Do your employees want to relocate to another country? Are you looking to hire someone who is moving across borders? Whatever challenges you face, this guide will help you understand more about relocation for international employees.

Relocation for international employees video guide

Prefer watching to reading? Check out Remote’s webinar on international relocation, hosted by Nadia Vatalidis (head of people), Filipa Matos (vice president of operations) and Roderick van Vliet (head of legal).

In this hour-long special session, these three international employment experts cover a host of questions on important topics and answer real questions from businesses and HR professionals.

[Webinar Recording] Relocation for International Employees

If you’re wondering whether you really need to know about international relocation, the answer is a resounding yes. According to our Global Workforce Revolution Report from last year, 81% of tech workers surveyed would move to a new region, state, or country if they could do so without jeopardizing their career prospects. To keep your best people, you need to be able to offer them the location flexibility they desire.

Now that most knowledge jobs can be done remotely, employees see remote work as a way to guard against recessions and financial difficulties. Sixty-three percent of respondents in our study said the ability to work remotely can protect workers from region-based financial challenges.

We found two-thirds of companies planned to increase remote work options, but that number is growing all the time. Employees have more options than ever as more companies go all-remote. Around a third of people would quit outright if they could not continue to work remotely. The lesson is: businesses need to offer remote work, and employees expect to be able to move anywhere they want if they work remotely. To meet that demand and stay compliant with international labor laws, companies have some work to do.

Unique relocation challenges with remote work

Companies should always seek to treat their employees equally. However, statutory requirements vary greatly from country to country. Overtime laws, minimum benefits, lengths of probationary periods, and hundreds of other details change when employees cross borders.

For example, take a person who leaves the US to work in Italy. In the US, employees usually work under “at-will” employment, a concept that does not exist in Italy. That change in location would require a whole new employment contract to reflect local laws. If that same person moved from Italy to Mexico, the employee would now be entitled to a 13th month’s salary, and the employee’s salary could only be deposited in a bank approved by the government.

Labor laws are mostly behind the times for remote workers. Employers are required to provide safe working conditions, but what happens when the place of work is the employee’s home? How does the employee’s right to privacy conflict with laws about workplace inspections? Is the employer required to cover certain expenses for employees working from home?

Relocation isn’t easy, but as the world becomes more connected, employers must be prepared to deal with the challenges that arise. 

Different types of international relocation

There are three major types of relocation: travel, short-term relocation, and long-term relocation. When your company is in one country and your employee plans to be in another country, you must first understand the type of relocation you are facing.

Travel may last for a few months or a year, but it always has a specific end date. Travelers must typically hold some kind of visa, such as a tourist visa or business visa. The type of work the employee may do is determined by the type of visa they hold.

Unlike travel, which always requires a specific visa, short-term relocation has the employee move to the country as a resident. Still though, the employee moves for a fixed period of time, which separates short-term relocation from long-term relocation. Things become more complicated when the employee becomes a resident.

Under long-term relocation, the employee moves somewhere for an extensive amount of time. This can be for a year or two, or even indefinitely. The main difference between short-term and long-term relocation is the lack of a fixed end date. Employees who relocate for the long term become residents, though the specific type of residence varies by country. Issues of long-term relocation may include immigration, international taxation, and compliance with local labor laws.

No matter how much time your employee plans to spend in another country, you need to be familiar with the laws that will apply to your continuing employment relationship. 

What to know when your employee wants to relocate

Any type of relocation can be a stressful process for both employee and employer. Visas, immigration, and other concerns often become complicated affairs. Each situation is different, but you can make life easier by understanding more about how relocation works, what to watch for, and how to do the paperwork.

(Psst! Remote can help you with visas, immigration, compliance, and more, including international payroll and benefits. Let us know about your situation and we’ll walk you through it from start to finish.)

1. Fulfilling requirements for immigration and visas

For your employee to move to another country without breaking the law, you need to understand the specific immigration rules in play. Employees must often meet minimum thresholds of residency, for example. Even if your employee takes the responsibility of staying compliant seriously, your business could still face issues if the employee breaks the law unknowingly.

