“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:

Retirement, pensions, and social security plans

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:

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: 

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!

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.

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.

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.

Calculate the real-world costs of hiring international employees

Global payroll is a complex process that varies from country to country. If you are looking to pay workers in other countries, follow these steps:

Identify the person you wish to hire (or the existing employee who will be relocating).

Determine whether your new worker will be a contractor or an employee.

Select a global payroll provider, also known as an employer of record, or EOR.

Confirm the worker’s salary and benefits package.

Provide the worker’s information to your provider to set up payroll.

Work with your global payroll provider to create an employment agreement.

Sign the employment agreement with your employee.

Setting up global payroll may seem like a daunting task, but with the right partner, global payroll can be as easy as clicking a button.

See also: Remote’s Global Payroll Management Guide

What are the different types of employer of record service providers?

There are two main types of EOR service providers: owned-entity and partner-dependent. 

As the name suggests, partner-dependent EOR service providers do not provide their services directly to you. Instead, they resell the services of local third parties in countries where they operate — either in all countries or only in certain countries. This structure allows the EOR to charge more money, but it comes at the cost of less control. Partner-dependent EORs do not have final say over their own fees, which means your monthly bills can be unpredictable, or the experience provided to your employees, which means problems can take several days to solve. Avoid partner-dependent EORs at all costs.

Owned-entity EOR service providers do not rely on third parties. Instead, they fully own their local legal entities, which means they can exercise full control over their own billing and the experience of your employees. Whichever EOR you choose, make sure the EOR owns its own entity in the countries where your employees will be working. Remote only operates in countries where we fully own and operate our own local legal entities to save you money, provide a great experience for your employees, and guarantee maximum protections for your intellectual property.

See also: The difference between owned-entity and partner-dependent EORs

What's the difference between an EOR and a PEO?

A professional employer organization (PEO) is fundamentally different from an EOR, although some people use these terms interchangeably to refer to global payroll providers. From the outside, they can look very similar. After all, both handle HR tasks including, global payroll, benefits, withholding, and reporting.

However, these are a few key differences:

You must have a local legal entity in a country in order to use a PEO.

Working with a PEO means entering into a co-employment arrangement; working with an EOR does not.

With a PEO, the final responsibility of compliance with local labor laws falls to you.

A PEO may be cheaper than an EOR if you already have a local legal entity.

If you do not have a local legal entity, it is usually more affordable to work with an EOR.

See also: The differences between an EOR and a PEO

What is an Employer of Record (EOR)?

We created Remote to eliminate the frustrations and hidden costs associated with employing people in other countries. I am pleased to say that we have recently taken another step in our continued commitment toward transparency and fairness in our pricing.

Remote customers are no longer required to pay a deposit to use our global employment services. This new policy — in addition to our existing policies of zero hidden fees, zero commitments, and zero surprise bills — makes it easier than ever for companies to employ and pay their international teams.

As one of the original team members at GitLab, I saw firsthand how frustrating extra fees and deposits can be in scaling a global team. When you want to hire the best people in the world, you should not have to worry about extra costs. By removing deposits, we are eliminating another barrier between businesses and the people they wish to employ.

Our Fair Price Guarantee is straightforward. You pay one flat rate to employ someone, and we don’t add anything on top of that flat rate. You always know what your bill will be. We also never require long-term commitments or exclusivity agreements.

Here’s what the Fair Price Guarantee looks like in action:

Flat, transparent pricing. You pay us a monthly service fee to manage payroll, benefits, taxes, equity, and compliance for your international team members. And that’s all. You know exactly what your bill will be each month, and you know exactly what you’re paying for: the most reliable global employment solution in the business.

No hidden fees or deposits. Our flat-rate pricing means you can set salaries for your international employees without worrying about extra costs. For example, some providers charge you more for employees with higher salaries. Remote does not. Whether you employ a software engineer, a marketing designer, or your own CEO through Remote, we never charge extra fees — and no deposits, either! You can sign up and start onboarding employees and contractors in minutes.

No minimum commitments. You never know what the future holds, which is why Remote requires no minimum commitments. Pay one contractor for one month or 100 employees for 100 years: the choice is yours, and there is never a fee for canceling early. We offer monthly and annual pricing to help you choose the plan that’s right for your business.

No exclusivity agreements. We want you to love working with Remote, and we believe you will. That’s why we never require exclusivity agreements for our customers. While we hope you will work with us for as long as you have international employees, we will not force you into staying with fine print. We are committed to you and your team, and our pricing and contracts reflect that commitment.

The price you see on our pricing page is the price you pay for our services. You will never see an extra “employment fee” or “salary percentage fee” or “this country has complicated laws” fee. We take care of the hard stuff for one flat customer-friendly price, so you can focus on growing your team.

