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 Ukraine can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Ukraine, 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 Ukraine.
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 Ukraine is not the same as paying workers in your own country. Employees have to be paid using Ukraine'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 workweek is 40 hours per week, 8 hours per day.
A maximum of 4 hours of overtime is permitted during 2 consecutive days at a time and not more than 120 hours overtime per year.
Additional overtime work may be applied in exceptional cases such as disruptions in production due to accidents or to avoid production downtime.
The following employees are forbidden from working overtime:
The following employees can only work overtime with their consent:
Twice a month:
Cycle 1: 15-20th of each month
Cycle 2: 31-7th of following month
Not required and is not common practice.
Employees get 24 calendar days per year as a minimum, 2 days per month.
Unused days accumulate and can be used at a future period. It is paid based on the average salary over the last 12 months.
There are 11 public holidays.
The first 5 days are paid by the employer; further days are paid by Social insurance fund.
Sickness pay is based on the average salary for the last 12 months and depends on the contribution period of employee:
0-3 years – 50%
3-5 years – 60%
5-8 years – 70%
8+ years – 100%
If the employee’s contribution period is less than 6 months within the last 12 months, the sick leave is paid based on minimum wage.
Maternity leave lasts for 126 calendar days. 70 days should be taken before delivery and 56 after delivery.
It can be extended to 140 days by medical recommendation and to 180 days for women affected by the Chernobyl disaster.
Maternity leave is paid by Social Insurance Fund at 100% of salary.
There is no paternity leave but fathers can use the mother’s maternity leave if she has returned to work. For the father to be granted leave he must apply to the employer, providing them with a copy of the child’s birth certificate, a document confirming family ties and a certificate from the child’s mother’s place of employment that she went to work before the end of her leave.
After maternity leave ends, mothers, fathers, and grandparents can take unpaid parental leave until the child turns 3.
Study leave – paid by the employer. The length of the leave depends on the duration of the exam period.
Up to 10 days
Up to 7 days unpaid
Every case is analyzed individually, but in general the rights of employees are strongly protected by legislation.
Permanent employees’ termination conditions must be delineated in the employment contract.
Pregnant women, women with children under 3 years old and pre-pension employees are protected against dismissal.
Termination by the employer must include 2 months notice before the final date.
Termination by the employee must be done in writing 14 days before the final date.
Termination by mutual agreement has no notice period requirement.
Severance pay is one month salary, on average.
The maximum probation period is 1 month for non-qualified employees and 3 months- for specialists and managers.