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 Russia can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Russia, 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 Russia.
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 Russia is not the same as paying workers in your own country. Employees have to be paid using Russia'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 considered 8 hours per day and 40 hours a week.
Hours worked over 40 hours per week are considered as overtime and are paid at a higher rate. Overtime should not exceed 4 hours in 2 successive days and 120 hours per year.
Overtime is paid at a rate 150% of the regular pay rate for the first two hours and at 200% for all subsequent hours worked within a day.
When an irregular working regime is stipulated in the contract, overtime is compensated by additional paid leave and cannot be less than 3 calendar days per year.
Work during weekends and on public holidays is paid at a minimum of 200% of the regular pay rate. However, the employee can agree to be compensated by receiving regular pay plus an additional day off.
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Minimum wage is 12,130 RUB to 21,060 RUB, but can be higher in certain regions.
The payroll cycle is bi-monthly.
There are no statutory laws on 13th salary in Russia.
28 calendar days per year, all unused days are carried over.
Employees may be entitled to additional paid leave if they work in harmful and dangerous working conditions, have irregular working hours, work in the far North regions and in some other cases stipulated by the law.
There are 7 public holidays.
Sick leave allowance is paid by the employer for the first 3 days of sickness and by the Social Insurance Fund from the 4th day onwards.
Sick leave allowance varies depending on the overall length of service, but it does not exceed 2,301 RUB per day.
Maternity leave is paid for 140 calendar days and additional paid childcare leave till the child reaches the age of 18 months. The allowance is covered by the Social Security Fund.
Paternity leave falls under parental leave.
The relative or guardian who takes care of the child can take paid parental leave till the child reaches the age of 18 months. The allowance is covered by the Social Security Fund.
Only one parent can take the childcare leave.
Study leave: Employees gaining higher education are entitled to 40 days paid leave during the first two years of study and 50 days paid leave during consequent years of study. The allowance is paid by the Employer.
Labor contracts can be terminated on the following grounds:
All termination settlements are to be finalized during the employee’s last working day.
When terminating due to staff redundancy or a company’s liquidation, severance pay is one month’s salary plus payment of their average month’s earnings for a 2-month period post dismissal when the employee is searching for alternative work.
If the employee fails to find an alternative job after two months, they can obtain a letter from the Employment Fund which entitles them to receive an additional month’s salary.
When termination is a result of the employee’s refusal to transfer to a different available position within the company or due to the loss of the ability to work (additional reasons might also apply), two weeks’ salary is paid.
The probation period is 3 months. It can be extended to 6 months for directors, chief accountants, and their deputies.