Remote’s unique model of global employment is what allows us to guarantee consistent flat-rate billing for our customers, a promise no other company can make. Our fully owned infrastructure ensures Remote will never pass on third-party costs or markups to our customers.

We own our own entities in every country where we offer employer of record services. If we don’t own our own entity, we don’t operate in that country yet. That means we never rely on third parties to employ workers on your behalf, because doing so could create a bad experience for your employees and unpredictably high costs for you.

Refusing to rely on third parties means we are not available in every country in the world yet, but we believe it’s better to take the time to get it right. You can always see where we’re available and where we’re going next in our Country Explorer.

Employ your global team with Remote today

We want to make it easy for companies of all sizes to employ and pay global teams. With our Fair Price Guarantee, Remote provides the reliability and peace of mind you need to grow with confidence.

Get started today to begin onboarding your first employee in minutes. Have questions? Contact us and we will help answer all your questions on how to employ workers in other countries. With our flat-rate pricing and commitment to excellence in everything we do, it’s never been easier — or more affordable — to grow your global team with Remote.

Introducing the new Remote Fair Price Guarantee. You pay one flat rate to employ someone, and we don’t add anything on top of that flat rate. You always know what your bill will be. We also never require long-term commitments or exclusivity agreements.

Remote's Fair Price Guarantee means no fees, deposits, or surprises

How to select the right employer of record for you

If you have decided that an employer of record is the best approach for your international hiring needs, the next step is deciding on the right EOR to meet those needs. 

The right employer of record will offer global HR solutions, salary simulations, onboarding, payroll approvals, benefits, local taxes, and more — all managed in one place. 

But this is just the beginning of what a good EOR can provide to their clients. Security, which encompasses data protection and compliance, is also essential, as is IP protection.

You should also understand the way your EOR handles your business behind the scenes. Your employees deserve a great experience with your company, no matter where they live and work. A good EOR will prioritize the experience of your employees to ensure they feel like full, valued members of your team.

Why working with an EOR with owned entities is crucial 

One of the most crucial things to understand when evaluating different employers of record is whether they own legal entities in the countries where they operate or whether they rely on a network of third-party partners. 

Imagine you have a request for your employer of record. A partner-dependent EOR will have to go down a chain of vendors to get the correct information and execute on it. This could take days to complete, and any miscommunications between the various parties will create complications. This also makes EOR services more expensive: since there are so many intermediaries involved, everyone wants a cut of the money.

Alternatively, an owned-entity EOR has established legal business entities in the countries where you want to hire. They can control the entire hiring process and manage your global employees, which means less friction, lower cost, and a superior experience for you and your team. 

Learn more about owned-entity versus partner-dependent employers of record in our helpful on-page guide.

Questions to ask an EOR before signing the contract

Before signing on with your employer of record, there are a few questions you should be sure to ask:

Do you own an entity in this country, or are you dependent on third parties? Be cautious: some EORs own entities in some places and not in others, creating a chaotic experience for your employees (and unreliable pricing for you).

Do you handle IP transfers and protection? Ask hard questions about how the EOR handles IP transfers. The best ones know exactly how the laws of the country will affect your IP and what you need to do to retain your rights.

Are you sharing our data with any third parties? Again, EORs dependent on third parties have long lists of partners. Many of those partners have partners of their own, creating a web of companies with access to your sensitive data.

Is all documentation and information centralized in one software hub? Your EOR handles the hard legal work on the back end, but your user experience is also critical. Try out the software to see whether you can manage everything you need in one place.

Getting answers to these questions will help you make the right decision on which partner to trust for your international hiring needs.

The best employer of record for your global team

You now know when to use an employer of record and how to find the best EOR for your business needs. So what comes next?

Remote can help you hire, pay, and onboard your global hires in just a few clicks while keeping your company compliant every step of the way. We don’t just manage the paperwork, though. Remote fully owns legal entities in every country where we operate, so you know you and your team will always receive the best experience. As you grow your global team, Remote will be there to help every step of the way.

Get started today and begin onboarding your first employee in minutes!

The workforce has evolved before our eyes. Over the past year, we saw more workers going remote and more collaboration happening online, changing not just work but hiring forever. 

It’s no wonder that the world’s top companies now recognize global hiring as a business advantage and opportunity, allowing them to gain insights into new markets and greater diversity in ideas. Additionally, international hiring helps solve challenges around finding the right talent and retaining talent among the growing number of workers who wish to relocate. But it’s not without risks and complexity, which have long created barriers to entry for recruitment teams who want to hire across borders.

So, what is a hiring manager to do? In many hiring scenarios, the most straightforward approach is working with an employer of record, or EOR.

