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General Questions
1. What is a GEO?
2. Why use a GEO?
3. What are the advantages of using a GEO?
4. GEO vs DIY (do it yourself)?
5. What are the cost savings in using a GEO?
6. What is the difference between a GEO and a PEO?
About Shield GEO
1. What is Shield GEO?
2. What are the core services provided by Shield GEO?
3. What countries does Shield GEO operate in?
4. Does Shield GEO work through its own entities?
5. Is there a minimum number of employees to use a GEO service?
6. Is there a minimum or maximum period we can engage Shield as a GEO?
7. How long is the onboarding process?
8. What is the bond payment?
9. How does Shield GEO comply with data privacy regulations like the European Union’s General Data Protection Regulation (GDPR)?
10. How do you ensure the personal data of an employee is collected securely?
11. What information does Shield collect from an employee and why?
Hiring and Employing Your Employee
1. Who is the employer?
2. Who manages the employee?
3. Who is responsible for the employee?
4. How do we manage leave requests and tracking leave consumption?
5. Do you offer a benefits package?
6. What benefits are offered?
7. Are employees covered under Shield’s insurance?
8. Are they employed on local employment contracts?
9. Who will be issuing the employment contract to the employee? Will it be between Shield GEO and the employee?
10. How will I be notified of any changes to in-country requirements?
Paying Your Employee
1. Who pays the employee?
2. Who calculates payroll?
3. What are the standard payroll dates?
4. Standard pro-rata calculation?
5. Who pays the taxes?
6. Can you support shadow / dual / split payrolls?
7. How are taxes and social security contributions paid?
8. Do you provide payslips?
9. Can we set the local salary in a foreign currency?
10. When processing additional payments (eg. commissions), do you use gross or net amounts?
11. Can you run out of cycle payments?
12. How do you handle taxable benefits?
13. What are the reasons why expenses are viewed as taxable?
14. How do we inform you of changes to the monthly salary or payroll?
15. Does Shield GEO manage expense reimbursements?
16. Can we still reimburse employee expenses directly when using an employer of record service?
17. Do you support different currencies when processing payroll and invoicing? If so, what method do you use to calculate the exchange rates?
18. How do you handle foreign exchange?
Immigration and Work Permits
1. Can you sponsor work permits?
2. Can you arrange the work permit but we continue to employ the person directly?
3. Do you help with business visas?
General Questions
1. What is a GEO?
A Global Employment Organization (GEO) is an intermediary between the client and their international assignees, that acts as the employer of record in the host country and handles every aspect of the legal and administrative requirements of employment in that location. Also known as Global Employment Outsourcing this service allows companies to employ staff in overseas locations quickly, simply, and cost-effectively.
2. Why use a GEO?
A GEO is a cost-effective and secure method of quickly employing staff into new or existing international markets, saving the time and expense of incorporating a local entity. The number one concern for companies with active global mobility programs is compliance with employment and tax regulations. A GEO is already established in the host country and takes on the responsibility of making sure all legal, employment, tax, and immigration requirements are met.
3. What are the advantages of using a GEO?
The main advantage of using a GEO is that it makes international employment simple. Our customers attest that having Shield GEO handle the administration and compliance of their overseas staff, with a single point of contact and consistent service across all locations, has been transformative. It has become much easier to meet the expansion objectives of their business stakeholders.
The other benefits include:
- Cost savings
- Speed of deployment
- Full compliance with immigration and labor laws
- Flexible payroll approaches
- Assistance with both onboarding and repatriation of assignees
4. GEO vs DIY (do it yourself)?
Companies that elect a DIY approach face the daunting task of navigating complex local laws and regulations, including the need to set up a local corporate entity. Unless the HR department has broad expertise and legal resources to meet this challenge, there is an ongoing risk of non-compliance in the host country.
By using a GEO solution, a company can minimize the risk of non-compliance, and rely on the GEO’s expertise to initiate or expand business activity in any foreign market. Because the local entity is already in place, there is no delay in employing staff in the host country.
