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 Czech Republic can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Czech Republic, 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 Czech Republic.
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 Czech Republic is not the same as paying workers in your own country. Employees have to be paid using Czech Republic’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.
A full-time workweek is 40 hours or 8 hours per day. The length of a shift cannot exceed 12 hours.
Overtime work can only be performed as an exception and cannot exceed 150 hours within a calendar year.
If there is an agreement between the employee and employer in regards to work beyond regular hours, overtime cannot exceed 8 hours a week for more than 26 consecutive weeks. If there is a collective agreement, overtime may be increased.
For managerial positions- the maximum amount of overtime that can be negotiated is 150 hours per year.
Overtime pay is as follows:
The payroll cycle is monthly and a regular date for payment must be set by the employer. Salaries must be paid no later than the following calendar month in which the work was performed.
There are no provisions in the law regarding 13th salaries.
Employees are entitled to 4 weeks of paid leave.
There are 13 public holidays.
During the first 14 days of illness, the employee is entitled to receive 60% of their regular wages, so long as the employee has fulfilled the conditions to be eligible for this entitlement.
In the Czech Republic, a woman is entitled to 28 weeks of maternity leave or 37 weeks for multiple births. The leave can start at least 8 weeks before the expected due date, but no later than 6 weeks. Maternity leave is compensated at 70% of the regular salary, however, this amount depends on how much the employee has contributed to social security. In addition, at least 14 weeks of maternity leave must be taken.
New fathers are able to take leave in lieu of the mother after the first 7 weeks from birth.
The mother is entitled to parental leave starting at the end of the maternity leave and the father is entitled to the leave starting from the child’s birth until the child reaches the age of 3. This leave can only be taken when the child is being cared for from home.
Parents are entitled to a maximum allowance of 220,000 CZK until the child reaches the age of 4 or 330,000 CZK for multiple births.
An employee can be terminated:
The notice period for the employee or employer must be at least 2 months. It is possible to extend this period if both parties agree on a longer notice period and must be agreed upon in writing. The notice period commences the first day of the month following the delivery of the notice.
Depending on how long the employee has been employed, the amount of severance pay to be paid out will vary:
The probation period is a maximum of 3 consecutive months for regular employees and up to 6 consecutive months for chief officers. The probationary period must be agreed upon in writing and cannot be longer than half of the agreed period of the employment relationship.