Be careful not to hire someone who does not actually have the right to work in a specific country. Always confirm the employability of a candidate or current employee. It’s possible to have a work permit while still needing sponsorship from a company, for instance.

The concept of taxes is simple: the country where the business operates wants a cut of the business’s revenue. Things get complicated when the company operates with employees in multiple countries. Income taxes and corporate taxes can get messy, and physical residency and tax residency are not always the same thing. Tax treaties between countries dictate which taxes businesses pay and when.

Be wary of permanent establishment risk. Simply having workers in a country isn’t always enough to trigger permanent establishment, but certain actions by employees (or the type of role an employee fulfills) may be. Permanent establishment is not a one-and-done issue, so businesses must continuously reevaluate their risk factors.

3. Staying compliant with local employment laws

No two countries are alike in employment laws. Noncompliance with local laws can lead to major fines and penalties related to the misclassification of workers and more. Further, companies cannot legally employ someone in another country without having that person employed by a legal entity within that country.

If you have multiple employees in a country and plan to have a long-term presence there, you may want to open a legal entity yourself. Doing so usually costs a lot of money and takes several months, and you will need to manage your own payroll, benefits, legal work, but owning your own business does have its advantages.

Most companies choose to use an employer of record to employ full-time workers in another country. This is what Remote does. We help you employ team members in other countries legally and easily.

We only offer services in countries where we own our own legal entities, so you never have to worry about third parties handling your data or providing a bad experience for your employees. Whichever employer of record you choose, make sure your employer of record owns a legal entity in the country and does not outsource to a third party provider.

Mastering international relocation to grow your business

The world has permanently embraced remote work, and many employees will never go back to full-time office roles. Choosing to limit your business to local candidates will cut you off from some of the best talent the world has to offer. To stay competitive, businesses must allow their employees the flexibility to relocate, even internationally.

Remote is here to make this transition easy. With our self-serve platform, you can onboard international employees in minutes. If you have questions about immigration, visas, or other specifics, we are always here to help — just reach out! We look forward to helping you grow your global team and providing the best experience for your relocating employees.

How to Handle International Employee Relocation

How to handle international employee relocation

Your remote workforce needs an advocate, and a head of remote role could be the answer.

But who should own that role? What responsibilities will that person have? How will you measure success?

To answer these questions, we put together an all-star cast of remote work leaders: Job van der Voort, CEO of Remote; Laurel Farrer, CEO of Distribute Consulting; and Darren Murph, head of remote at GitLab.

In this exclusive webinar, our trio of remote experts share their insights on the head of remote role, which organizations need one, and how a head of remote should operate. Watch now to learn:

Who should be the advocate for your remote workers?

Is this a function of HR, operations, marketing, or something else?

Should this role focus more internally on the employee experience or externally on attracting talent?

How can you create an asynchronous, remote-first team, no matter where people work?

How does the head of remote role promote diversity and inclusion?

When does your company need a head of remote?

Where in the world do your employees work?

What percentage of your company is remote?

What challenges are your remote employees experiencing?

How do you measure success as a head of remote?

How well does your company recruit and retain talent?

Are your managers equipped and trained to lead remote teams?

Is your company receiving press for your remote leadership?

This recording also includes a Q&A session, with real questions from business leaders on the importance, structure, and duties of the head of remote.

Click here to watch now! For more information, you can also download the Head of Remote Whitepaper from Remote and Distribute Consulting.

[Webinar Recording] Does your company need a head of remote?

The Dutch labor market is attractive for many reasons. Not only is 90% of the population proficient in English, but the Netherlands has one of the top education systems in the world. No wonder many companies are already hiring employees and contractors in the Netherlands.

If you are considering opening a new office or starting a new team, the Netherlands might be for you. But Dutch workers are classified in many ways, and each classification is treated differently.

Not only is the law in the Netherlands already complicated, but it’s also in flux. That makes everything even more difficult. Luckily, we’ve developed a comprehensive guide to employee classification in the Netherlands to help you stay on top of this fluid situation.

