In a cutthroat marketplace as we have today, it is almost impossible for a business, especially IT-related to grow and compete effectively without a viable talent management strategy in place. In the same vein, considering the technical nature of IT profession, it is essentially important to hire and work with highly skilled specialists who have the required prowess to be engaged in your projects. Businesses – big and small – having realized the role of international IT talent in business continuity are beginning to look for every way possible to hire global IT specialists no matter where they live in the world. But having said that, global hiring is not without its challenges. One of the biggest challenges is the difficulty of finding, hiring, engaging and retaining the suitable IT professionals as the quality of IT expertise lies at the heart of any business success. Once you’ve found an IT specialist, you now need to figure out how you can pay them for work done so global hiring is compliant.

In this article, we will find out how Global Employer of Record can help IT professionals to attract, engage and retain the world’s best talent and soar their business internationally side by side.

Building an effective employer branding

Gone are days when the main factors for workforce acquisition are race, age, gender, and so forth. Employers are presently more concerned about building a strong diverse corporate culture where individuals of difference backgrounds, skill sets and experience can team up to produce more effective and productive team. With a global employer of record, aka international employment outsourcing solution in place, any IT workforce employers can easily build a strong diverse-collaborative culture which is not only identifiable by all job seekers, but can make them the envy of the top-notch skills.

Having a labor pool of top-notch talent

It can be very difficult, time demanding and expensive to expand globally, especially when it involves more than one country and/or projects when there is no labor pool of skills. Acumen International having that in mind has provided through her employer of record solution, the platform that guarantees a steady pool of global talent. With a global employer of record solution, Acumen International can employ your workforce – whom you have known his skill potentials – on your behalf to realize your project in any country of your choice thereby saving you the time needed to look for appropriate skills. Having your global workforce in reserve saves you the resources that would have been used to search, recruit, train and onboard new employees each time you want to implement a new project or expand to a new country, as well as the resources that could have been lost in bad recruits.

Eliminating employee turnover

Poor employee management usually leads to unfriendly working relationship, employees’ dissatisfaction, low level of motivation and commitment, workforce disengagement, low productivity, and consequently high rate of high employee turnover. Employees are more engaged and productive when they understand and share your vision, have a sense of connection with your company, and feel recognized/appreciated. Global Employer of Record solution helps to eliminate employee turnover by providing a platform that does not only provide the possibility to attract the best skills, but also to continually engage and ultimately retain them. This Employer of Record platform makes it possible for any IT company to easily share its company vision and values with its global workforce. Through these Employer of Record services, Acumen International’s friendly group of professionals ensures that your workforce remuneration package (salary, leave and bonuses) is duly payed, while taking care of their payroll/ taxation and compliance issues.

Expanding your global presence cost-effectively, time-effectively and compliantly (leverage our global infrastructure)

Acumen International has made it much more easier and cost effective for IT professionals to expand to any foreign market as quickly as possible. With an international employment outsourcing solution, IT specialists can leverage Acumen’s global infrastructure when entering any global market without having to set up their own entities. This simply saves time, money, resources and also guarantees compliance.

Working with sales representatives is often a fantastic way to scale your production capacity in a short period of time. However, there are some companies that work with sales reps on a fulltime basis. We want to provide a guideline on how to prevent employee misclassification for these individuals.

What’s the deal?

If a US court determines a case of employee misclassification then the company will be faced with liabilities such as back tax withholdings, due social security contributions, overtime hours, interest and penalties. If employee classification is determined outside the US then the company will additionally be liable for paid vacation days, mandatory benefits such as a thirteenth month pay, severance payment, notice pay and fines, which are often a combination of a lump sum + a percentage over total liabilities.

These are severe liabilities but luckily there are a few ways to prevent it.

1 Hire a local accountant to do all the tax fillings

Your sales rep may be the best in his field but he is often not a great administrator. An employee misclassification case can be triggered because tax authorities discover that there is something wrong with the tax payments. Tax authorities will start an investigation and if they believe this individual is a misclassified employee then they will call in the labor authorities.

More often the sales rep will go to the labor authorities by himself. A deteriorating working relationship with the client, coupled with the sight on a high severance payment, are often enough for the sales rep to make this step.

2 Check the criteria for employee misclassification

Criteria that determine employee misclassification differ per country. In a country such as Germany it is important that the revenue of the sales rep should come from multiple clients. If a German sales rep receives more than 80% of total revenue from one source then this will likely trigger an employee misclassification case. In countries such as the US it is more important to look whether the sales rep has his own website, business cards and other methods to promote his business.

The chances for employee misclassification are close to zero if the sales rep works for multiple clients and when the working relationship is only for a brief period of time. A sales rep that works indefinitely for one client is in the danger zone. In these cases, you should pay extra attention to the criteria per country.

3 Don’t work with fulltime sales reps

Sales reps are great to scale up sales in a short period of time. But when you want to retain this talent for an indefinite period then it makes more sense to employ this individual. Acumen International can employ your sales reps on your behalf. We would act as the employer of record, pay the wages, fill out the taxes and make sure everything is compliant with local labor laws.

One American company was working on a fulltime basis with an IT freelancer in Slovakia for approximately three years. The American HR director decided to contact Acumen International to employ this freelancer. The HR director feared that would risk an employee / independent IT contractor misclassification case sometime in the future.

We provided an offer to employ the Slovakian freelancer. However, the US finance department did not approve our proposal since it was higher than what they were currently paying the freelancer. An employee misclassification case did not seem imminent, so they decided not to act.

