As we move into 2023, it is becoming increasingly clear that the nature of work has changed across the world, and that there are very few industries that have not been impacted.
There is a variety of terminology employed to describe this new and growing sector of the workforce and the people who participate in it. However, regardless of whether you refer to the freelance economy or the gig economy, what is clear is that more and more people worldwide are viewing hybrid work, or operating as an independent global contractor, as a much more attractive proposition than other sorts of conventional working arrangement.
For instance, recent research has found that in 2022 there were 70.8 million freelance workers in the US alone, and that this number is expected to rise to 90.1 million by 2028. Given these figures, it is unsurprising that the freelance market globally is reported to be worth $1.5 trillion, with a compound annual growth rate (CAGR) in the region if 15%.
So what does this substantial change in the work environment mean for employers? If workers are seeking new ways of working, how should companies respond and what new opportunities does this create for them?
In broad terms, a key benefit for employers has been that a genuinely global workforce is now eminently more accessible and that it has become easier than ever for companies to hire the best talent from around the world under freelance, independent contractor arrangements.
However, at the same time, this also means that businesses that have not had a great deal of experience in this area may require some guidance on hiring and managing their contractors in the most efficient, cost-effective, and legal way.
Therefore, for businesses in the market for freelance independent global contractors in any sort of sector or industry, here are six useful tips to help ensure you are taking on and managing these workers under the right conditions.
1. Ensure you have appropriate HR procedures in place
When taking on foreign independent contractors, one of the areas in which companies can potentially fall foul of local labour laws is that of worker classification. Therefore, it is important that your HR team has the appropriate capacity and understanding of the legislation in any country in which you are hiring workers.
The terms under which a worker is being taken on need to be fully understood by HR and payroll, as this will have a bearing on what sort of deductions need to be made in terms of tax, superannuation, other employee costs, etc.
The laws surrounding worker classification naturally differ from country to country, so it is essential that your HR and global payroll teams are conversant and up to date with employment legislation in any jurisdiction in which freelance workers and independent contractors are being engaged.
2. Clarify your independent contractor agreements
An independent contractor agreement is a valuable tool for ensuing that both parties are clear about their rights and obligations when you take on foreign contractors.
In this way, an employer can clarify the nature of the tasks that they expect a contractor to complete as part of their role, along with expectations regarding deadlines and the amount of work that a freelancer can expect to receive. It should also include your terms and conditions as they pertain to privacy and data protection, along with clear guidelines regarding intellectual propriety and non-disclosure.
In addition, an independent contractor agreement should also make clear which (if any) deductions the employer will make on a worker’s behalf, the frequency of payments, and how those payments will be made.
Further to this, it is advisable for an independent contractor agreement to make explicit any conditions regarding warranties and indemnities, as well as any mechanisms that are in place should a dispute arise over conditions of work, performance, payments, etc.
3. Benchmark your freelancer rates
We all know that inflation is having an impact globally, and independent contractors are not immune from rising costs. As a consequence, freelance rates of pay can be volatile in many sectors, and so in order to get access to the best talent, employers need to offer rates of pay that are comparable with what others in the industry are paying at any given time.
Therefore, it is important for your HR and payroll teams to be sure that the pay rates you offer are appropriate for the role, sector, location, etc. At the same time, if workers are being hired through a recruitment agency, or via freelancer websites such as Fiverr or Upwork, there may be fees associated with this, and so when determining remuneration rates for independent contractors, this will need to be factored in to calculations.
4. Utilise appropriate payment methods
When you are seeking to take on the best global talent, you need to be aware that your competitors may be trying to get access to the very same people. Therefore, you should aim to make your offer is as attractive as possible.
One of the factors that may persuade a freelancer to work with you rather than a rival is the payment method you use. Independent contractors want to know that any money they are due can be remitted quickly, and with minimal fees charged.
At the same time, employers also need to make sure that when it comes to making international payments, they have efficient, cost-effective payment systems in place. Remitting money in currencies other than your own can be a significant expense, so it’s important to find appropriate payment menthes that minimise the fee you are charged, while still ensuring foreign workers get paid as quickly as possible. Depending on the country, this could be through bank transfers, paper checks, wire transfers, digital payments, cryptocurrency or freelance platforms.
Therefore, if employing foreign independent contractors is going to be an important part of your business model, employers need to ensure that the payment methods they use aren’t a burden in terms of time, costs and convenience, while at the same time still meeting the needs of your overseas freelancers.
5. Keep your contracting arrangements up to date
As discussed above, the world of work is constantly changing, as are the terms and rates of pay under which independent contractors might be engaged. Therefore, just as the remuneration a company offers freelancers needs to be monitored regularly so that it stays competitive, employers similarly need to make sure that their contracting arrangements remain relevant and up to date.
Just as you would with full time employers based in your home country, it is important to review regularly the terms under which you are engaging foreign freelancers, so that what is expected by and from each party in the arrangement remains explicit and relevant.
Reviewing these arrangements on a regular basis will also ensure that you continue to be compliant with local labour and taxations laws, and that the terms you are able to offer remain competitive so you can attract the best global talent.
6. Consider outsourcing the management of your independent contractors
If you are a start up, a SME in a growth phase, or a company looking to expand quickly into multiple new territories, and you expect independent contractors to play a significant role in your business, it might be worth outsourcing your contractor management services.
Doings so can enable enterprises of any size to compete globally, as it means they can enjoy all the benefits derived from setting up and running an in-house HR team in an unfamiliar foreign country, but without any of the associated hassle, paperwork or overheads.
It also means you can be sure that you are compliant with local labour laws, workers are being classified correctly, and that you are making all appropriate deductions, thereby avoiding the possibility of incurring a hefty penalty.
In addition, working with a contractor management service can also mean that you are able to manage large numbers of contractors in multiple locations, while data and records can be efficiently managed and securely stored.
Furthermore, transferring a contractor onto your employee payroll is made easier when you utilise contractor management services. You can leave the process in the hands of HR and payroll specialists who understand the intricacies of labour and tax laws in the jurisdiction in which a contractor is based, which makes the process of onboarding them an employee significantly quicker and simpler.