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.
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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 Laos can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Laos, 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 Laos.
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 Laos is not the same as paying workers in your own country. Employees have to be paid using Laos’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 Labor Law limits working hours to 48 hours per week.
Work that is performed beyond this limit will be considered as overtime.
Likewise, the law provides that an employee cannot work more than six days per week and eight hours per day.
According to the Labor Law, overtime cannot exceed three hours per day or 45 hours per month.
In addition, an employee cannot work overtime for more than four consecutive days, except in emergencies.
Overtime wages differ according to the type of overtime, with the Labor Law providing different rates for different days and periods in which the overtime is performed (e.g. overtime on regular days, overtime at night, overtime on public holidays).
With respect to an indefinite-term contract, each party may terminate the contract at any time provided notification is provided to the other party at least 30 days in advance for contracts involving physical labor employees, and at least 45 days in advance for contracts involving employees who use intellectual/special skills.
Employer
No statutory payroll cycle.
Not compulsory but bonuses are common.
An employee is entitled to 15 days' paid annual leave per year, if they have both:
There are 7 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Female employees are entitled by law to receive full wages in case of maternity leave, which can range from 90 to 105 days, or 120 days in the case of multiple births.
In the event of miscarriage, female employees are also entitled to maternity leave, with the number of days to be determined by the attending physician.
Male employees are entitled to take at least three days' paid leave if their wife gives birth or miscarries (Article 58, Labour Law).
Employees are entitled to up to 3 days of leave if the employee’s father, mother, spouse, or child is injured and hospitalized, and there is nobody to take care of them.
Jury Duty Leave and Voting Leave (Leave due to Public Interest) - Not specified by law.
Military Leave -Not Specified by law.
Not Specified by law.
Employees are entitled to up to 3 days of paid leave if the employee’s father, mother, spouse, or child passes away.
The employment will be terminated when one of the following conditions is met:
There is no defined notification period for a fixed-term contract, and such terms are generally agreed upon in the employment contract.
With respect to an indefinite-term contract, each party may terminate the contract at any time provided notification is provided to the other party at least 30 days in advance for contracts involving physical labor employees, and at least 45 days in advance for contracts involving employees who use intellectual/special skills.
Alternatively, the employer can choose to make payment in lieu of notice to the employee who will be terminated.
The Labor Law provides for severance payments to be made for the following types of termination of employment:
The notice period in Laos is:
There is no defined notification period for a fixed-term contract, and such terms are generally agreed upon in the employment contract.
The Labor Law provides for severance payments to be made for the following types of termination of employment:
Probation period may not exceed 30 days.
