Calculate the real-world costs of hiring international employees

Hiring international talent, from wherever the best employees can be found, makes perfect sense. Doing so affords you the flexibility to choose among an unlimited and diverse talent pool, a move proven to boost your productivity and your competitive edge. Having team members on the ground in a country where you’re developing your business is also crucial when you’re expanding to new markets.

But do you know how much to budget when hiring international employees? Remote's Employee Cost Calculator can help! Read on to learn more about how this new tool works, what kind of information you need to know, and how to get even more insights into your budget for international hiring.

Additional costs when hiring in new countries

The cost of hiring an international team member extends beyond the dollar amount of their paycheck. The addition of mandated employment taxes can increase total employee costs to anywhere from 1.25 to 1.4 times salary, depending on where they’re logging in from. For example:

• You want to hire a great software engineer based in Argentina at a salary of USD $60,000 a year. But you will incur an additional $15,731.76 in Argentina’s mandated employer costs, which include your employee’s pension and your payments into the country’s social welfare fund and public healthcare systems.

• You’re thrilled that you’ve onboarded an up-and-coming 3D artist in Singapore. While his annual salary equals USD $40,000, you as the employer will also be paying $6,897.24 in other required costs.

• You’re now working with an experienced product manager in Belgium who receives a United States-equivalent annual salary of $102,000. You’ll have to factor in strong benefits requirements from Belgium and the European Union, increasing that figure by $26,384.64 a year.

These are just a few examples from within a few countries. Keeping track of all your international hiring and onboarding costs can quickly become unmanageable without help. Fortunately, Remote offers a quick and painless way to sort all this out.

Remote’s Employee Cost Calculator makes it quick and easy

Remote’s free Employee Cost Calculator will help you quickly understand the total cost of employment (TCE) so you can build a strong, fully compliant global compensation policy while containing costs. The calculator shows you mandated baseline salary and benefits requirements in the countries where you’re thinking of hiring before you start putting time and resources into new areas. With this tool, you can make better decisions about how much and how quickly you can afford to build out your international workforce.

Our Employee Cost Calculator allows you to select a country, job role, and exact salary in U.S. dollars, Euros, or any of several other international currencies. Press “Calculate” and our expert tool provides a helpful breakdown — including vital cost comparisons across different countries to help your HR team know where to focus their recruitment efforts.

Try the Employee Cost Calculator now!

Avoid costly international hiring mistakes

Making these calculations at the start of your international expansion plan will put you ahead of your competition. Many companies go astray when hiring internationally for the first time because they haven’t factored in the true local costs of government-mandated employee benefits. For example, they may budget $60,000 for a role but fail to realize they've chosen a candidate in a country with mandated employer-paid social security.

For example, it’s common throughout Latin America and in some parts of Southeast Asia, Africa, and Europe, for employers to offer “13th month” and even “14th month” bonus salaries. These salaries equal a full month’s pay and are typically distributed during winter and summer holidays. In a few countries, like the Philippines, these additional salary payments are mandatory, although employees in many other countries expect them as customary benefits.

If your team were to enter one of these markets unfamiliar with these expectations, you could easily find yourself scrambling to manage a hiring budget that’s been thrown off for the entire year.

Managing total rewards strategically

The costs of hiring an international employee encompass these and a number of factors, many of which are common across borders. But in today’s distributed workforce with highly skilled employees across so many areas, your path to structuring a cost-effective approach to all your employee benefits programs begins with the concept of total rewards.

“Total rewards” references the total value of compensation, benefits, and rewards that a company provides its employees. This includes optimal salaries and bonuses, of course, but also the robust and locally relevant sets of benefits that candidates are looking for.

Remote VP of People Nadia Vatalidis has developed a total rewards strategy for hundreds of employees across dozens of countries. In her experience, getting total rewards right is critical to ensure employees feel welcomed and valued.

“Total rewards is about the value, both intrinsic and extrinsic, that sets the tone for an employee’s entire experience with an organization.”

The best total rewards systems demonstrate a company’s commitment to putting people first. They work by respecting individual preferences in an international business climate that is increasingly geared toward building an equitable work environment — one that engages and empowers employees. When you offer a strong and diverse total rewards portfolio, you position yourself as a leader in attracting, developing, and retaining top-performing employees who will go on to add value to your organization.

But in order to put in place a comprehensive total rewards program across multiple target countries, you need information. The first step is to get a 360-view of how much it costs to hire in each country, then gauge that against your budget. That’s what this calculator helps you accomplish.

As you can see from the example of 13th month salaries, the real total cost of hiring international employees can sometimes present surprises, especially to companies entering new markets for the first time. For Vatalidis, planning a global compensation strategy is all about balance.

“When you understand how hiring costs play out in the particular country or countries where you might want to do business,” she says, “you’ll be better able to select the countries that will connect you with the workforce you need, while crafting rewards packages that are both genuinely responsive to their needs and realistic in terms of your budget.”