5. What are the cost savings in using a GEO?
The cost savings in using a GEO occur at every stage including:
- No need to set up, register, and meet capital requirements for a local corporate entity – our employer of record is already in place
- No requirement to engage the full suite of host country advisors: tax advisors, employment lawyers, immigration specialists, payroll providers, incorporation advisors, etc.
- Streamlined payroll processes for all employees in the country
- Minimizing the potential for permanent establishment and corporate taxation
- No corporate tax or social security filing requirements – all covered by the employer of record
- Easy closure of employment without the requirement to shut down an entity
6. What is the difference between a GEO and a PEO?
A PEO or Professional Employment Organization differs from a GEO in several ways. The PEO is typically a co-employer with the client, while a GEO acts as the sole employer of record. The PEO can assist with some registration and insurance requirements, but the GEO provides a more complete employment solution for clients. PEOs are frequently used within the US to handle multistate payroll issues, while a GEO can function across international borders for ease of payroll and employment compliance.
About Shield GEO
1. What is Shield GEO?
Shield GEO provides employer of record solutions in more than 50 countries around the world, ensuring legal compliance and rapid deployment of staff into any market for our corporate clients. We make international employment simple.
2. What are the core services provided by Shield GEO?
Our core services are to employ international workers on behalf of our clients. This means we take on the responsibility for payroll, tax, immigration and employment compliance. Often this is for companies that do not have an incorporated entity in a foreign country. We offer dedicated, end to end service that covers every element of employing staff into the host country, greatly reducing the risk and workload for our clients.
3. What countries does Shield GEO operate in?
Shield GEO provides employment solutions in more than 50 countries, most of which you can find on our website. If there is a particular country you’re looking at that is not listed on the website, please get in touch.
4. Does Shield GEO work through its own entities?
In many of the locations we’re active in, we work through a network of local partners and in others, we have our own entities. In those countries where we use partners – the partners have gone through a detailed vetting process to ensure they align with our values and are fully compliant. This doesn’t mean that the GEO solution will be provided by them, Shield GEO is responsible for the full administration of the service and the relationship with the client and the employees; we rely on our partners for in-country requirements as an employer.
5. Is there a minimum number of employees to use a GEO service?
There is no minimum. We’re happy to help you with a single employee.
6. Is there a minimum or maximum period we can engage Shield as a GEO?
We have a minimum engagement period of 6 months for any individual employee. In a few countries, we are restricted to a maximum term as a third-party employer. However, in most of the locations we support, there is no maximum.
7. How long is the onboarding process?
The onboarding process generally takes up to 10-15 business days. This timeline may vary depending on response times from the client or employee, changes made to the employment contract, questions during the process, etc.
8. What is the bond payment?
The bond payment is a salary deposit inclusive of employer social costs and our management fee. This amount is collected upfront during the onboarding process and later refunded within 60 days of the employee’s termination date. The bond helps to ensure Shield GEO can meet the statutory obligation to pay the salary and employer costs on time, therefore protecting the client and employee. The bond may be used to cover unforeseen circumstances and potential termination costs. However, it is not meant to be a substitute for late payments, and payments for invoices should be received each month as per the agreed due date.
9. How does Shield GEO comply with data privacy regulations like the European Union’s General Data Protection Regulation (GDPR)?
As an employer of record, Shield GEO may be required to collect and process personal data of an employee and their spouse, partner, or dependents. We only collect this data with the consent of the employee and it is only used for the performance of our duties. We have reviewed our Data Privacy Policy and processes to ensure that we meet the criteria of the GDPR legislation as well as other relevant data privacy legislation in the countries where we operate.
10. How do you ensure the personal data of an employee is collected securely?
Shield has reviewed and implemented internal processes and practices to ensure our data collection process meets the data privacy regulations across all locations we are working in. It is important to us that we handle your employee’s sensitive information in accordance with the relevant data privacy regulations. We collect and transfer data using a secure online platform through Accellion. Accellion is a private cloud solutions company focused on secure file sharing and collaboration. Users can access, edit, and share enterprise content from any device while maintaining compliance and security.
