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 Eritrea can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Eritrea, 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 Eritrea.
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 Eritrea is not the same as paying workers in your own country. Employees have to be paid using Eritrea'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.
The standard working hours in Eritrea is 48 hours for 8 hours a day.
Overtime work may not exceed two hours unless there is written consent of the employee.
Employees are entitled to at least one day, 24 hours, of rest per week. This is generally a Sunday but can be a different day.
The typical payroll cycle in Eritrea is in monthly basis.
Employers in Eritrea are not required to provide bonuses but some employers provide performance-based awards.
Employees in Eritrea receive 14 days of paid annual leave after one year of service.
This increases by one day for each year of service up to 35 working days. Employers are required to pay any accrued but unused days upon separation of service.
There are 13 public holidays.
Employees receive full or partial payments for the first two months and no pay in months three to six.
Employees may need to provide a medical certificate validating their illness.
The maternity leave generally starts after the birth, but a portion may be taken prior to the birth. Female employees receive 60 consecutive days of fully paid maternity leave. An employer cannot terminate the employment of a woman on maternity leave.
Male employees receive three days of paid paternity leave after the child’s birth.
There are no statutory provisions for parental leave.
Employers in Eritrea can dismiss employees without providing notice at the end of a fixed-term contract, during the probation period, due to the death of the employee, failure of the employee to perform or for misconduct.
Misconduct includes falsifying documents, theft or breach of trust, missing work for five consecutive days or 10 days in one year without justification, disclosure of confidential information or violating the terms of a collective bargaining agreement.
Article 12 under clause 6, it is provided that an employee on probation can terminate their employment without notice.
Employees upon the termination of his employment, be paid severance pay by the employer as follows:
The probation period in Eritrea cannot exceed 90 days.