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For any organization today, hiring is an exercise in compliance. In addition to complying with international and local labor laws, you must also follow tax rules and a host of reporting requirements. And when you’re engaging independent contractors (ICs) across borders, the challenges of classifying, contracting, and paying those workers can make compliance even more challenging.
In this blog post, learn about three things you should take into account to boost your compliance with IC laws around the world.
3 Critical IC Compliance Considerations
As freelancers comprise a growing percentage of the global workforce, employers increasingly rely on these workers to provide specialized skills and help teams fill short-term and project-based talent needs. Given the value external workers bring, it’s not surprising that the “gig economy” of independent workers has grown 15 times faster than the traditional job market.
However, various compliance requirements can make hiring independent contractors a tricky undertaking, especially if they reside or provide services in other countries. Mistakes that violate a country’s labor laws can result in penalties ranging from non-compliance fines to lawsuits, not to mention the potential negative effect on your organization’s reputation.
To ensure your organization stays in compliance with global independent contractor regulations, consider the following:
1. Freelancer locations
One of the first critical steps in achieving compliance with international contractor laws is understanding and tracking contractor locations. Each country has specific requirements for how employers must classify and engage independent contractors, and you’ll need an easy way to determine which laws apply to which contractors.
Tracking freelancer locations is easy when there aren’t that many. But for enterprise organizations hiring contractors around the world, it can quickly become overwhelming to keep track of all the applicable regulations. Moreover, each time you add a contractor from a new country, you can spend precious time trying to decipher local requirements—time that would be better spent getting the contractor up and running on a new project. To record contractor locations and other relevant data, such as availability, skills, and pay rate, use an independent contractor management system to store and access those details.
2. Potential sources of risks
Achieving global compliance in independent contractor hiring requires understanding common pitfalls and where things could go wrong. The more you know about potential risks and the scenarios where you’re more likely to encounter them, the better you can proactively reduce your risk exposure.
Here are the key areas of risk to be aware of when expanding your global workforce with independent contractors:
- Worker classification: Each country has specific laws for determining whether a worker is an employee or contractor. Every classification carries implications for the worker’s pay, benefits, taxes, and job protections.
- Taxes: Tax regulations also vary by country. Staying in compliance with location-specific tax regulations includes being aware of filing deadlines and the country-specific tax forms you may be required to send to contractors and their applicable tax authorities.
- Contract parameters: Whether written or verbal, countries can interpret contracts differently, making it necessary to draft and execute freelancer contracts that protect your organization and comply with applicable law.
3. Tools for simplifying global IC compliance
Hiring managers and talent acquisition professionals aren’t typically international tax and contract experts. But when you have the right global compliance solution, they don’t have to be.
No matter where you hire talent around the world, you can simplify compliance and make it an easy process for users. Worksome’s global compliance tools allow you to classify, pay, and contract with external workers using a single platform. Hiring managers, HR, and recruiters get automated compliance support, making it easy to hire contractors from any location quickly and conveniently. Key capabilities of the solution include:
- A built-in worker classification tool with misclassification indemnity protection
- Total payment flexibility for freelancers in any location
- Background checks to help you verify contractor identity, work experience, and eligibility for work
- Automated contracting that meets local laws and regulations
Global Compliance, Simplified
External workers give your organization access to a broader pool of skills and capabilities. And though hiring these workers requires compliance with international and local laws, it doesn’t have to be a cumbersome or time-consuming process. To see how Worksome can help your organization achieve global compliance for all independent contractor hires, schedule a demo today.