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.
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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 Dominican Republic can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Dominican 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 Dominican 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 Dominican Republic is not the same as paying workers in your own country. Employees have to be paid using Dominican 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 workweek is 44 hours based on 8 hours per day for 5.5 days.
Hours worked beyond 8 per day are overtime and paid at +35%, even if the weekly total is still 44.
If the workweek exceeds 68 hours, the extra pay rate is +100%. Night hours are paid at +15%.
Employer
Salaries are paid at a minimum monthly.
Christmas bonus equal to one month’s payment is due no later than Dec. 20.
PTO is calculated by the:
There are 13 public holidays.
No paid sick leave.
New mothers are entitled to paid leave of 14 weeks.
New fathers are entitled to paternity leave of 2 days.
No legal requirement.
None.
Employees receive paid 5 days leave.
Employees will receive a paid 3 days leave.
In the event of a termination of a local employee, the employee’s salary must be paid:
“For cause” termination requires evidence of wrongdoing and 48 hours’ notice. If an employer fails to provide evidence or the required notice, he will have to pay severance.
“At will” termination requires longer notice and severance payment.
The notice period in Dominican Republic is:
For at-will termination, notice depends on the employee’s seniority.
After three months, the employee receives 7 days’ notice; after six months, 14 days; after a year, 28 days’ notice.
Severance pay is also determined by seniority.
3 – 6 months get 6 days’ salary
6 – 12 months get 13 days’ salary
1 – 5 years get 21 days per year
Over 5 years get 23 days per year
Probation period is not longer than 3 months.