11. What information does Shield collect from an employee and why?
It is important to us that we handle your employee’s sensitive information in accordance with the relevant data privacy regulations. Therefore, we only collect data we are required to and only authorized individuals within our team will have access to view and action this information. We collect data from your employees at two levels, at a global level and at a local country level. By doing so we can address the varying data privacy risks across different countries. You can view a sample of the data we collect from your employees via our Global Candidate Information Form. Our in-country team may also collect additional country-specific data from your employees. Once we have set up the onboarding, only information and documents that are required in line with the Data Privacy regulations of that country will be retained. All other documents will be deleted from our systems.
Hiring and Employing Your Employee
1. Who is the employer?
Shield GEO’s local entities act as the legal local employer of record in the host country.
2. Who manages the employee?
Although staff are legally employed through Shield GEO, day-to-day management of employee work hours, methods and projects is still handled by the client. However, as the Employer of Record, Shield GEO is directly responsible to the authorities for the employment and any issues related to immigration, tax or labor. We’ll work with you to make sure that you and the employee understand any unique statutory requirements of the host country such as working hours restrictions, annual leave entitlements and so on.
3. Who is responsible for the employee?
The client maintains primary responsibility for the employee’s activity and conduct in the host country, however as the Employer of Record, Shield GEO is directly responsible to the authorities for the employment. Especially as concerns immigration, tax, or labor issues related to the employment. We’ll work with you to make sure that you and the employee understand any unique statutory requirements of the host country such as working hours restrictions, annual leave entitlements, and so on.
4. How do we manage leave requests and tracking leave consumption?
Leave requests are controlled by you. The employee will request leave directly to their line manager or HR as normal and you will review/approve it. But we need you to report any leave consumed (annual leave, sick leave, and unpaid leave) each month when you supply the salary inputs. This allows us to track against the overall accruals. If you are in any doubt whether a leave request is in line with the statutory allowance or if there is a certain protocol in a country to grant or deny a leave request, please talk to your account manager.
5. Do you offer a benefits package?
Non-statutory benefits are provided by the client as part of the employee’s compensation package. Statutory benefits in the host country such as insurance or social security are provided as part of the payroll withholding process.
6. What benefits are offered?
The employee will receive the statutory entitlements as per local labor law. Depending on the country, this may include annual leave, sick leave, maternity/parental leave, holiday allowance, pension and health insurance. The client can offer additional benefits like private pension or health insurance and in some countries, Shield can arrange this for the employees.
7. Are employees covered under Shield’s insurance?
The employee will be covered under our Professional Indemnity and Public Liability insurance as well as any other employment related insurances required by the laws of the host country like workers compensation or medical insurance
8. Are they employed on local employment contracts?
A local employment contract is required to comply with host country labor and employment laws. We will work with you to draft an employment agreement that meets the host country regulations and also incorporates, where possible, any additional terms you may wish to include. For example, your corporate policies on confidentiality or annual leave policies. The general rule is that local regulations will take precedence, but if your corporate or home policy is more generous than the local requirement, we can include it in the employment agreement.
9. Who will be issuing the employment contract to the employee? Will it be between Shield GEO and the employee?
We share the employment contract with our client and the employee in advance so they can review it. We work with the client, employee and local entity to accommodate any requested revisions whilst keeping the contract compliant with the host country regulations.
10. How will I be notified of any changes to in-country requirements?
Your Shield GEO Account Manager will inform you whenever there are changes that will affect your employees in the host country. We’ll let you know what is going to change, when the change is scheduled to happen, how it will impact the existing engagement (if at all) and what options are available to mitigate any impact.
Paying Your Employee
1. Who pays the employee?
Shield GEO, as the Employer of Record, will pay the employee their net salary through the local payroll.
2. Who calculates payroll?
Shield GEO calculates the payroll in advance of each payment date and invoices you for the “Total Cost of Employment”. Total Cost of Employment is the gross salary, bonus payment or allowances to the employee, employer contributions like tax or social security, expense reimbursements and our monthly management fee.
3. What are the standard payroll dates?
We ask clients for inputs on the 1st of each month. We need those inputs confirmed by the 3rd of the month. We raise our invoices by the 7th of the month. The invoice should be paid by the 15th of the month.
