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 Finland can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Finland, 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 Finland.
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 Finland is not the same as paying workers in your own country. Employees have to be paid using Finland’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-time workweek is 40 hours, or 8 hours per day.
Overtime work requires the employee’s consent for each overtime period, and to be considered overtime, must be under the employer’s initiative and approval. Overtime hours cannot exceed 138 hours over a 4-month period and 250 hours annually. Additional 80 hours of overtime may be agreed upon if it is necessary.
Overtime increases pay to the rate of 150% of the regular pay for the first two hours and 200% for the following hours. Weekly overtime is paid at the rate of 150% of the regular pay. Any work performed on Sunday is compensated at 200%.
Overtime pay can differ depending on collective agreements.
The payroll cycle is monthly and wages are paid at the end of the month.
There are no provisions in the law regarding 13th salaries.
Annual leave is calculated from the period of April 1st through March 31st of the following year. Vacation is typically taken between May 2 -September 30 (4 weeks in the summer and 1 week in the winter).
Employees earn 2 vacation days per month or 2.5 days per month for continuous employment of over a year. Employees who have at least 15 years of service receive 3 vacation days per month.
There are 10 public holidays.
Employees who have been employed for at least a month receive full sick pay for 9 working days. After 9 days, the employee must provide a medical certificate from a doctor.
Pregnant employees are allowed to choose when maternity leave begins with a maximum of 50 days before the expected due date. Once maternity leave begins, the employee receives benefits for 105 working days (Monday-Saturday, excluding holidays).
The employee must notify the employer and apply for maternity pay at least 2 months before starting maternity leave.
Fathers are given 54 days of paternity leave, with a maximum of 18 days to be used at the same time as the mother. The remaining days are to be taken in more than two periods.
Both parents are allowed to take parental leave with benefits up to 158 days and ends when the child is approximately 9 months old. Parents are to agree when each takes the leave since it cannot be taken by both simultaneously.
An employer must provide valid reasoning for the termination of an employee. If an employee has performed poorly, the employer must first receive a warning and an opportunity to improve before being terminated.
An employee must provide written notice to the employer and honor the notice period before ending work.
Fixed-term employment cannot be terminated.
Notice period when the employer initiates the termination:
Notice period when employee initiates the termination:
There is no statutory severance pay unless the employee’s termination is unjustified, or the employer has decided voluntarily to provide it.