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 Bolivia can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Bolivia, 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 Bolivia.
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 Bolivia is not the same as paying workers in your own country. Employees have to be paid using Bolivia’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 standard working hours in Bolivia is 8 hours per day, up to maximum of 6 days per week.
In Bolivia, if the employees will work more than the working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements. In general, overtime maximum limits are set at 2 hours per day and paid 200.00% of the standard salary.
São Tomé & Príncipe employees receive their salary in monthly basis on the last day working day of the month.
A 13th salary is required at the end of the year and is equivalent to one month’s pay (Aguinaldo). The Christmas bonus is not subject to tax and social security contributions.
14th-month is also a mandatory bonus if GDP is over 4.50% or makes annual profits. All employees must receive one additional monthly salary, subject to a cap of 25.00% of the company’s profits (Profit bonus (Prima).
In Bolivia is outlined in the employment contract as a minimum of 15 days paid leave a year (following completion of 1-year service) in addition to public holidays.
This increases to 20 days paid leave once the employee has been employed for five years and increases after ten years of service to 30 days paid leave per year.
There are 10 public holidays.
Employees are entitled to up to 26 weeks of paid sick leave per year and must provide a medical certificate within 48 hours of the first day of sickness.
The employer pays the sick pay at 100.00% of the regular salary rate (to be reimbursed at a rate of 75.00% from the social security) from the 5th day of sickness.
Female employees are eligible for maternity benefits, consisting of 90 days paid maternity leave, 45 days before the due date, and 45 days after.
The employer will pay the maternity benefit at 100.00% of the national minimum wage; the employer will receive a reimbursement of 90.00% from social security.
The father is entitled to mandatory paid paternity leave of 3 days.
There are no provisions in the law regarding parental leave.
Public employees are entitled of 3 days of paid bereavement leave must be granted to an employee in the event of the death of a parent, child, sibling, or spouse.
The termination process is standard in Bolivia based on the prescribed list of termination reasons contained within article 16 of the General Labour Law unless an employer can provide sufficient cause for dismissal without notice.
Notice of termination must be in writing and sent to the relevant governmental authorities.
In Bolivia labor law, there is no mandatory notice period.
Severance pay in Bolivia is mandatory if applicable. Still, the amount differs based on the type of termination, i.e., termination by an employee, termination by mutual agreement, termination without cause, and termination with a cause in an indefinite term agreement and fixed-term agreement.
It is common for a severance payment to be calculated as one month’s regular salary payment for each completed year of service.
Probation period is 1 and 3 months.