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 Rwanda can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Rwanda, 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 Rwanda.
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 Rwanda is not the same as paying workers in your own country. Employees have to be paid using Rwanda'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 workweek in Rwanda 45 hours per week with a standard workday of 7.5 hours over six days.
Overtime compensation is determined in the employment contract.
The typical payroll cycle in Rwanda are typically paid on a monthly basis.
In Rwanda, employers are not required to provide bonuses to their employees.
Employees under the age of 18 receive 24 days of paid annual leave. Employees are entitled to 18 days of paid annual leave after a year of service.
Additionally, paid leave allotments increase for adult employees with the length of service.
There are 14 public holidays.
Sick leave entitlement is up to six months (subject to evidence). The first three months are paid and the last three months are unpaid.
Long-term sickness is determined by a committee of three recognized medical practitioners and is granted for no more than three months with pay and three months without pay.
Female employees are entitled to 12 weeks of paid maternity leave. This leave may be taken up to two weeks before the due date.
Certificate of delivery needs to be furnished before starting the maternity leave.
Male employees are entitled to four days of paternity leave.
A contract for employment can be terminated either by either mutual consent of the employer or the employee, expiry of the term of the contract or unilateral termination of employment.
The minimum notice period is 15 days for service up to a year and 30 days for service beyond a year where the employee is entitled to an additional day off per week to look for alternate employment.
Employments in Rwanda may be terminated upon written notice, as follows:
Severance pay in Rwanda as follows:
The probation period is six months, while there is no limit on the length or the number of renewals of a fixed-term contract.