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 Colombia can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Colombia, 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 Colombia.
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 Colombia is not the same as paying workers in your own country. Employees have to be paid using Colombia’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.
Full-time employment is considered 48 hours weekly, and 8 hours daily.
Hours worked in a single day cannot exceed 10.
Overtime pay rates are as follows:
Exemptions on overtime compensation:
Note: Only applies to employees earning 10 times the minimum wage
The payroll cycle is bi-weekly or monthly.
For employees who are paid bi-weekly, wages are paid on the 15th and last working day of the month.
For employees who are paid monthly, wages are paid on the last working day of the month.
Employees are entitled to a 13th salary equivalent to one months’ salary. It is paid in 2 installments (half in June and the other half in December).
PTO is calculated by the:
There are 18 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Maternity leave is 18 weeks, paid at a rate of 100% salary. The employer makes the payment to the employee and then claims the money back through social security (EPS).
Paternity leave is 8 working days, paid at a rate of 100% salary. The employer makes the payment to the employee and then claims the money back through EPS.
There are no provisions in the law regarding parental leave.
5 days of paid leave.
5 days. Leave can be paid or unpaid and depends on company policy.
The reason for dismissal must be communicated to the employee in writing upon termination.
The notice period in Colombia is:
The Severance Pay in Colombia depends on the Duration of Employment:
When the termination is without cause, employers are obligated to pay severance. For employees with an indefinite term agreement, the severance will be calculated as follows:
Indefinite contracts- The probation period is 2 months.
Fixed-term contracts- The probation period cannot exceed more than 1/5 of the initially agreed employment term.