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How do you Pay Remote Employees in Different Countries?

You’re the founder of a small tech company, with remote employees based all over the world. You’ve decided to hire all your employees with full benefits and entitlements, but how can you accomplish this when employment regulations are different in each country? There are a few options to choose from as you get started.

Your Options When Paying Remote Employees in Different Countries

Paying Your Remote Employee through a Local Partner

You could work with a local partner or affiliate in your employee’s country of residence. A local partner might be willing to place your employee on their payroll.  Your employee would then be a legal employee of the local partner, and part of their payroll, withholding and benefits system.  You will continue to direct and supervise your employees work.

Why you should work with a local partner

  • In country expertise
  • Local partners will help ensure that statutory benefits such as social security and workers’ compensation are offered in full compliance with the country’s laws

Why you shouldn’t work with a local partner

  • Language and cultural barriers when liaising with a local partner who’s in a different country
  • Can be costly
  • You would have to use a different local partner each time you employ in a new country, so be prepared to engage with multiple people from different countries overlooking your different employees

Paying Your Remote Employee on Home Country Payroll

Your remote employee can be paid via your company’s payroll under certain circumstances. Most countries do not allow remote payrolls from a foreign company, but there may be specific laws that permit it as long as the company registers the employee and makes employer social contributions.

In that case, payment can be made to your employee while complying with host country withholding requirements. But the employee would not be subject to withholding in your home country as a non-resident.

Outsourcing Payroll for Your Remote Employee

You could work with an outsourced payroll provider to pay your remote employee. There are two ways you could outsource your remote employee’s payroll.

One option is to use a local payroll provider that primarily computes withholding, compensation and then issues the check. There are limitations to how much a local payroll provider can do for your local employee. It is a limited administrative foreign employment solution that does not guarantee compliance with taxation, immigration or labor laws in the country.

A more comprehensive option for you is to use a GEO service, that offers full payroll and employment compliance in your employee’s country. The GEO service differs from payroll providers, since the GEO has a legal entity in place that functions as the local employer of record for the remote worker.

It is also an easier option than employing your worker through a local third party, as GEO services such as Shield GEO, typically have partners in most countries and can help you hire all your remote employees in different countries. You will only have to coordinate with one account manager who will help you sort out your employment needs for all your international employees.

A GEO service is also compliant with local laws and allows you hire your international employee easily without much hassle. You wouldn’t have to burden yourself trying to understand a complex foreign jurisdiction and can be assured that your remote employees are receiving all required entitlements and benefits.

Can You Pay Your Remote Employee as an Independent Contractor?

You can hire a worker as an independent contractor instead of as an employee, but there are some potential downsides.  Contractors won’t be as loyal as employees, and they can take their skills to another company at any time.

And there is a risk of misclassification, where the country your employee is based in may actually view them as your employee based on how you structure and manage their work.

In contrast, formal employees (locals and expats alike) are entitled to a full range of benefits and labor protections in the host country. Not only does this help you retain their loyalty, in ensures that you won’t face a misclassification claim at some point, along with fines and penalties.

 Need more information about employing in a new country? Learn more about:



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The information in this article is subject to changes in local legislation.

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