How do you hire and pay contractors compliantly, anywhere?
Contractor or employee is a tax-status call, not a contract call. Almost every country runs its own test, and the words on the agreement decide none of them. An EOR fixes the next hire, not the last one.
· Global contractor guide
How Teamed handles contractor engagement for you, anywhere
Teamed gives you one place to engage people the right way, in 180+ countries. Where the work is genuinely independent, you document and defend that position. Where it’s employment in substance, Teamed becomes your employer of record from $599 per employee per month.
Real HR and legal experts run the engagement, with zero FX mark-up in any currency.
An actual person, not a chatbot or a pooled queue, handles your contractor onboarding, EOR and entity payroll on one platform. There’s no setup fee and no exit fee. Statutory employer cost passes through at cost, itemised on every invoice.
A contractor who should be an employee can move onto employment without re-onboarding, and that same employee can later graduate to your own entity on the same platform under Teamed’s Graduation Model. The hard part here isn’t paying a contractor. It’s proving they were one. An EOR is the right model for a close call, until it isn’t.
- The contract title decides nothing. Almost every country reads the real working arrangement against its own employment test, then ignores the label on the agreement. Most guides lead with the paperwork. The paperwork isn’t the test.
- The bill usually lands on you, not the contractor. Where a country runs an engager-liability rule, the business that hired the contractor repays the tax and contributions, not the worker who invoiced. The person you thought was off your books becomes your liability.
- An EOR fixes the next engagement, not the last one. Moving an at-risk contractor onto employment can read as proof they were an employee all along. It does nothing for the period already worked.
Engaging a contractor anywhere is a classification call before it’s a payment call. A genuine contractor invoices you, runs their own tax, and carries their own business risk. If the working arrangement looks like employment, the country’s own test treats it as employment, whatever the contract says.
The markers are consistent across borders: who controls the work, whether the person has to do it personally or can send a substitute, who carries the financial risk, and how far the worker is built into your business. The thresholds and the back-tax figures differ country by country. The shape does not.
Get it wrong and the cost stacks: back tax and social contributions, a penalty usually scaled to how the error happened, interest, and criminal exposure in deliberate cases. In many countries the engager carries the bill, and the lookback runs years.
Teamed engages and pays your contractors compliantly in 180+ countries, and employs them through an employer of record from $599 per employee per month when the classification is too close to risk. An EOR fixes the next engagement. It doesn’t erase the last one.
One place to engage and pay people the right way, wherever they work. Every developed country runs its own test to tell a genuine contractor from an employee. The contract title decides none of them.
What separates a genuine contractor from an employee?
No single factor decides it anywhere. The local authority weighs the whole working arrangement: control, personal service and the right of substitution, financial risk, and how far the worker is built into your business.
The markers that point to employment travel across borders, even when the test has a different name in each country.
The legal test has many names. Common-law employment status in the United Kingdom, the IRS three-category test in the United States, Scheinselbstständigkeit in Germany, the subordination test across much of Europe and Latin America. They reach for the same thing: does this person work like a business, or like a member of staff? You read the markers together. The more an arrangement leans toward the left column, the more it looks like employment.
| Marker | Points to employment (risk) | Points to a genuine contractor (safer) |
|---|---|---|
| Control | You decide what work is done, and when, where and how it’s done. | The contractor sets their own method, hours and place. You agree a result, not a routine. |
| Personal service and substitution | The person has to do the work themselves. No real right to send someone else. | A genuine, unqualified right to send a substitute, which points strongly to self-employment on its own. |
| Financial risk | Paid like a salary, no investment, no real chance of profit or loss, holiday and sick pay expected. | Invoices for the work, bears their own costs and tax, can profit or lose on the engagement. |
| Integration and continuity | Part of the team, open-ended, working only for you, doing core business work. | A discrete, time-bound project, serving other clients, doing work outside your usual course of business. |
You can’t contract your way out of employment. If the person works like an employee, the local test treats them as one for tax, whatever the agreement says. The label is the least important document in the room.
How do you check a contractor’s status before the work starts?
Hold the planned engagement against the test that applies where the contractor works, before you sign. Some countries publish an official check you can run for free. Where you’re not sure, get the answer on paper before any money moves.
Teamed reviews every engagement against the local test, so the call is made on the facts, not a guess.
The cheapest moment to get classification right is before the contract is signed. Run the engagement through the markers: who decides what work is done, who decides when, where and how it’s done, how the person is paid, and whether they carry any of their own business risk. Run the contractor classification check on every engagement you’re unsure about.
