Say, your young start-up is unable to afford the salary requirements of tech developers of your country. You got to know there are highly skilled tech developers in other parts of the world who you can afford and onboard. So, now you need to manage their immigration and relocation. But there is a way around that too. We are in the second decade of the 21st century – tech developers from across borders can work for your start-up remotely!
Read on to know how to navigate borders to hire the most suitable people for your budding start-up-
While hiring overseas candidates, the background check should be microscopic, the kind Sherlock Holmes would do.
You probably have no idea about the best educational institutions in that country.
So, you may want to take the help of a recruiting agency to thoroughly scrutinize the candidate’s skills/ qualifications/ experience. Make sure that the agency is skilled and experienced enough to gauge the candidate’s skills and knowledge. You may also choose to DIY – using job portals such as LinkedIn, Careerjet, Jobvine, etc, etc.
Would you want the candidate to be an employee or an independent consultant/ freelancer or gig worker?
The freelancing space is still in the making. Different countries have different laws around it. What classifies as freelancing in one country may classify as employment in another country.
Missclassification of employees as freelancers or otherwise may lead to penalty
Hiring employees is usually accompanied with tax, insurance, and social security compliances. While hiring freelancers may be easier, you may prefer to hire employees for long-term projects who work dedicatedly with you under your direction and supervision.
In February 2021, a group of Uber drivers challenged the way Uber classified them as self-employed in Britain’s Supreme Court. The Court ruled in the drivers’ favor, entitling them to rights such as the minimum wage and holiday pay.
Courts across the UK and Europe are now ruling in favor of employment rights for gig workers, there are some outliers though.
The EU is proposing to pass a law that attempts to define the line between a self-employed platform worker and a platform worker that deserves the same rights as an employee. That line is actually a list of five criteria, which focuses on how much control a platform has over a worker—whether the platform monitors their performance, whether the worker can choose their hours or work for other companies, etc. If a platform meets two or more criteria, its self-employed workers should be reclassified. The onus to prove that there is no employment relationship between the platform and the workers rests on the platform.
Cross-border hiring may expose your start-up to taxation in that other country by virtue of it having a Permanent Establishment there. To explain in simple words, having a Permanent Establishment in a country implies that your organization has created a presence so strong in a foreign country that the country wants to collect income tax from it.
You may also need to adhere to employer-related tax and social security compliances in the overseas country. Consider hiring your cross-border remote employee through a third-party service provider who acts as the legal employer in their home country. These service providers are often called Employers of Records (‘EOR‘). Cross-border hiring through EOR reduces overseas tax and compliance exposure. To learn more about the concept of Employer of Records, read our comprehensive ‘EOR’ handbook.
We are currently supporting a US based start-up to work compliantly with their remote digital marketing team in India. Check out how we supported an Indian company hire team in West Africa without actually setting-up an entity there.
on a time basis or project basis. They may ask for an advance payment, or you may decide to pay them on the completion of their project. In any case, ensure that they have raised an invoice for the work done. This practice can help rule out employer-employee relationship (remember employees don’t raise invoices).
In either case (whether you are hiring an employee or a freelancer), you need to be mindful of the currency you’ll be paying in. Consider the cost of living index of the overseas worker or prevalent payscale in the host country, industry rates, and expected benefits before finalizing the compensation. A well-drafted contract is non-negotiable.
To attract and retain talent, compensation structuring should be top-notch. Employer-sponsored health insurance, stock options, are some ways that can be explored to incentivise performance.
