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 Peru can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Peru, 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 Peru.
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 Peru is not the same as paying workers in your own country. Employees have to be paid using Peru’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 8 hours per day and 48 hours per week.
The compensation for overtime hours should be agreed upon by the employer and the employee.
However, the first 2 hours cannot be compensated with less than 25% of the total remuneration of the employee.
For every additional hour, the surcharge cannot be less than 35% per hour.
Employer
Employees are paid monthly.
The 13th and 14th salaries are paid in July and December.
PTO is calculated by the:
There are 12 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Mothers are entitled to 98 days of fully paid leave paid by ESSALUD through the company.
10 days paid by the employer.
Not required.
None.
None.
None.
Employees may be terminated on objective grounds or for cause, with documentation.
In general, employees should get a minimum of six calendar days of written notice so that the employee can respond in writing or 30 calendar days to prove his/her capability.
The dismissal decision and reason should also be provided in writing to the trade union and the employee. Employees which are dismissed without cause are generally entitled to severance pay for up to 12 months.
When resigning employees must give at least 30 days’ notice.
Generally, an employer must provide an employee a minimum of six calendar days of notice so that the employee can present a written defense to any charges against him or her, or 30 calendar days to prove the employee’s performance capability or to correct any error.
There is no need for notice if the employee has exhibited serious misconduct under which it would be unreasonable to require the employer to continue the employment relationship.
The probationary period may last three months.
When the work requires training and adaptation or when the nature of the work requires it, an extension may be granted. Such extensions must be done in writing and may not exceed:
