With remote work, you are no longer limited to hiring talent within 20 miles of your office. You can hire across cities, states, or even countries. But this advantage comes with additional responsibilities.
Most importantly, you need to understand the rules and regulations for remote employment in every country. If not, you could be in trouble. For instance, Google faced one such compliance issue when it landed in hot water for underpaying its workers in the UK and Asia.
Here are the top 11 rules and regulations for remote employees. (EORs may not offer all these services but they may provide guidance in those areas.)
1. Immigration laws
Firstly, with remote work, employees can work from anywhere. But you need to verify if they are legally eligible to work in the location you are hiring. You can assist them with work visas or permits (if required) to comply with local regulations.
2. Payroll regulations
Are you paying your distributed employees fair wages? It depends on the payroll laws of the country in which they work. Check these four rules before deciding the pay:
(i) Minimum pay: What are the minimum wages set by the government?
(ii) Overtime pay: How much do you have to compensate for overtime hours?
(iii) Pay frequency: When to pay employees: weekly, biweekly, or monthly?
(iv) 13-month pay: Some countries expect you to pay an additional bonus, usually before Christmas. This is called 13th pay. It is customary in countries like Austria, Netherlands, etc. But a few countries like Spain and the Philippines mandate 13th pay for employees. You can check whether it is required in the country you are hiring from.
3. Tax requirements
You have to get hold of the tax obligations as an employer. Research the laws related to:
(i) Business taxes: Are you liable for any business taxes from where the employee works in the country?
(ii) Tax withholding: Do you need to withhold taxes from an employee's salary?
(iii) Tax rates: If you have to withhold taxes from an employee's salary, then what are the tax rates? Each country will have different tax slabs. For example, below are the tax slabs of the UK and France.
(iv) Taxable income: Which parts of the salary are taxable: basic salary, overtime pay, bonus, benefits, expenses, allowances, stock options, gratuity, and leave encashment?
(v) Tax filing process: What is the process of filing taxes and due dates?
Not complying with these tax rules can get you in trouble with local authorities and attract hefty penalties.
4. Working hours
With remote employees, it's not easy to track working hours. But that doesn't mean you can ignore the employment laws on work hours.
- Standard working hours: What are the expected working hours for the country? It's easy to assume a 40-hour working week is standard. But different countries have different expectations. For example, France has a 35-hour working week, and India has an upper limit of 48-hour working week.
- Break: How much uninterrupted break are employees legally supposed to get? Remote employees in France have to get at least 20 minutes of break every 6 hours.
- Overtime: How many hours of overtime is permissible as per the law? Understand the capping rules clearly. Let's take India as an example. In India, an employee can extend up to 12 hours per day but they still need to work within the weekly limit of 48 hours per week. Identify such terms and conditions to stay compliant.
5. Paid leave policies
You are also responsible for providing enough paid leave to employees per country/state norms. Three main types of leaves are:
(i) Public holidays and festivals: What are the nationally recognised days by the government? Also, which festivals are celebrated in the region (can vary from state to state)?
(ii) Paid leaves: Besides public holidays, how much additional paid time off is the employee eligible for? For example, in Germany, employees are entitled to up to a minimum of 20 vacation days per year and in Portugal, it's 22.
(iii) Sick leaves: How many sick leaves can employees take? Also, who pays for it? In Germany, the employer is responsible for paying employees on sick leave for up to six weeks. On the other hand, in Portugal, employers pay salary only for up to three days. After that, employees get a percentage of their salary from government-funded systems.
(iv) Parental leaves: How many leaves are parents of newborns eligible for? Review laws for both maternity and parental leave. In the UK, new mothers can avail maternity leave for up to 52 weeks, and partners can take up to 18 weeks of parental leave (but it's unpaid).
6. Employee benefits
What other benefits do employees get as per the law? Common expected benefits across the board are:
- Health insurance: Does the country mandate health coverage for employees, and what should be covered (emergency services, outpatient care, maternity, mental health, preventive health, etc)?
- Retirement plans: Do you have to contribute to any retirement or pension fund, and what's the process for it?
- Any other benefits: Are there any other must-haves peculiar to the country? For instance, in the Philippines, employers must contribute to the Home Development Mutual Fund to support affordable housing loans.
7. Business expenses
You have to reimburse or provide additional allowance for any business expenses which employees incur. Common expenses for remote workers are the internet or telephone fees. In some cases, vehicle expenses (if work demands travel). It's wise to add this component on top of the pay, even if it's small. Amazon missed it once and landed in legal trouble when an employee sued them for not reimbursing work-from-home expenses.
8. Data privacy laws
Employee data protection is another crucial aspect of legal compliance. You need to have a well-documented policy and obtain employee consent to store personal data. Every country sets their privacy guidelines.
European countries are specifically more rigid, with their General Data Protection Regulation (GDPR) law being one of the strictest laws in the world. It focuses more on individuals' consent to data and demands heavy penalties for any data breaches. As per GDPR, individuals also have a right to erasure, where employees can request the deletion of their data if it's no longer necessary. You have to incorporate the privacy guidelines set by the country in your policy to avoid remote work legal issues.
9. Anti-discrimination laws
The same rules that protect in-office employees from discrimination apply to remote workers as well. Remote workers should also get fair pay, benefits, and opportunities regardless of age, gender, race, religion, disability, pregnancy, geography or sexual orientation. When employing remote workers, you must:
- Ensure no pay discrimination or opportunities based on location or any other factors.
- Fulfil any requirements of differently abled employees regarding hardware, software or work setup.
10. Health and safety
Remote workers are not within your office premises, but it's still your responsibility to create a safe and healthy work environment for them. For their health, you can assist employees with wellness programs, counselling, and allowance for ergonomic workplaces. To ensure safety, you can create proper protocols to report any work injuries, harassment, or discrimination.
11. Termination procedures
Lastly, be aware of compliance requirements for terminating any employment contracts, both for resignation from the employee's side or termination decision from your end. Get answers to the following questions to form termination guidelines:
- Do employees serve a notice period in that region, and if yes, how many days?
- Are there any specific rules related to termination? For example, in South Africa, you can't terminate an employee during the probation period unless they are put in a performance improvement program and still failed to improve their performance. After the completion of the probation period, you can provide any valid reason and terminate employees.
- What is the paperwork required for terminating the contract?
- How much severance pay should you have to give in case of termination?
- Are there any compliance expectations even after contract termination? For example, in European countries, employees can request to delete personal data at any point in time.
Stay Compliant with Teamed
Understanding the labour laws of every country can fill up the to-do lists of your HR team and still leave room for lapses. The biggest catch is that they must do this before onboarding every single international employee, leading to productivity loss and administrative overhead.
Teamed can help you navigate the rules and regulations for remote employees across countries and expand your global workforce.
As a Global EOR, we help with:
- Sourcing ideal candidates through our vetted recruitment partners
- Onboarding employees within 24 hours
- Managing international payroll and taxes in 50+ currencies
- Offering attractive localised benefits packages
- Ensuring country-specific compliance
Compliantly hire full-time employees in 150+ countries. Contact us today so we can take care of compliance and your HR team can focus on building the right team.