Key facts about worker classification in the Netherlands

Employers must always pay close attention to the classification of workers, because companies have different responsibilities to employees than they do to contractors. Generally, you have a greater obligation to employees that includes deducting payroll taxes, granting leave, and paying a minimum wage. Additionally, employees have greater and stronger legal rights and protections.

The consequences of misclassification vary by country but can be serious. For example, in the United States, the IRS can levy fines and penalties associated with failure to file a W-2 and subsequent unpaid payroll taxes.

Employees who were misclassified and were therefore denied the rights associated with employment such as leave, benefits, and severance pay are entitled to compensation. Employers risk fines and lawsuits resulting from such misclassification.

See also: When should you convert a contractor to an employee?

The new Balanced Employment Market Act (WAB) in the Netherlands took effect in January of 2021. This act was intended to crack down on false self-employment and associated abuses. As such, employers are now responsible for correctly classifying employees.

To help employers, the government provided a pilot program for a web tool to help clarify if an employment relationship exists. There is a moratorium on enforcement, fines, and penalties until October 2021. After that time, employers will be liable for misclassification.

A worker is considered an employee if the work they do for you meets all the following criteria:

The work must be done personally by the employee.

There is a relationship of authority in which the employer determines how the work must be performed and the employee must comply.

If the relationship does not meet all of these criteria, you may be able to classify the workers as a contractor. These workers are considered to be self-employed. If an employment relationship is found to exist, however, this would be called false self-employment.

Determining worker classification in the Netherlands

It can be a challenge to determine a worker’s classification in the Netherlands. As part of its new laws, the Netherlands has developed an online tool to assist employers. You answer a series of questions, and the tool will give you one of the following three findings:

Your answers indicate the work can be performed by a self-employed contractor outside of an employment relationship.

Your answers indicate that the work cannot be performed outside of an employment agreement.

Your replies do not make clear what the work relationship is.

If you are still unsure whether an employment relationship exists, you can request additional guidance from the government. The findings of the tool are currently non-binding, however, meaning companies cannot use their results as a defense against false self-employment.

For the purposes of enforcement, intent is irrelevant. Even if you thought the worker was a contractor, further investigation may reveal that an employment relationship exists. If that is the case, you will be liable for payroll taxes, fines, and penalties. In addition, you may be subject to lawsuits, especially if you were found to misrepresent the relationship knowingly.

Employment agreements and services contracts

Dutch law does not always require employment agreements for employees or contractors. However, if there are any disputes, it is on the employer to prove that there was no employment agreement. Therefore, it is in your best interest to use a written employment agreement with all workers. If you do not have an employee relationship, you can use a services contract to outline the work to be performed and the terms of payment.

If you choose to use an employment agreement, current recommendations suggest using a sample contract or model agreement from the tax authorities to help ensure compliance. These sample contracts are widely available for general use. Remember, though, that the use of a sample contract does not guarantee correct classification.

Keep in mind that an employment agreement that classifies a worker as a contractor does not protect you if an employment relationship is found to exist. Employers should not rely on this document alone.

Additional assistance on employee classification

If you are still uncertain, you may request guidance from the tax authorities with the caveat that even this does not necessarily guarantee compliance. You may submit the following information for a judgement within six weeks:

The name of the organization and the client

The type of organization: for example, a trade association or an intermediary

The name, address, telephone number, and e-mail address of your contact person

If you submit the agreement as a client or contractor, your RSIN/BSN

Whether the agreement is intended for one or more clients

Whether the agreement is intended for one or more contractors

A clear and complete overview of all agreements

A description of the circumstances under which the contractor will carry out the work

Whether the agreement was concluded through mediation

Which specific regulations or certification requirements apply

On which model agreement your agreement is based and what you have adjusted

Consequences of contractor misclassification

The consequences of misclassification will be very serious. Additionally, enforcement of misclassification laws in the Netherlands can be robust and proactive. Employers in the Netherlands can’t afford to ignore accurate classification.