Where a country puts the determination on the engager rather than the worker, document the decision and the reasons, and keep that record with the engagement file. If an authority ever asks, that file is your defence. The reality has to match the contract, because authorities read the reality, not the wording.
For any engagement you’re not sure about, get a classification on paper before the work begins, or engage the person as an employee through an EOR from day one. Both remove the guesswork.
What does contractor misclassification actually cost?
It varies by country, but the cost is built from the same layers everywhere: back tax and social contributions the engager should have paid, a penalty, interest, and criminal exposure in deliberate cases.
The lookback runs years, and reaches further where the misclassification was deliberate. In many countries the bill lands on the engager, not the contractor.
This is the part that catches engagers out. When an authority reclassifies a contractor as an employee, it rebuilds the tax and contributions that should have been paid on employment, then adds a penalty on top. The bill is built from several layers.
| Cost layer | What it means | Who usually carries it |
|---|---|---|
| Back tax and social contributions | The income tax and statutory contributions that should have been withheld and paid on employment, rebuilt across the period worked. | The engager |
| Penalty, scaled to behaviour | A penalty on the underpaid amount. An honest, disclosed error sits low. A deliberate, hidden one sits high. | The engager |
| Interest | Charged on the unpaid amounts from when they fell due until they’re settled. | The engager |
| Lost benefits and entitlements | Unpaid holiday, notice, severance or overtime that a reclassified employee can claim for the period. | The engager |
| Criminal exposure | Serious, deliberate misclassification used to evade tax can be prosecuted. | The individuals responsible |
Read the layers together. The penalty is usually a percentage of the tax that was lost, multiplied by how the error happened, so the cost rises with the behaviour, not just the size. Stretch that across a multi-year lookback and a single misclassified person becomes serious money before any criminal exposure.
Every country sets its own rates, penalties and lookback windows. The exact figures for the United Kingdom, the United States and more sit on each country contractor hub. Wherever you hire, getting the call right up front costs almost nothing by comparison.
How do you engage and pay a contractor compliantly?
Decide the status honestly before you sign. If the work is genuinely independent, contract for a result, let the contractor use their own tools and set their own hours, pay against their invoices, and keep them free to serve other clients.
If the work is really employment, engage the person through an EOR instead. When it’s close, get a classification on paper first.
A clean contractor engagement follows a simple sequence, wherever the contractor sits.
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Assess the status before you sign
Hold the planned arrangement against the markers: control, personal service and substitution, financial risk, and how far the person is integrated into your business. If it leans toward employment, stop and treat it as employment.
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Get a classification on paper where it’s close
For any engagement you’re not sure about, run the classification check before work begins and keep the result with the engagement file.
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Contract for a result, not a routine
Define the deliverable. Avoid fixed hours, a fixed desk, required attendance at internal meetings, and language that puts the contractor under day-to-day direction. A contract that describes managed, hourly, on-site work is itself evidence of employment.
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Keep the contractor independent in practice
Let them use their own equipment, set their own schedule, and keep serving other clients. The reality has to match the contract, because authorities read the reality, not the wording.
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Pay against invoices, and keep the file
The contractor invoices you and you pay gross, unless the country requires withholding at source. You don’t run them through payroll. Hold the contract, the classification result, and the invoices. If an authority ever asks, that file is your defence.
Does an EOR fix prior contractor misclassification?
No. Moving an at-risk contractor onto employment makes the relationship formal employment going forward, which can read as confirmation the person was an employee all along. It doesn’t undo the earlier period.
The back-tax exposure for that prior time still stands. An EOR is the clean answer only when the engagement is employment from the start.
The logic mirrors the classification test itself. Status asks whether the working arrangement looks like employment. If you take a contractor who already looked like an employee and put them onto an EOR, you’ve made the employment explicit. An authority can read that as evidence the relationship was employment all along, which is the finding you were trying to avoid.
And it does nothing for the past. The assessment window still covers the period the person was treated as a contractor. Switching them to employment on a Monday doesn’t erase the months or years before it.
So when is an EOR the right move?
When the engagement is honestly assessed as employment from day one. If you know the work is full-time, ongoing, directed and integrated, don’t dress it up as contracting and hope. Engage the person as an employee through an EOR from the start. Teamed becomes the legal employer, runs payroll and statutory contributions correctly from $599 per employee per month with statutory cost passed through at cost, and the classification question never arises.
| Genuine contractor | Employment via EOR | |
|---|---|---|
| Right when | Independent, multi-client, own tools and risk, you buy a result. | Full-time, long-term, directed, integrated, single-client in substance. |
| Who runs the tax | The contractor, on their own account. | Teamed, as the legal employer, from day one. |
| Misclassification risk | Carried by the engager if the reality drifts toward employment. | Removed. It’s employment by design. |
| How you pay | Against the contractor’s invoices, gross. | From $599 per employee per month, statutory cost passed through at cost. |
An EOR prevents the next misclassification. It doesn’t erase the last one. Classify right at the start.