Half a year later the same company contacted us to employ the Slovakian freelancer. Our offer got approved but the freelancer refused to sign our employment agreement. In this half year, the relationship between the freelancer and the US company went sour. The freelancer decided to go to the labor authorities instead.

The US company had to register their own legal entity in Slovakia due to employee misclassification. We never heard the ultimate verdict but from communication with the HR director we understood that they risked paying the due social security taxes, vacation, severance payment and additional fines. The total claimed amount was approximately 70.000 EUR.

The ride-hailing service has long maintained its drivers are independent contractors. In a decision that could majorly impact the gig economy, British judges disagree.

A London court ruled Friday that Uber drivers should be classified as employees, rather than independent contractors. The decision could have serious ramifications on the ride-hailing company and its so-called “gig economy” brethren.

Uber’s current classification of drivers as contractors means the company isn’t responsible for many costs, including Social Security (in the US), health insurance, paid sick days, gas, car maintenance and much more. If all drivers are eventually deemed employees, Uber will have to pay for all of this, as well as manage a workforce of more than one million.

“This is a groundbreaking decision,” Annie Powell, a lawyer for the firm Leigh Day that represented UK Uber drivers, said in a statement. “It will impact not just on the thousands of Uber drivers working in this country, but on all workers in the so-called gig economy whose employers wrongly classify them as self-employed and deny them the rights to which they are entitled.

A UK court rules that Uber drivers should be classified as employees rather than independent contractors

Gig economy is a term given to the workforce in which someone is hired, usually through a digital marketplace, to work on demand, for a short-term engagement.

Founded in 2009, Uber offers a mobile app that lets passengers hail a ride from their phone. The company began operations in San Francisco and is now one of the world’s biggest ride-hailing services, operating in more than 450 cities in more than 70 countries.

Uber is also the highest-valued venture-backed company in the world with a valuation of $68 billion. Much of this valuation, however, is based on Uber’s ability to be profitable by running its ride-hailing platform. If the company has to pay for its drivers’ expenses, profits could diminish or costs could be transferred to passengers.

As discussions of driver classification arose over the past couple of years, Uber has always said that it classifies drivers as contractors because that’s what drivers want

“Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss,” wrote Jo Bertram, Uber UK’s regional general manager, in an email to CNET. “The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want.”

In the US, Uber settled two similar lawsuits in April over the classification of drivers. The class action suits were brought in California and Massachusetts and involved roughly 385,000 drivers. Under the settlement agreement, Uber was allowed to continue classifying its drivers as independent contractors but had to pay $100 million to the drivers involved in the suit. The ride-hailing company also agreed to certain concessions, including giving drivers more information when they’re banned from the service, not terminating drivers at will and creating a “Driver Association” to address drivers’ concerns.

The London Central Employment Tribunal on Friday took these decisions a step further. The court said Uber drivers should be classified as employees, earn at least the national minimum wage and get paid vacations. The tribunal will hold another hearing to determine the amount of pay drivers should receive.

Uber said it is appealing the decision.

While this preliminary decision threatens Uber’s business model, it’s currently limited to only two drivers. Uber has more than 40,000 drivers in the UK. Lawyers for the two drivers said they intend to open the case up to those thousands of other drivers.

In the wake of Uber’s worker classification battles, several other on-demand companies have begun to rethink employee classification. The grocery-delivery startup Instacart said in June 2015 that it’s switching hundreds of its personal shoppers from contract workers to part-time employees. House-cleaning startup Homejoy said in July 2015 that it was permanently shutting down after being sued over the classification of its workers. Several similar lawsuits have also popped up against other on-demand companies, including Postmates, Handy, Shyp and Washio.

“The Uber ruling will demystify much rhetoric on the ‘gig economy’ being inherently liberating,” said Guglielmo Meardi, industrial relations professor at Warwick Business School in the UK. “Over recent years self-employment has increased, but often coming with very bad conditions, prompting fears that it was being used to bypass employment legislation.”

Would you like to know how you can eliminate the risk of employee / sales rep misclassification and other risks of working through foreign independent contractors?

Source: www.cnet.com

Acumen International is the International Professional Employer Organization that can provide your growing company (local or foreign) with international PEO services, global employment and payroll solutions, as well as work permits or business visa issuances. In other words, signing up for our International PEO and Payroll solutions will guarantee that your or your client’s company payroll and taxes are fully managed by a team of experienced professionals.

With over 15 years of running global employment and payroll across 180+ countries around the globe, serving companies in IT & Telecommunications, FMCG, Oil & Gas, Construction & Engineering, Agriculture, Automotive, Healthcare and Pharmaceuticals, and other industries, Acumen International has gained practical experience and valuable expertise, along with a strong-built network that can help you maintain a highly satisfied workforce, while cutting down on your administrative HR tasks and all the risks involved at the same time.

In addition, our International PEO and Payroll package is an insurance against non-compliancy and inflexibility. With our PEO and Payroll solutions, you are certain to get in a quick and compliant way, payroll and employment documents preparation, employees and/or contractors onboarding, detailed payroll calculations (base salary, bonuses, sick-leave, business trips, holidays, etc.), completion of local tax payments and reports submission to local authorities, advanced reports, assistance with work permits, business visas and employment termination and offboarding. Moreover, our International PEO and payroll services are a more cost-effective way of entering a foreign market compared to foreign branch setup or even contacting a local citizen.