Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Azerbaijan can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Azerbaijan, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Azerbaijan.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Azerbaijan is not the same as paying workers in your own country. Employees have to be paid using Azerbaijan’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
A full workweek in Azerbaijan is 40 hours for employees over the age of 18.
Overtime is paid at the rate of 200% of the normal salary.
The payroll cycle in monthly salaries should be divided into two parts (advance and remaining portions of the wage) and paid to employees twice a month with an interval not exceeding 16 days.
Annual salaries should be paid not less than once a month, which is now becoming the normal practice.
There is no requirement for the 13th salary payment in Azerbaijan.
PTO is calculated by:
In addition, depending on the number of years of employment, an employee is entitled to additional leave:
Annual leave can be broken down to multiple leave periods, however, one of the leave periods must be 2 weeks in length.
There are 14 public holidays in Azerbaijan.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Women are entitled to a total of 126 days of maternity leave and can begin 70 days before the expected due date.
If the mother endured a difficult birth or the birth of more than one child, maternity leave can be extended for an additional 14 days.
Maternity leave is paid by the State Social Protection Fund.
Compensation is 100% of the average monthly salary of the past 12 months.
Fathers can take 14 days of unpaid paternity leave following the birth of a child.
In Azerbaijan, there are various stipulations for various parental rights:
Study leave- employees studying in addition to work are provided study leave in order to participate in training sessions in the relevant academic season, to take state exams, prepare a diploma project, etc. During the period of paid educational leave, an employee shall be paid an average salary.
In general, termination of an employment contract in Azerbaijan is strict and must be carried out with the utmost care. Labor laws for termination are in favor of the employee and any misstep can have major consequences for the employer.
For employees who are terminated based on redundancy, 3 month’s severance pay is required.
The notice period in Azerbaijan is:
When terminating an employment agreement due to downsizing, 2 months’ notice is required. During this 2 month period, the employee is able to take one day of paid time off per week for the purpose of finding new employment.
If the employee initiates the termination of the employment agreement, one months’ written notice is required.
The Severance Pay in Azerbaijan depends on:
Severance pay varies depending on the length the employee has been employed:
Termination pay– in addition to severance pay, an additional 2 months’ salary must be given if:
In the event that the employee’s employment is terminated due to death, 3 month’s allowance is given to their family members.
The probation period can last up to 3 months. During this time, either the employee or employer can cancel the employment agreement so long as 3 days’ notice is given.