Most recruiters have experienced the pain of finding the perfect candidate for a role, only to turn them down because of the country where they reside. Employers of record provide the solution to this problem. 

An employer of record is simply an entity through which you can legally (and efficiently!) employ your dream hires, regardless of where they live. The EOR acts as the worker’s employer on paper, but effectively, your hire will work for your business just like anyone else on your team. 

Your EOR will typically manage hiring, compliance, payroll, benefits, and more for your foreign employees, thereby eliminating much of the cost and complication from the process of global hiring. 

To learn more about what an employer of record does, see our previous article.

The reality is that most companies don’t have the resources or expertise needed to make global hiring work, and mistakes can come with considerable risks. 

Sean Page, a talent branding and hiring expert who has worked for some of the world’s top startups, agrees. “[Global hiring] is a resource-intensive process…It can take a minimum of six months to plan thoughtfully, get a vendor who has the knowledge to set up an entity in that particular country, and then get the IT, finance, people, talent, and legal teams all in alignment…In my previous roles, we normally wouldn’t even set up an entity until we knew that there were going to be multiple role openings in that particular country or region.”

For companies with the resources, opening an entity may not be the best use of their time or money. Partnering with an EOR that already has established entities in the countries where they want to hire is often faster and more cost effective. For example, Remote is an employer of record with business entities in dozens of countries, with all services set at a low flat rate with no hidden fees and no deposits. Remote's approach to transparent pricing is outlined in more detail in our Fair Price Guarantee.

Reducing cost and complications of global hiring are advantages of EORs, but far from the only ones. Hiring managers also need to be mindful of the risks of misclassifying workers or running astray of labor laws in the foreign countries. 

See also: The consequences of misclassifying employees as contractors

Christy Zajack, a talent acquisition expert who has hired employees for companies like American Airlines, Hilton, and Pfizer, explains that, “Labor laws are often very confusing, different in actual practice [than in writing], or ill-defined until there are court decisions.” Laws around work hours, overtime, terminations, domicile, workplace, payroll, and taxes are just a few of the things Christy says employers must consider before hiring in another country.

Fortunately, by working with an EOR, businesses can tap into the expertise of employment lawyers and business experts whose entire focus is getting global hiring right. This means that internal talent specialists can focus on doing what they do best, like attracting and retaining the right talent on their teams. Not struggling to keep up with changing laws in multiple countries. 

What makes an employer of record different?

Many recruitment teams have experience working with staffing agencies, payroll companies, and professional employer organizations (PEOs). But these providers are not the same as employers of record. It is vital to understand the differences when deciding on a solution for global hiring.

What is the difference between an EOR and a staffing agency? 

Staffing agencies focus on matching businesses with talent, usually to help with their temporary or medium-term hiring needs. They offer up their talent network, review resumes, initiate contact between candidates and hiring managers, and collect feedback from both sides. However, unlike an EOR, they cannot actually hire an employee on behalf of a client’s business.

On the other hand, an employer of record manages everything involved with hiring a candidate, up to and including managing the employment contract. Employer of record services include payroll, taxes, benefits, compliance, and much more, making EORs a very different offering than a traditional staffing agency.

What is the difference between an EOR and a payroll company?

Payroll companies offer software services to automate the processing of their client’s payroll obligations and accounting for year-end taxes. Some also provide limited HR services but are not equipped to hire employees on behalf of their clients in countries worldwide. 

The extent of an EOR’s services goes far beyond what a payroll company can offer for businesses that want to hire internationally. While a payroll company provides mostly financial services, an employer of record handles everything related to compliance, payroll, and benefits management in the countries where your employees work.

What is the difference between an EOR and a PEO?

A PEO, or professional employer organization, is essentially an outsourced HR department that handles things like payroll and benefits on behalf of their clients’ businesses. On the surface, this might seem quite similar to the services provided by an EOR, but there are significant differences.

A PEO requires your company to own a local legal entity in the country where you want to hire. In addition, a PEO requires your business to enter into a co-employment arrangement, in which both you and your PEO employ the worker at the same time.

You can read more about the differences between a PEO and an EOR in our previous article!

Use an EOR to stay safe when hiring internationally

If your company wants to hire workers in another country, you probably need an employer of record. But how do you choose the right one? And what does an employer of record actually do? This guide provides all the answers you need.

Employer of Record

Calculate the real-world costs of hiring international employees

What is an Employer of Record (EOR)?

Remote's Fair Price Guarantee means no fees, deposits, or surprises

When should you use an employer of record, and which one should you choose?

How to hire remote employees

Written by • Preston Wickersham

Owned-entity vs. partner-dependent global employment: What companies should know

What does an employer of record do?

Does your business need an EOR or a PEO?

[May 2020] We’re making our pricing (and global employment) even more accessible