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 Slovakia can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Slovakia, 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 Slovakia.
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 Slovakia is not the same as paying workers in your own country. Employees have to be paid using Slovakia'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 standard workweek is 40 hours, at 8 hours per day.
Up to 37,163.36 EUR: 19%
37,163.37 EUR and above: 25%
The payroll cycle is monthly.
There is no statutory obligation but it is the common practice to give 13th and 14th salaries.
There are 15 public holidays in Slovakia.
The first 10 days are paid by the employer.
Mothers are entitled to 34 weeks of maternity leave.
Mothers of twins are entitled to 43 weeks of maternity leave.
Single mothers are entitled to 37 weeks of maternity leave.
The leave is paid by the Social security agency at a rate of 75% of daily salary up to a maximum of 66,6083.
Fathers are entitled to 28 weeks of paternity leave, starting 6 weeks after the mother gives birth, but only if the mother is not receiving maternity benefits. Single fathers are entitled to 31 weeks of paternity leave. The leave is paid by the Social security agency.
Parental leave can be used by a parent or guardian until the child reaches the age of 3 years old or until the child reached the age of 6 years old in case of a child having a long term adverse health condition.
The amount of the parental allowance is 270 EUR per month or 370 EUR per month (if the parent previously received a maternity benefit in the EU/EEA states). It is paid by the Central Office of Labour Social Affairs and family
The employment contract in Slovakia can be terminated in writing by both parties as follows:
The general length of the notice period for a Slovak labor contract is:
When employees resign they need to give the following notice:
1 month – if the employee had worked 1 year or less
2 months – if the employee had worked 2 years or more.
Severance pay depends on the length of employment and type of termination. When employment is terminated with notice, the minimum amount of severance pay is one to four times the employee’s average monthly earnings, depending on the years of service (2 to 20 years).
The probation period is limited to 3 months for operational roles or 6 months for management roles.