Remote Work
December 15, 2020

Jake W.

How Does Compensation Work for Remote Employees?

Once deemed as less productive than working in an office, remote work is quickly becoming the new normal. In 2016, only 36% of companies offered the option to work from home but now, that number has increased to 48%.

Studies conducted by the Global Workplace Analytics have also shown a rise in productivity associated with remote work, with employees 75% more productive when working from home compared to 63% when working in an office.

When your organization adopts or expands their work from home policy, it is usually a good idea to look at your workers’ compensation and coverages. But if your company does not have a subsidiary or an office in the remote worker’s location, paying your workforce can be a challenge.

It is not realistic to set up an office where every remote worker is located, so how should you arrange compensation for those workers? Here are three solutions to consider, which might prove both simpler and more cost effective than your current method.

Paying through a local partner

If your company works with an affiliate or a local partner in the remote worker’s country of residence, you may find it useful to place the remote worker on your local partner’s payroll.

This would make the remote worker a legal employee of your local partner’s and a part of their workforce, while allowing your company to continue to direct the employee’s work.

Utilizing the home country’s payroll

Another simple method to pay remote workers can be via the company’s home country payroll. Not all countries allow remote payrolls from a foreign company, but as long as the company registers the remote worker, there are specific laws that sanction it.

If this happens, payment can be made to the remote worker while complying with the host country’s regulations. Investigate the regulations in your area to find out whether this is a possible option for your business to handle compensation for remote workers.

Hiring workers as contractors

Hiring workers as independent contractors is another way to pay your remote employees. The independent contractor is responsible for their own hours of work, benefits, and taxes. All your company has to do is simply remit the payment to the worker under the agreed schedule and terms.

There are a few ways to help you pay independent contractors such as using PayPal and GooglePay which ensure the transfer is instantaneous. Transferring the funds via bank wire transfers or ACH transfers to contractor’s accounts allows you to minimize the cost of international transfers.

Explore your opportunities

If you believe that paying your remote workforce is an issue in your business, try having a look at any opportunities you may have to update your processes. Could you pay through a partner? Or through your home country payroll? Is there an opportunity for you to pay your remote worker as independent contractors?

Compensating a remote team isn’t the simplest of tasks, but it’s important to address challenges before they grow and become a problem for your business.

Whichever method you choose, it is important that the process is as transparent as possible to keep your workers happy and your business profitable.

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