The best talent lives everywhere. Hiring these international entrepreneurs has its advantages: access to specialized expertise, diversity of ideas, savings on benefits and rights, and more.
However, working with contractors from other countries can be a slippery slope if you don’t do your homework. Rule #1 does not imply that the rules for contractors in the United States apply everywhere else. In fact, they rarely apply elsewhere in the world.
There is a lot to learn about working with international contractors. Start with these six lessons:
1. Pay the Piper
One of the challenges of hiring international contractors is paying them. Bank transfers are expensive. Peer-to-peer payment services like PayPal and Venmo aren’t available in many countries.
So how can you make sure your patrons get paid? With a global payroll partner.
These companies are not just for paying employees. They know the local labor laws, so you don’t have to spend your time and energy understanding them. Some also provide tools to help you manage contractor invoices and tax remittances.
If you’re wrong, you risk disturbing more than your subcontractors. Local authorities aren’t likely to look the other way because you’re having logistical issues.
2. Check references
Verifying the identity and credentials of a foreign contractor can be difficult. But you should consider them carefully before hiring one. Assets such as your intellectual property are at stake, not to mention your company’s brand and customer relationships.
If you can’t interview the contractor in person, conduct a video interview. The camera makes it difficult to read body language, but it’s better than audio only or no interview at all. Record the interview for later reference.
Ask each candidate for contact information for references, including past employers and clients. Then contact them to find out if they really are the contractors you need. You should also check for college degrees and certifications.
3. Draft contracts carefully
A well-designed contract that complies with local employment laws is essential. Be careful, in some countries, the relationship with the contractor has more weight than the contract itself.
A wily contractor might sue you for benefits. French employment laws, for example, are strongly geared towards the protection of employees by contractors. The rise of the gig economy has increased the benefits and rights of subcontractors in France.
In the UK, the relationship between employer and contractor carries at least as much weight as the contract. Similarly, in Spain and Peru, the laws state that if a contractor works for only one client, he is an employee.
A determination by a foreign authority that your contractor is a de facto employee will require you to pay. You may end up owing things like back taxes and unemployment insurance. You could also owe paid time off – and incur interest and penalties on all of the above.
Your written agreement with an independent contractor should include certain key clauses. These include non-disclosure/confidentiality, indemnification, transfer of intellectual property, notice and dispute resolution. Don’t just rely on those.
Make sure your contractors have other customers. Do not provide them with office space or supplies. Make sure they are free to do their work in their spare time, notwithstanding project deadlines.
Oh, and don’t forget the national requirements. Foreign independent contractors retained by U.S. companies and working abroad must complete IRS Form W-8BEN.
4. Foster connectivity
If you rely on independent contractors in your global business strategy, they should be part of your culture, not separate from it. There is always a chance that these contractors will start working for the competition and take your customers with them.
Although contractors are not employees, it is important to create links beyond the transactional. For example, you can invite them to employee events or offer them training opportunities. This should help them feel more like part of the team, and not just a corollary service provider.
If your contractors are doing work for or alongside your employees, facilitate meetings between them. Not only will you improve the product or service you provide, but you will create connections that will engender loyalty.
5. Consider converting
Even if you start a contract employment relationship, you can change your mind. Sometimes it can make good business sense to convert an entrepreneur into an employee.
Let’s say you hired a contractor at first to save on benefits, but now you’re making thousands of dollars in business together. Since most entrepreneurs earn higher salaries than their employed peers, it might be time to reevaluate their status. The benefits might pale in comparison to the premium wages you pay.
Also consider labor laws and team suitability. Are you a contractor’s only client? Do they work full-time for you on a long-term basis? Government officials and existing employees might not consider them a contractor. Check with a local HR consultant if in doubt.
If you like their work and want them to stay, full employment, even temporary, could benefit everyone involved.
6. Give and ask for feedback
Employees tend to stay in closer communication with their superiors than contractors with their touchpoints. Some contractors submit their deliverables and move on, even if they have opinions or concerns about them.
When in doubt, ask: Do they enjoy working with your employees? What suggestions do they have for improving the product and the process? Do they feel like your project timelines, compensation, and quality expectations are aligned?
Remember that feedback is a two-way street. Encourage employees to provide regular feedback to the contractors they work with. Make sure they answer questions quickly and respectfully. Ask them to flag contractors who submit work that exceeds or falls short of their quality expectations.
Never hire a contractor with your eyes closed and don’t assume that everything is fine just because it seemed to be so at first. International entrepreneurs deserve and demand as much attention as those in your home country. Work relationships change, and so does your approach to managing them.
Image: Depositphotos
