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 Bosnia & Herzegovina can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Bosnia & Herzegovina, 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 Bosnia & Herzegovina.
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 Bosnia & Herzegovina is not the same as paying workers in your own country. Employees have to be paid using Bosnia & Herzegovina’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 Bosnia & Herzegovina is 40 hours.
Employees are entitled to a break of at least 30 minutes when working more than 6 hours daily, and at least a continuous period of 24 hours weekly
In Bosnia & Herzegovina, employees overtime is limited to 10 hours per week in most cases and must be justified by an emergency or a sudden operational need for the increased hours.
A workweek can in some cases be extended, with the hours reduced in other weeks to ensure the average workweek for the relevant period of time is limited to 52 hours, or 60 hours for seasonal workers.
Employees in Bosnia & Herzegovina expect to be paid monthly on the 25th of each month.
In Bosnia & Herzegovina, employees who are going to work for the first time or who have not worked for more than 15 months, become entitled to leave after working for six months.
Employees receive a minimum of 20 days of paid leave annually, and a maximum of 30 days. Employees under 18 and employees who work in hazardous occupations are entitled to additional leave.
There are 18 public holidays.
Employees receive 100% of their salary compensation if the absence is due to work injury, pregnancy, or organ transplant. The first 42 days of compensation are paid by the employer. After the first 42 days, sick pay is refunded by the state.
In FBiH sick pay is a minimum of 80% of the employee’s salary compensation and no less than the minimum monthly salary. RS sick pay is a minimum of 70% of the employee’s salary compensation. The first 30 days are paid by the employer and after that it is paid by the state.
Leave is mandatory 28 days before birth and must be taken for a minimum period of 42 days after birth. Maternity leave is paid at full salary for the duration of the employee’s leave.
When a specialist decides that the child needs more than normal treatment, a breastfeeding mother is entitled to two absences per day to nurse her child until the child is one year old, and parents of children aged one to three years old are entitled to serve part-time, at half pay.
Disabled children's parents have special protections. Normally, an employee who is pregnant and on maternity leave cannot be fired.
The Father can participate or use the mother's unused maternity leave if the parents consent. One adult has the freedom to exercise any of these rights in situations of adoption or foster parenting.
Apart from maternity and paternity leave, there is no other parental leave.
In Bosnia &Herzegovina law Article 46, an employee shall be entitled to paid absence from work of up to seven working days in one calendar year - paid leave
Employees is entitled to paid absence from work up to seven working days in the event of serious disease or death of a family.
Employees may be terminated with notice if the termination is justified for business reasons or if the employee is unable to fulfill his or her assigned responsibilities and the employer is unable to transfer or retrain the employee for a new position with reasonable effort.
The notice of the termination must be given in writing and provide a justification for the dismissal.
In the FBH, the employer must provide the written notice a minimum of 14 days in advance, unless the employee is on probation, where only seven days of notice is required. An employee must give seven days of notice when quitting.
The Severance Pay in Bosnia & Herzegovina depends on the Duration of Employment:
Probation period not last longer than 6 months for the Federation of Bosnia and Herzegovina, and 3 months for the Republic of Srpska.