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 Lithuania can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Lithuania , 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 Lithuania .
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 Lithuania is not the same as paying workers in your own country. Employees have to be paid using Lithuania’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.
Full Time employment is 40 hours weekly, and 8 hours daily.
Employees are paid 150% of their normal hourly salary for overtime. If overtime is from 10 PM to 6 AM they should receive 200% of their normal hourly salary.
Maximum overtime hours are as follows:
Salaries are paid on a monthly basis typically by the 10th of the following month.
Not required, however, some companies pay it as a yearly bonus.
PTO is calculated by the:
There are 11 public holidays. The day before the public holiday, working hours are reduced by one hour (paid, just one hour shorter is indicated in the timesheet). Public holidays are paid holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Eligible employees receive 18 weeks (126 days) of paid maternity leave based on an employee’s average monthly wage during 12 consecutive calendar months prior to the beginning of maternity leave.
An additional two weeks is given for complicated childbirths and multiple births. The maternity benefit is 77.58 percent of the recipient’s compensatory earnings.
This amount is calculated on the basis of the person’s insured income received during the 12 consecutive calendar months preceding the month in which entitlement to the maternity benefit arose. The minimum maternity benefit per month cannot be less than 228 Eur.
New fathers are entitled to 4 weeks of paternity leave. The pay calculation is the same as specified in the ‘Maternity Leave’ section.
100% paid up to one year of parental leave. If the parent chooses to receive the benefit until the child reaches two, 70% is paid until child reaches one and 40% thereafter. The pay calculation is the same as specified in the ‘Maternity Leave’ section.
For employers to properly terminate an employee, they must provide the correct notice. The length of notice is determined by the length of continuous employment.
The notice period in Lithuania is:
Standard notice is period one month.
For employees with less than 1 year of service, notice period is two weeks.
The previously mentioned notice periods are increased 3 times for:
* Employees raising a child (also adopted) under 14 years of age
* Employees raising a disabled child under age 18
* Disabled employees
* Employees who would be entitled to the retirement pension in 2 years
Notice periods are doubled for employees who will be entitled to the retirement pension in 5 years.
Severance payments are calculated per one month’s average wage when the employee has been in the company for 12 months or less and up to six months’ average when the employment is over 240 months.
Probation periods are not required but are common. They typically last 3 months.