Ways to Pay Remote Employees

by | Sep 17, 2022 | International Payroll

Working with distributed teams from various global locations is the norm in the new world of work. Many business organizations have recognized its benefits to cost savings and workforce productivity.

Finding a strategy that eliminates high platform fees to pay your remote teams may help increase your bottom line.

You may notice that each payment you make for your remote employees on freelancing platforms is subject to processing fees. For employers, processing fees and advertising charges may go as high as $75.

Furthermore, it’s also not beneficial on the employee’s end because they have pay cuts on their total earnings by as much as 20 percent.

The main question here is:

Why is it difficult to pay your employees who work abroad?

Many of my clients hire IT teams in Southeast Asia since they have the skills and world-class competence in the IT industry. On the other hand, most clients choose other countries for their manufacturing and operations because it’s more cost-effective.

This setup is an ideal framework for running your business. However, it becomes complicated when considering long-term agreements, compensation ranges, wage structure, taxes, and compliance, among others. Imagine that you must adhere to different labor laws, taxation, and all that with various nations.

In my decades of experience as an HR professional, I can say there’s a competitive nature in hiring global talents today. Hence, companies may need to place their best efforts to ensure that their employees get what they truly deserve.

Challenges On Paying Your Global Workforce

The first challenge a company has before choosing the payment method is the different pay scales of their employees. Furthermore, the compensation component must be ideal, but there is insufficient market data to decide how much to pay a remote employee.

While maintaining wage fairness between remote and non-remote employees could also be challenging for companies. Most organizations lack the assurance required to decide on fair remuneration. A business may feel that employing someone in a large city will be more expensive than hiring someone in a suburb or a smaller city, regardless of how skilled and informed they are. However, some employees might be hesitant to sacrifice a raise to take advantage of the comfort of working from home and save money on commuting costs.

Top Considerations On How To Pay Overseas Employees

Currency Exchange Rates 

Should you pay an employee who works abroad in your currency or theirs?

The ever-changing exchange rates may affect employees’ net compensation. Therefore, you may need a plan to handle variations that might harm either party. You might need to fix the wage in their local currency because fluctuations may impact their take-home pay.

Another alternative is to establish a currency exchange arrangement to mitigate changes either way.

Local Taxations & Compliances

Remote employees must pay taxes in their home countries, and you, as the employer, may also be required to withhold taxes, creating a situation where there is double taxation.

Furthermore, social security and health contributions for both the employer and the employee are also on the table.

Ways to Pay Remote Employees from Different Locations

Pay them Using Company Payroll

It looks to be the simplest way to pay your staff on the surface. However, as your global workforce grows and becomes more widely distributed, it may become more complicated than you think.

Indeed, this payment method works well for quick tasks or little projects. Regarding global expansion and long-term employment, some nations will require you to establish your legal entity and register your business in their country.

Outsource Your Payroll to an Employer of Record (EOR) 

It’s the most secure and efficient approach to handling your international employees’ payroll.

EOR service providers will not only handle your payroll but also take care of administrative duties and legal liabilities as an employer. An EoR provider serves as your employees’ legal employer on paper.

It may manage all aspects of hiring, paying, and managing an employee’s life cycle while taking care of local laws, international compliance requirements, taxes, benefits, and other complexity.

Benefits of Outsourcing Your Payroll with an EOR Provider

Saving Money

Having an EOR provider to handle your remote teams will cut expenditures like staff salaries, real estate, allowances, and benefits.

Hiring the Best Global Talent

An EOR provider will help you find the best talents for your company. They can explore local and global candidates that ideal for your requirements.

Promoting Diversity and Inclusion

Working with remote employees fosters the inclusion of racial, ethnic, and religious minorities, individuals with impairments, working moms, single parents, and any other underrepresented groups in society.

Indeed, it adds a variety of viewpoints, thoughts, and opinions to the table and helps to enrich the company’s culture.

Do you want to learn more about the benefits of EOR for your business? Contact us today to discuss how we can help you with your distributed teams.

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Ask our team to design a solution that works directly with your current setup.

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