What You Need to Know About Working With International Contractors
Top talents live everywhere. Hiring these international contractors has its advantages: access to specialist knowledge, a variety of ideas, savings in services and claims and much more.
However, working with contractors from other countries can be difficult if you don’t do your homework. Rule # 1 does not assume that the rules for contractors in the United States apply everywhere else. In fact, they seldom apply anywhere else in the world.
There is a lot to learn how to work with international contractors. Start with these six lessons:
1. Pay the piper
One of the challenges of hiring international contractors is how to pay them. Transfers are expensive. Peer-to-peer payment services like PayPal and Venmo are not available in many countries.
So how can you make sure your contributors get paid? With a global payroll partner.
These companies aren’t just for paying employees. You know local labor laws so you don’t have to spend your own time and energy figuring them out. Some also offer tools you can use to manage contractor invoices and tax transfers.
If you get these things wrong, you may be more angry than your contractors. Local authorities are unlikely to look the other way due to logistical issues.
2. Check the references
Verifying the identity and credentials of a foreign contractor can be difficult. However, you need to consider them carefully before hiring one. Assets like your intellectual property are at stake, not to mention your company’s brand and customer relationships.
If you cannot interview the contractor in person, do a video interview. The camera makes it difficult to read body language, but it’s better than just audio or no interview at all. Write down the interview for future reference.
Ask each applicant for their references’ contact information, including previous employers and clients. Then actually reach out to them to find out if they really are the contractors you need. You should also review university degrees and certifications.
3. Draft contracts carefully
A well-drafted contract that complies with local labor laws is vital. Note that in some countries, the relationship with the contractor outweighs the contract itself.
A smart contractor could take action against you for employee benefits. French labor law, for example, is heavily geared towards providing workers with worker protection. The rise of the gig economy has increased the benefits and rights of contractors in France.
In the UK, the employer-contractor relationship is at least as important as the contract. In Spain and Peru, the law states that a contractor who only works for one customer is an employee.
A finding by a foreign authority that your contractor is a de facto employee will force you to pay. You can owe things like back taxes and unemployment insurance. You could also owe some paid time off – and pay interest and penalties for all of the above.
Your written agreement with an independent contractor should include some key clauses. This includes secrecy / confidentiality, indemnity, IP transfer, notification and dispute resolution. Just don’t rely on them alone.
Make sure your contractors have other customers. Do not provide them with office space or supplies. Make sure they can do their job in their own time regardless of project deadlines.
Oh, and don’t forget the home requirements. Foreign independent contractors hired by US companies and working overseas must complete the IRS Form W-8BEN.
4. Promote connectivity
If you rely on independent contractors in your global business strategy, they need to be part of your culture, not independent of it. There is always the possibility that these contractors will work for the competition and take your customers away.
Even if contractors aren’t employees, it’s important to build connections beyond the transaction. For example, you can invite them to employee events or offer them training opportunities. This should help make them feel more like part of the team, not just a follow-up service provider.
Having your contractors doing work for or alongside your employees will make meetings between them easier. Not only do you improve the product or service you offer, but you also build bonds that create loyalty.
5. Observe the conversion
Even if you start a working relationship as a contract, you can change your mind. Sometimes it makes good business sense to convert a contractor into an employee.
Say you started out hiring a contractor to save employee benefits, but now you’re making thousands of dollars in business together. Given that most contractors earn wages in excess of their salaried colleagues, it may be time to reassess their status. The benefits can pale in comparison to the premium wages you paid.
Also take into account labor laws and the ability to work in a team. Are you a contractor’s only customer? Do they work for you full-time long-term? Officials and existing employees may not see them as contractors. If in doubt, contact a local recruiter.
If you like their work and want them to stay with you, full employment can benefit everyone involved, even temporarily.
6. Give and ask for feedback
Employees usually stay in closer communication with their managers than contractors with their contact persons. Some contractors submit their services and continue even if they have opinions or concerns about them.
When in doubt, ask: Do you enjoy working with your employees? What suggestions do you have for improving the product and process? Do you feel that your project schedules, compensation, and quality expectations are aligned?
Remember, feedback is a two-way street. Encourage employees to provide regular feedback to the contractors they work with. Make sure they answer questions promptly and respectfully. Ask them to point out contractors submitting work that is above or below their quality expectations.
Never hire a contractor with a blind eye and don’t assume everything is peach colored just because it seemed like it at first glance. International contractors deserve and require as much attention as those in your home country. Labor relationships change, and your approach to managing them needs to change.