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 Pakistan can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Pakistan, 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 Pakistan.
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 Pakistan is not the same as paying workers in your own country. Employees have to be paid using Pakistan'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.
Normal working hours are a maximum of 9 hours a day and 48 hours a week. Anything over this is considered overtime.
If employees work more than stipulated 9 hours per day and 48 hours per week, they are entitled to overtime pay.
Overtime pay in Pakistan is 200% the employees’ regular pay. During holidays employees receive 300% the pay rate.
Wages can be paid on a daily, weekly, bimonthly, or monthly basis. The wage period cannot exceed one month.
PTO is calculated by the:
There are 10 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 eligible to take 3 months of paid maternity leave.
The six-week post-natal leave is obligatory. In order to receive maternity leave, the employee should be working for the same employer for at least 4 months before she gives birth.
No employer is permitted to terminate the female employee while she is on maternity leave.
In order to receive benefits, the employee must have at least 180 days of contributions in the year before the expected birth of the child.
Fathers who are eligible will receive one-month leave for each of their first three children.
No statutory law for parental leave.
If a female employee’s husband dies, the employer must provide paid Iddat leave. This is a waiting period that the employee receives a normal wage.
A written letter should be provided when terminating a contract and reasoning for the termination must be sufficient.
The notice period in Pakistan is:
Both employee and employer should provide a months’ time notice.
Advanced notice is not required for temporary workers. If advance notice is not provided, a monthly salary in its lieu shall be provided.
When employees are discharged from work, they are given severance pay.
The pay amounts to 30 days’ wages for each completed year of service. Employees do not receive severance pay if they are dismissed for misconduct.
The probationary period typically lasts 3 months.