Which Teamed model fits each engagement?
Pick by how much risk you want to keep. Engage the contractor directly and add classification cover, transfer the engagement and the liability to Teamed, or employ the person through an EOR when the work is employment in substance.
Engage direct, add cover
Keep the direct commercial relationship with the contractor, often because they prefer it, and let Teamed run the classification review on a cadence and back the position. This sits over the top of your existing arrangement: the contractor invoices you, you pay them, and Teamed reviews the classification and documents the audit trail. The right fit for lower-risk engagements you want a backstop on.
Transfer the engagement, transfer the risk
Teamed engages the contractor under our agreement, the contractor delivers the work to you, and Teamed carries the misclassification risk. You get the work; Teamed holds the contractor relationship and the audit-trail position. The right fit for higher-risk engagements where you want the liability off your books.
Employ through an employer of record
When the engagement is employment in substance, switch the person to direct employment through Teamed as the employer of record from $599 per employee per month. Teamed runs payroll, statutory contributions and benefits in the country where the person works, and the classification question disappears.
Graduate to your own entity
Once headcount in a country justifies it, move from EOR to your own entity on the same platform, with continuous service preserved. Teamed tracks the crossover by country and tells you when the model no longer fits, rather than leaving you to ask. Run the crossover calculator to find your number.
Genuinely independent, lower risk, you want a backstop → engage direct with cover. Genuinely independent, higher risk, liability off your books → transfer the engagement to Teamed. Employment in substance → an EOR. Crossover point reached → graduate to your own entity.
Contractor guides by country
The markers are global. The figures are not. Each country contractor hub carries the local test, the back-tax window, the penalties, and how to engage and pay there.
Live now, with more arriving:
Hiring in more than one country, or somewhere not listed yet? Start at the hiring guides hub for every country Teamed supports, employee or contractor, or talk to an expert.
Frequently asked questions
Is a worker a contractor because the contract says so?
No. Almost every developed country decides status on how the work actually runs, not the label on the agreement. Authorities weigh who controls the work, whether the person has to do it themselves, who carries the financial risk, and how far the worker is built into your business. Get it wrong and the bill usually lands on the engager, not the worker.
How do you check a contractor’s status before the work starts?
Hold the planned engagement against the test that applies where the contractor works: who controls the work, whether the person can send a substitute, who carries the financial risk, and whether the work is project-shaped or open-ended. Some countries publish an official check. Teamed reviews every engagement against the local test before you sign.
What does contractor misclassification cost?
It varies by country, but the shape is the same everywhere: back tax and social contributions the engager should have paid, a penalty usually scaled to how the error happened, interest on the unpaid amounts, and criminal exposure in deliberate cases. The lookback runs years, and reaches further where the misclassification was deliberate. The exact figures sit on each country contractor hub.
Does putting a contractor through an EOR fix prior misclassification?
No. Moving an at-risk contractor onto employment makes the relationship formal employment going forward, which can read as confirmation the person was an employee all along. It doesn’t undo the earlier period, and the back-tax exposure for that time still stands. An employer of record is the clean answer when the engagement is employment from the start.
When is an employer of record the safer route than a contractor engagement?
When the work is full-time, ongoing, directed, and built into your business, it’s employment in substance. Engage the person through an employer of record from day one. Teamed becomes the legal employer, runs payroll and statutory contributions correctly from $599 per employee per month, and the classification question never arises.
Which countries does Teamed cover for contractors?
Teamed engages and pays contractors in 180+ countries. Country contractor hubs are live for the United Kingdom, the United States, Australia, Canada, the Netherlands, India, France, Spain, Brazil, Poland, and Ireland, with more arriving. For any other country, ask us and a specialist returns a written brief.
The contract is the least important document in the room. Wherever you hire, the authority reads how the work actually ran against its own test. If it looked like employment, it’s treated as employment, and the bill usually lands on the business that engaged the contractor, not the contractor.
The contract says contractor. The authority reads the working arrangement. Those are different documents.
The test has a different name in every country. The question is the same one everywhere.
Classify right at the start, or engage through an EOR. An EOR prevents the next mistake. It doesn’t erase the last one.