See also: How to create your own global compensation plan

Mandatory employee benefits around the world

Although every country’s system is different, typical mandated expenses charged to employers include taxes and premiums that support most or all of the following government programs:

• Healthcare programs

• Retirement, pensions, and social security plans

• Unemployment compensation

• Life insurance

• Workplace injury, accident, and disability protection administered through worker’s compensation plans

Don’t forget about paid time off for holidays, illness, and parental leave. In many non-U.S. markets, governments stipulate that all employees receive substantial allowances of paid time off for a variety of reasons. When an employee isn’t at work, their employer must budget for these benefits and associated administrative costs.

Even where core benefits are not mandated by law, today’s skilled international employees often expect them to be offered as part of an employer’s ethical commitment to equity across markets.

In some locations, like many Western European markets, strong public health and social welfare systems make employer-sponsored health and safety net benefits superfluous. But even here, for many employees, employer-provided private health or other insurance plans become highly attractive supplemental benefits because they offer greater a range of choice in providers and types of care in comparison with even the best-run public healthcare systems.

In other countries, the lack of publicly mandated healthcare or health insurance makes basic health insurance an essential employer-sponsored benefit, either as required by statute or as part of the cost of doing business equitably in a particular market.

See also: What is the modern benefits stack?

Which supplemental benefits employees expect

In many markets, employers also — whether mandated by law or voluntarily as a normal part of staying competitive — pay for the following benefits:

• Professional liability insurance plans

• Ongoing employee training

• Home office supplies

• Equipment required for use on the job

There are additional supplemental benefits every employer needs to consider offering as part of a competitive total rewards package. These packages look different from country to country and from industry to industry. Even possibly from employee to employee! It’s common now to see perks like these included in employment packages:

• Supplemental retirement savings plans

• Mental health support

• Wellness and fitness perks

• Personal development programs

It’s always a challenge to grasp all the nuances of government-mandated and supplemental benefits. However, adding in high-value fringe benefits can often create the most attractive and competitive total rewards package. When you’re hiring and calculating employee costs internationally, the issue becomes exponentially more complex, especially when your in-house team doesn’t have the requisite in-country experience.

See how Remote’s Employee Cost Calculator can work for you

Remote launched our free Employee Cost Calculator to give you everything you need to start budgeting for your new team in dozens of countries that are among the most popular for hiring remote workers.

Based on the in-depth, up-to-the-split-second expertise of our own in-country teams, the Employee Cost Calculator shows you the total cost of all the contributions you’ll be required to make for any particular type of new hire. Added to the employee’s salary, you’ll see a breakdown of the basic annual or monthly total cost of the hire. You can even download a handy PDF with all this information to use in your headcount budget meetings.

Remember that 3D artist from Singapore, for whom you’ll be paying close to $7,000 annually in mandatory benefits costs? The Employee Cost Calculator’s comparison tool will show you that hiring someone for the same job classification and salary level in South Korea will cost less than $4,000 in mandatory benefits. This kind of information can be mission-critical for emerging companies (or any organization on a tight budget). Even if you decide to go with the more expensive hire, knowing your budget ahead of time is always a smart play.

While information on supplemental benefits costs (those that are not mandated by the government but may be expected by employees in their local market) isn’t available in this public version of the calculator, you can use the calculations to see the mandatory contributions and better understand what kinds of supplemental benefits you can afford and would like to include.

Remote delivers across borders and across the board

If you decide to hire someone in a country where you do not own an entity, you’ll need some help from an employer of record, or EOR. When you work with Remote as your employer of record (EOR) in a particular country, you’ll gain immediate access to our locally based experts and their collective knowledge of local business ecosystems, laws, cultures, and employee expectations. Our fully Remote-owned entities in each country not only handle all compliance-related issues for you, but can also help you hire, pay, and manage benefits and payroll taxes for your employees in that country with ease.

As a Remote customer, you’ll also have access to the complete suite of information provided by the expanded version of our Employee Cost Calculator. This customer-only tool will allow you to see breakdowns specifying each of your mandatory contributions, in addition to details of estimated supplemental benefit costs for a particular country.

Your free sign-up with Remote gets you access to the expanded Employee Cost Calculator with no commitment on your part. If you continue to work with us, you’ll enjoy transparent and highly competitive fees for benefits and payroll management based on our large-scale buying power and in-country expertise. And with Remote, there are never any hidden mark-ups — you get our Fair Price Guarantee everywhere you go.

You and your team deserve the freedom, confidence, and peace of mind that come with partnering with an experienced employer of record who understands both the numbers on your balance sheet and the exceptional value you want to deliver as an employer.

Explore Remote’s Employee Cost Calculator and the many other informative resources on our website, including this detailed guide to hiring international employees, free to access at any time. With Remote, you can start adding the world’s best talent to your team, no matter where you operate — and no matter where they live!