The company offers an annual salary of £40,000. The company is registered in the UK, where the majority of the team is based. And although the company has customers all over the world, all operations (regulations, taxes, etc.) are based in the UK. The contract with the company states that you will be employed as an independent contractor for an agreed working period of 40 hours per week. And that all local taxes and social security contributions are your responsibility.

In this example, the company is not required to comply with local labor laws. This means that you are not legally entitled to employee benefits such as paid vacation, sick pay, maternity pay, etc. have. Whether these services are provided under this type of contract is entirely at the Company's discretion.

Not only will you then be self-employed and you will lose the security that comes with being an employee. The agreed salary from your new employer can also quickly shrink if the costs of self-employment, which were not taken into account during the negotiations, begin to add up. Not to mention all the unpaid vacation you have to plan and save for. Buffer has described some of these costs very well.

Of course, working for an outside company under these conditions is the worst case scenario. Most established remote-first companies have thoroughly tested procedures for hiring a remote team. They are likely to offer full employee status to every team member. Or they offer a whole host of perks as if you were. For smaller remote-first companies, startups, or enterprises, this may not be the case. The process of hiring a remote team is often developed by trying and testing different procedures. But that takes time. So don't assume that the company knows how it works. You should definitely be aware of this when looking for a remote job with international companies.

The Unspoken Challenges of Hiring Remote Employees

We all know the benefits of telecommuting. But we hear less about the challenges faced by both employers and employees putting this into practice. The benefits are endless, really. The way we work has changed massively. How this will impact our lives is priceless. Eliminating the need to go to the office every day eliminates the need to commute, has a positive impact on the environment, reduces the need to work in expensive cities and improves work-life balance. Access to work also increases Facilitated for people with disabilities. These are just some of the benefits. But what about the real challenges for both remote workers and remote-work-friendly companies?

The basic relationship between employer and employee is not so simple from a legal perspective in a remote environment. Accessing a global pool of talent presents unique challenges. The legal and regulatory issues surrounding hiring internationally are one of the biggest challenges when working remotely. If you already have several years of professional experience and have experienced first-hand how important local labor law is. You've settled into one place and are concentrating on the typical things like buying a house, supporting a family, etc. The sacrifice of the security of an employee may be too great to justify working remotely. But it doesn't have to be this way, you just need to know your options and discuss them during the hiring process.

Your options as a remote worker

Depending on how knowledgeable your new employer is, they will either politely tell you to take care of it yourself. Or he can appoint an “employer of record”, i.e. a third party who employs you on his behalf. This offers you full employee status and all the nice benefits that come with it. However, within Europe there is another option that is only possible in this region. An employer can employ you as an employee in the country where you live, provided it is in the European Economic Area. This means that he will maintain the direct employer-employee relationship.

As a remote worker, enjoy the security of an employee

If you work remotely as a freelancer, you may be sobered to discover that it is quite expensive to work abroad as a self-employed person. The salary you negotiate at the start of an employment contract may not take into account additional costs such as accounting fees, holiday entitlement, maternity pay (and freelance fees if you are based in Spain). And much more. However, if you are sufficiently informed, you can ensure that you have the necessary discussions with your employer before starting work. As there are more and more companies based in Spain, this is likely to be as much of a learning curve for companies as it is for workers.

The adoption of remote work in European companies has been much slower than in America. However, today there are some amazing companies originating from Europe that offer remote jobs for people in the EMEA time zones. Hotjar, Toggl, Human Made and many others are leading the way when it comes to showing the benefits of hiring a remote team. This encourages many others to adopt a similar model. Established companies have processes and procedures in place for hiring remote employees, but new companies may not.

An employer in Europe can hire you directly as an employee

This depends on where the company is incorporated and where you are based. If both are in the European Economic Area (EEA), the company can hire you directly as an employee. This would be the same as if you were based in the same country as the company.

This is a cost-effective solution that allows the company to comply with the laws in its home country and in the country in which you are based. At the same time, they can maintain the legal employer-employee relationship. This is important for both you and your employer, as the terms of the contract are governed by both of you and not by a third party.

We wrote a whole blog post on this topic, which you can view here: Comply with regulations when hiring remote employees in Europe .

Outsource remote employee onboarding to an employer of record

For companies based outside Europe, there are companies like Remote , which offer employee status to internationally active team members. An "Employer of Record" acts as an intermediary between the company and the employee. By ShieldGEO's definition, they are responsible for legal and regulatory requirements related to immigration, employment and payroll, but do not participate in day-to-day work.

Once an "employer of records" has been appointed, he or she will carry out these tasks while the company continues to manage the new employee as a normal employee. For employees, this means that they work remotely for an international company and at the same time receive the status of a full employee. And as such, they benefit from local labor laws and everything that comes with it: holiday pay, sick pay, entitlement to local holidays, etc. Not to mention the security that comes with being an employee.

Whether you work as an independent contractor, a contributing employee, or a direct employee of the company, you should negotiate your employment contract to ensure the right terms apply. Enjoy the flexibility that remote work brings without compromising your security.