<div id="ssa-timeline-container">
<style>
#ssa-timeline-container {
font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif;
line-height: 1.6;
color: #333333;
max-width: 800px;
margin: 0 auto;
padding: 20px;
background-color: #ffffff;
box-shadow: 0 0 10px rgba(0, 0, 0, 0.1);
}
#ssa-timeline-container h1 {
text-align: center;
color: #3498db;
font-size: 2.5em;
margin-bottom: 30px;
}
#ssa-timeline-container h2 {
color: #3498db;
border-bottom: 2px solid #2ecc71;
padding-bottom: 10px;
}
#ssa-timeline-container h3 {
color: #2ecc71;
}
#ssa-timeline-container p, #ssa-timeline-container ul, #ssa-timeline-container li {
margin-bottom: 15px;
}
.tabs {
display: flex;
margin-bottom: 20px;
border-radius: 5px;
overflow: hidden;
}
.tab {
flex: 1;
padding: 15px;
text-align: center;
background-color: #f5f5f5;
cursor: pointer;
transition: background-color 0.3s;
font-weight: bold;
}
.tab:hover {
background-color: #e0e0e0;
}
.tab.active {
background-color: #3498db;
color: #ffffff;
}
.content {
background-color: #ffffff;
padding: 30px;
border-radius: 5px;
box-shadow: 0 2px 5px rgba(0, 0, 0, 0.1);
}
.content-section {
display: none;
}
.content-section.active {
display: block;
}
.alert {
background-color: #e8f4fd;
border-left: 5px solid #3498db;
color: #333333;
padding: 15px;
margin-top: 20px;
border-radius: 4px;
}
.country-grid {
display: grid;
grid-template-columns: repeat(auto-fill, minmax(180px, 1fr));
gap: 15px;
margin-top: 20px;
}
.country-item {
display: flex;
align-items: center;
padding: 10px;
background-color: #f5f5f5;
border-radius: 4px;
transition: transform 0.2s;
}
.country-item:hover {
transform: translateY(-3px);
box-shadow: 0 4px 6px rgba(0, 0, 0, 0.1);
}
.country-flag {
font-size: 1.8em;
margin-right: 10px;
}
.timeline {
position: relative;
padding: 20px 0;
}
.timeline::before {
content: '';
position: absolute;
width: 4px;
background-color: #3498db;
top: 0;
bottom: 0;
left: 50%;
margin-left: -2px;
}
.timeline-item {
padding: 10px 40px;
position: relative;
background-color: inherit;
width: 50%;
box-sizing: border-box;
}
.timeline-item::after {
content: '';
position: absolute;
width: 25px;
height: 25px;
right: -17px;
background-color: #ffffff;
border: 4px solid #2ecc71;
top: 15px;
border-radius: 50%;
z-index: 1;
}
.timeline-item:nth-child(even) {
left: 50%;
}
.timeline-item:nth-child(odd) {
left: 0;
}
.timeline-item:nth-child(even)::after {
left: -16px;
}
.timeline-content {
padding: 20px;
background-color: #ffffff;
position: relative;
border-radius: 6px;
box-shadow: 0 2px 5px rgba(0, 0, 0, 0.1);
cursor: pointer;
transition: all 0.3s ease;
}
.timeline-content:hover {
transform: translateY(-5px);
box-shadow: 0 5px 15px rgba(0, 0, 0, 0.1);
}
.timeline-content h2 {
color: #3498db;
margin-top: 0;
}
.timeline-content p {
margin-bottom: 0;
display: none;
}
.timeline-content.active p {
display: block;
margin-top: 10px;
}
@media screen and (max-width: 600px) {
.timeline::before {
left: 31px;
}
.timeline-item {
width: 100%;
padding-left: 70px;
padding-right: 25px;
}
.timeline-item::before {
left: 60px;
border: medium solid white;
border-width: 10px 10px 10px 0;
border-color: transparent white transparent transparent;
}
.timeline-item:nth-child(even) {
left: 0%;
}
.timeline-item:nth-child(odd)::after, .timeline-item:nth-child(even)::after {
left: 15px;
}
}
</style>
<h1>Social Security Agreements and Provident Fund in India</h1>
<div class="tabs">
<div class="tab active" data-tab="overview">Overview</div>
<div class="tab" data-tab="ssa">SSA Countries</div>
<div class="tab" data-tab="non-ssa">Non-SSA Countries</div>
<div class="tab" data-tab="timeline">Timeline</div>
</div>
<div class="content">
<div id="overview" class="content-section active">
<h2>Understanding SSAs and Provident Fund for Expatriates</h2>
<p>Social Security Agreements (SSAs) are bilateral agreements between India and other countries that aim to protect the interests of expatriate workers. These agreements have significant implications for how expatriates contribute to and benefit from social security systems, including India's Provident Fund (PF) scheme.</p>
<h3>Key Benefits of SSAs:</h3>
<ul>
<li>Detachment: Expatriates can remain in their home country's social security system while working in India.</li>
<li>Exportability of Benefits: Social security benefits can be "exported" to the home country upon completion of the assignment.</li>
<li>Totalization: Periods of work in both countries are considered when calculating social security benefits.</li>
</ul>
<div class="alert">
<strong>Important Note:</strong> The process and requirements for Provident Fund contributions and withdrawals differ significantly between expatriates from SSA countries and those from non-SSA countries. Understanding these differences is crucial for both expatriates and their employers.
</div>
</div>
<div id="ssa" class="content-section">
<h2>SSA Countries</h2>
<p>India has signed SSAs with 20 countries. Expatriates from these countries may be exempt from mandatory PF contributions in India if they have a valid Certificate of Coverage (CoC) from their home country.</p>
<div class="country-grid" id="ssaCountries"></div>
<div class="alert">
<strong>PF Withdrawal for SSA Country Expatriates:</strong> Expatriates from SSA countries can withdraw their PF upon completion of their assignment in India, provided they have made contributions (in cases where they didn't have a valid CoC).