Misclassification fines and consequences in the Netherlands

If you have misclassified an employee as self-employed, you could be liable for taxes and social security. You are also required to provide the array of statutory rights given to employees. These include leave, minimum wage, and more.

You will have more difficulty terminating the worker if your contractor relationship is later found to be an employee relationship. Dutch employees enjoy many provisions to protect their job security. These can include notice periods and severance pay in the Netherlands.

See also: The consequences of misclassifying employees as contractors

Misclassification penalties and bans in the Netherlands

The new robust enforcement of contractor misclassification laws in the Netherlands is expected to target serious offenders who knowingly violate the rules. However, all employers are at risk for penalties. Negative publicity could also harm companies found to be in violation.

Another major risk of misclassifying a contractor is the loss of intellectual property (IP). In an employee relationship, businesses retain the rights to work product and intellectual property. However, these same protections do not always cover work done by contractors to the same degree. In an employment status dispute, your intellectual property could be in danger.

Remote’s IP Guard, included in every Remote employment contract, helps you maintain the maximum protections for IP created by international workers. You can find more information about protecting your IP on the Remote blog.

Managing and paying employees and contractors in the Netherlands

To learn more about employing workers in the Netherlands, check out our Netherlands country explorer page.

Contractor tax and benefits requirements in the Netherlands

Like most countries, the tax rules and benefits for contractors are different from those for employees. That’s why it’s even more important to get classification right.

Contractors in the Netherlands do not pay payroll taxes. As an employer, you would not need to worry about income taxes or social security deductions. Additionally, you aren’t required to award benefits, such as severance pay, or give notice in the event of employee termination.

However, contractors are protected by minimum wage laws. Contractors must earn at least the hourly minimum wage for their work. If your contractors perform piece work, you must document how many hours it takes them to complete and pay at least the minimum wage.

While in your workspace, contractors are also protected by the same health and safety laws that protect employees. This means you must do the following:

Provide a proper workspace and safe equipment.

Prevent physiological and psychological strain and stress.

Take steps to avoid accidents with hazardous or harmful substances, radiation or contagious diseases.

Failure to provide the above can result in fines and penalties.

Manage benefits for contractors and employees

By now, you understand the complexity of the emerging laws around worker classification in the Netherlands. So how do you manage your benefits programs against this backdrop?

Follow these steps, beginning with accurate classification:

Make use of the sample contracts to assist you.

Schedule regular reviews with employees and contractors to affirm the employment agreement.

Extend statutory benefits to all workers correctly according to their classification.

When the stakes are high, it can be stressful to navigate new legislation. But it helps to have a partner fully versed in existing and emerging law to help you. At Remote, we have teams of experts in the Netherlands who closely follow emerging laws and guidelines.

The simple way to pay and manage contractors

Using an employer of record like Remote is one of the easiest ways to pay and manage contractors and employees in the Netherlands and around the world. We can help you employ and pay your international workers legally, easily, and quickly. We can also help you with employee relocation, so an employee moving to a new country can continue to work for your business without interruption.

Create a successful remote contractor culture

Successful employment relationships aren’t just about compliance and the letter of the law. To create an environment where remote contractors feel engaged and valued requires deliberate thought and effort. Work on fostering relationships, improving inclusion, and removing barriers.

Pay and manage contractors in the Netherlands with Remote

The Netherlands offers a variety of opportunities for companies looking to expand into new labor markets or to attract some of the many top candidates living there. Thanks to evolving laws, though, companies must be careful about correctly classifying their workers.

Remote takes the guesswork out of working with international contractors and employees. To learn more about how Remote can help you pay and manage contractors in countries all over the world, visit our website or reach out to our team for more information.

Not only is the law regarding contractor classification in the Netherlands already complicated, but it’s also in flux. That makes everything even more difficult. Luckily, we’ve developed a comprehensive guide to employee classification in the Netherlands to help you stay on top of this fluid situation.

[Webinar Recording] Does your company need a head of remote?

Watch now!

What is covered in the webinar?

What is a head of remote?

What does a head of remote do?

When does your company need a head of remote?

How do you measure success as a head of remote?

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