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Global Hiring: Is Your Contractor Really an Employee? By MIRANDA ZOLOT
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lobal hiring is fast becoming a strategic imperative for companies competing in the post-pandemic marketplace. Smart organizations want to look for talent everywhere and build global teams. This might mean hiring full-time employees as well as contractors. Hiring contractors allows companies to be flexible and nimble with their talent strategy. However, misclassifying workers as contractors when they’re really doing the work of
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full-time employees can lead to both monetary liabilities and penalties, as well as an increased permanent establishment risk. Therefore, it is crucial to evaluate each contractor role in each country to ensure you aren’t unknowingly putting your company at risk.
IS YOUR CONTRACTOR REALLY AN EMPLOYEE? Employers need to know what defines an employer-employee relationship versus an employer-contractor
NOVEMBER 2023
relationship. There are a myriad of laws and regulations that address that issue. While the specifics may vary between roles and regions, here are a few basic guidelines to help you determine how to classify your people: Business Intent: What is the business intent for hiring this person? If they were hired to accomplish a specific task or project, they might be a contractor. But if their role is to provide ongoing operational support, then they’re likely an employee. Duration: What is the duration of the task this person is being hired to do? Perhaps they are filling in until you find a full-time employee, or they are supplementing staff during a seasonal rush. Specified durations typically indicate a contractor, whereas workers who are brought on indefinitely are more likely employees. Control: How much control or supervision do you have over this worker? If you tell them where and when they must work, that is an indication of an employee rather than a contractor. Also, if they are limited to providing services exclusively to your company, it makes them more likely to be considered an employee. Integration: How deeply integrated is this person in your organization? Do they have a corporate email address and BACK TO CONTENTS