</div>
</div>
<div id="non-ssa" class="content-section">
<h2>Non-SSA Countries</h2>
<p>Expatriates from countries that do not have an SSA with India face different regulations regarding Provident Fund contributions and withdrawals:</p>
<ul>
<li>Mandatory PF Contributions: These expatriates must contribute to the Indian PF scheme.</li>
<li>Contribution Rate: Both the employer and employee contribute 12% of the employee's salary to the PF.</li>
<li>Withdrawal Restrictions: PF withdrawal is generally not allowed until the expatriate reaches 58 years of age.</li>
</ul>
<div class="alert">
<strong>Special Consideration:</strong> While early withdrawal is generally not permitted, expatriates from non-SSA countries may apply for early withdrawal under specific circumstances, such as permanent departure from India. However, this process can be complex and may require additional documentation.
</div>
<p>It's crucial for employers and expatriates from non-SSA countries to understand these regulations to ensure compliance and proper financial planning.</p>
</div>
<div id="timeline" class="content-section">
<h2>Timeline of Social Security Developments for Expatriates in India</h2>
<div class="timeline">
<div class="timeline-item">
<div class="timeline-content">
<h2>2008</h2>
<p>India made it mandatory for expatriate employees working in covered establishments to contribute towards pension and provident fund. Both employer and employee were required to make matching contributions of 12% each.</p>
</div>
</div>
<div class="timeline-item">
<div class="timeline-content">
<h2>2014</h2>
<p>An amendment excused expatriate employees coming to India on or after September 2014 from participating in the pension scheme. The entire contribution should now be made to the PF Fund.</p>
</div>
</div>
<div class="timeline-item">
<div class="timeline-content">
<h2>2020</h2>
<p>The tax laws were amended to make the employer's contribution to the Provident Fund exceeding INR 7,50,000, along with the interest earned on the excess amount, taxable.</p>
</div>
</div>
<div class="timeline-item">
<div class="timeline-content">
<h2>2021</h2>
<p>Another amendment made interest on employee's contributions exceeding INR 2,50,000 taxable.</p>
</div>
</div>
<div class="timeline-item">
<div class="timeline-content">
<h2>2024</h2>
<p>In a landmark judgment, the Karnataka High Court struck down provisions extending EPF coverage to international workers, questioning the constitutionality of these provisions. This decision addressed the disparity in provident fund contributions between Indian and international employees. However, the issue is not fully settled. In a recent press release, the Employees' Provident Fund Organization (EPFO) indicated that options were being evaluated and that it might change the decision.</p>
</div>
</div>
</div>
</div>
</div>
<script>
(function() {
const ssaCountries = [
{ name: 'Australia', flag: '🇦🇺' },
{ name: 'Austria', flag: '🇦🇹' },
{ name: 'Belgium', flag: '🇧🇪' },
{ name: 'Brazil', flag: '🇧🇷' },
{ name: 'Canada', flag: '🇨🇦' },
{ name: 'Czech Republic', flag: '🇨🇿' },
{ name: 'Denmark', flag: '🇩🇰' },
{ name: 'Finland', flag: '🇫🇮' },
{ name: 'France', flag: '🇫🇷' },
{ name: 'Germany', flag: '🇩🇪' },
{ name: 'Hungary', flag: '🇭🇺' },
{ name: 'Japan', flag: '🇯🇵' },
{ name: 'Luxembourg', flag: '🇱🇺' },
{ name: 'Netherlands', flag: '🇳🇱' },
{ name: 'Norway', flag: '🇳🇴' },
{ name: 'Portugal', flag: '🇵🇹' },
{ name: 'Quebec', flag: '🇨🇦' },
{ name: 'South Korea', flag: '🇰🇷' },
{ name: 'Sweden', flag: '🇸🇪' },
{ name: 'Switzerland', flag: '🇨🇭' },
];
const tabs = document.querySelectorAll('.tab');
const contentSections = document.querySelectorAll('.content-section');
tabs.forEach(tab => {
tab.addEventListener('click', () => {
const tabId = tab.getAttribute('data-tab');
tabs.forEach(t => t.classList.remove('active'));
contentSections.forEach(cs => cs.classList.remove('active'));
tab.classList.add('active');
document.getElementById(tabId).classList.add('active');
});
});
const ssaCountriesGrid = document.getElementById('ssaCountries');
ssaCountries.forEach(country => {
const countryElement = document.createElement('div');
countryElement.className = 'country-item';
countryElement.innerHTML = `
<span class="country-flag">${country.flag}</span>
<span>${country.name}</span>
`;
ssaCountriesGrid.appendChild(countryElement);
});
const timelineItems = document.querySelectorAll('.timeline-content');
timelineItems.forEach(item => {
item.addEventListener('click', () => {
item.classList.toggle('active');
});
});
})();
</script>
</div>
