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 Mongolia can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Mongolia, 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 Mongolia.
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 Mongolia is not the same as paying workers in your own country. Employees have to be paid using Mongolia'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 working week in Mongolia is Monday to Friday.
The working day for commercial offices is usually eight hours. Lunch breaks are usually one hour.
Employee who has worked overtime or on the weekly rest days has not been compensated with other rest days, he shall be paid one and half times or more of his average remuneration.
It is prohibited to require a minor employee to perform overtime work or to work on public holidays or weekends.
If an employer has forced women or minors to perform a labour prohibited by law, or to lift or carry the load exceeding the prescribed limits, or has forced an employee under 18 years age to work in a working place harmful to his mental development and health or under abnormal or special conditions, or to perform overtime work or to work on public holidays or weekends, or has violated Section 74 of this law -i.e. an employee was compelled to work overtime - the state labour inspector shall fine that employer 15,000-30,000 to grogs;
The payroll cycle in Mongolia is monthly, and salaries must be paid by the 5th of the following month.
Employees are typically page between the 25th and last day of the month.
There are no provisions in the law regarding 13th salaries.
Employees are generally entitled to 15 days of annual paid leave. Additional leave is granted, considering the length of their record of service, and their working conditions as follows:
There are 15 public holidays.
Employees are generally eligible for sick leave for as long as needed.
Female employees are generally entitled to 120 days of maternity leave at 70% of pay.
Male employees do not receive paternity leave; however, single fathers are entitled to equal leave as a mother who gives birth to a child until the child reaches 60 days old.
Childcare leave is granted to mothers and single fathers with children under three years old. During this leave, the employer is responsible for making social insurance payments on the employee’s behalf.
Baby Care leave - Female employees are entitled to have this leave with children under the age of three.
Adoption Leave -mother is entitled to equal leave as a mother who gives birth to a child until the child reaches 60 days old.
Military Leave - Employers are required to pay severance pay to employees who have terminated their employment due to military service.
Not specified by law.
Not specified by law.
An employee shall have the right to leave his or her workplace upon the expiration of 30 days after submitting his or her request of resignation to the employer, in which case the employment agreement shall be considered as terminated.
An employment agreement may be terminated prior to the above mentioned time limit due to a valid reason or by an agreement with respect to the time of resignation with the employer.
Employees may terminate the employment contract with 30 days’ notice.
Employees are generally entitled to between 30 days and two month’s notice, dependent on the reason for dismissal. In general employees are entitled to at least one month’s wages on dismissal.
Severance pay is one month's wages if the termination is due to the employee's military duty, liquidation of the business, or an employee reaches retirement age
Probation period is 6 months.