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 Belgium can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Belgium, 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 Belgium.
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.
Paying employees in Belgium is not the same as paying workers in your own country. Employees have to be paid using Belgium’s employment and payroll standards.
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.
The maximum full workweek in Belgium is 38 hours.
Depending on some Joint Labour Committees, the number of working hours can be lower, however, the minimum number of hours per day is 3.
Overtime is strictly regulated and in general, prohibited.
When employees work overtime, they are paid at the rate of 150% of the regular pay during weekdays and 200% for work on weekends or public holidays.
Rules on overtime and working hours do not apply to some jobs such as sales, managerial roles, and trust roles.
Employee (Income Tax)
Payroll frequency is monthly, for work between the first and last day of the month.
Pay date is typically the last day of the month, but can be as late as the 15th of each following month.
A 13th salary may apply depending on Joint Labour Committee.
In the first and last year of employment, the 13th-month bonus is paid pro-rata, assuming the employee doesn’t work a full calendar year.
Employee’s annual leave entitlement in a given year is determined by the number of days worked. Employees are entitled to 20 to 24 days of annual leave, depending on their working regime (i.e., For a 5-day week, the entitlement would be 20 days paid annual leave and for a 6-day week 24 days).
Employees are entitled to remuneration for ten official public holidays. If a public holiday falls on a Sunday or on a day the employee does not usually work, the employer must grant a replacement rest day.
There are 10 public holidays. An extra holiday may be applicable according to the Joint Labour Committee.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Maternity leave is 15 weeks long and is broken down into 2 stages:
For multiple births, the mother is entitled to an additional 2 weeks of maternity leave.
The Health Insurance Fund pays for the maternity leave as follows:
The father is entitled to 15 days of paid paternity leave. The 15 days can be taken separately or in a row as well as split up to up to 30 half-days.
The first 3 days of the leave are paid by the employer and the remaining leave is paid by the Health Insurance Fund at a rate of 82% of the regular pay.
Parental leave can start from any time from the end of the post-natal maternity leave and can be taken as follows:
Family care, to assist a seriously ill household or family member, depending on the various Joint Labour Committees:
Depending on the various Joint Labour Committees, leave might be given for the marriage of the employee or family member.
In Belgium, employees are entitled to paid leave due to a death of a family member.
The termination process varies according to how the employment agreement.
The strictest form of dismissal is dismissal with notice.
Employees who have been employed for at least 6 months have the right to know the reason for the termination.
The notice period in Belgium is:
Notice period varies based on the length of employment:
It is also possible to pay in lieu of notice.
The Severance Pay in Belgium:
Severance pay is only applicable when an employer terminated an employment agreement without notice. In this case, the severance pay would be for the same amount the employee would earn if they were given notice.
Probation period is 6 months.