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 Uruguay can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Uruguay, 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 Uruguay.
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.
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.
Paying employees in Uruguay is not the same as paying workers in your own country. Employees have to be paid using Uruguay's employment and payroll standards.
A normal work week is 44 hours.
Employees who exceed 44 hours in a week are entitled to overtime pay at 200% of the regular salary.
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Minimum wage is 17,930 Uruguan Pesos (Approx. $420 USD) monthly.
Salaries are paid monthly by the 5th day of the following month.
Aguinaldo (13th salary) is mandatory by law and paid in two installments (June and December).
All workers have the right to 20 days’ annual leave. From the fifth year of work, an extra leave day is added, and then every four years another day is added, up to a maximum of 25 days.
The annual leave should be used in the year after which it was accrued. It may be divided into two periods, the shorter of which may not be less than 10 days.
In addition to the worker’s regular remuneration during leave, the worker is entitled to receive an additional amount called “vacation salary” (technically “amount for the better enjoyment of the annual leave”), equal to 100% of the net vacation daily wage.
There are 12 public holidays.
The first 3 days are paid in full by the employer and the fourth day onward is paid 70% by the institute of social security (BPS).
Female employees get six weeks before and eight weeks after the birth as maternity leave, paid by the Institute of Social Security.
Fathers receive 10 days of leave.
Employees have the right to terminate employees, but must provide a notice period as well as severance pay.
A notice of 1.5 weeks should be given.
Employees are entitled to severance payments which includes one months salary for every year employed up to 6 months of salary.
Common practice to have a probation period of up to 3 months.