We pay the employee normally on the 28th of the month but this varies by country.
4. Standard pro-rata calculation?
Many countries will have their own standard pro-rata calculations. These may be just customary, or they may be statutory requirements. But where we have some freedom to set the pro-rata this is our default formula:
We take the annual salary and divide it by 260 (the number of weekdays in a normal year). This gives us an “annual weekday salary rate”.
We then multiply the “annual weekday salary rate” by the number of weekdays since the employee started work. We include public holidays.
E.g. If the annual salary is 120,000.
- 120,000 / 260 = 461.54
- The employee starts work on the 10th of January 2017 which means 16 weekdays (461.54 * 16 = 7,384.64)
We evaluated a number of other formulas before settling on the one above. Here are a few examples of other formulas:
Example 1: Divide the monthly salary by calendar days in the month to get a “monthly calendar day rate” and then multiply that by the number of calendar days since work commenced. We didn’t like that this formula penalizes the employee if they start work in a month with 31 days.
- The annual salary is 120,000. The monthly salary is 10,000.
- 10,000 / 31 = 322.58
- The employee starts work on the 10th of January 2017 which means 22 calendar days.
- 322.58 * 22 = 7096.76
Example 2: Divide the monthly salary by the number of weekdays in the month to get a “monthly weekday rate” and then multiply that by the number of days worked. We didn’t like that this penalizes the employee for weekends and public holidays.
- The annual salary is 120,000. The monthly salary is 10,000. January 2017 had 22 weekdays.
- 10,000 / 22 = 454.55
- The employee starts work on the 10th of January 2017 which means 16 days worked.
- 454.55 * 16 = 7272.80
Example 3: Divide the monthly salary by 30 to get a “30-day salary rate” and multiply that by the number of calendar days since work commenced. To be honest we didn’t really evaluate this one but we have come across it in Latin America and it doesn’t make much logical sense. The employee gets heavily penalized in February!
- The annual salary is 120,000. The monthly salary 10,000 / 30 = 333.33
- The employee starts work on the 10th of January (31 days in January). Amount of days since work started (30-10) = 20 (note this is always based on 30 days even if the month has 28 days or 31 days).
- 3333 * 20 = 6,666.67
5. Who pays the taxes?
Shield GEO handles payment of income taxes and employer taxes to the host country tax authorities as part of the payroll process.
6. Can you support shadow / dual / split payrolls?
Yes, as long as local payroll and statutory withholding rules are met.
7. How are taxes and social security contributions paid?
Employer and employee taxes are handled according to the host country requirements. These will be clearly outlined in your initial quote along with an explanation of how they are calculated in each host country. Each month we’ll invoice you, in advance of the payroll date, for what we call the Total Cost of Employment. Total Cost of Employment is the gross salary, bonus payment or allowances to the employee, employer contributions like tax or social security, expense reimbursements and our monthly management fee.
Employer taxes (e.g. payroll taxes) and social security contributions are shown as itemized inputs on the monthly invoice and included in our client reporting. When we run our monthly payroll process these amounts are paid to the local authorities as required.
8. Do you provide payslips?
Yes, we provide payslips in two formats. The host country payslip will be issued as per the statutory requirements of the host country. We also aggregate all payslips onto our Shield format which means we can provide summary reporting to clients across their employee populations. It also makes life a bit easier for expat GEO employees who may have trouble deciphering the local payslips.
9. Can we set the local salary in a foreign currency?
In all countries we have to pay the employee a salary fixed in local currency. That salary should be specified in local currency in the employment contract.
10. When processing additional payments (eg. commissions), do you use gross or net amounts?
It depends on the client instruction. We always ask whether an input is to be paid gross or net. e.g. for a commission of SGD 10,000
Paid Gross
This amount should be paid gross to the employee. Paid gross means we should add the employers social contributions on top of the SGD 10,000 when we calculate your invoice. And the employee should receive the net amount after employee social security and income tax is deducted from the SGD 10,000.
Paid Net
This amount should be paid net to the employee. Paid net means that we’ll add employees social security and income tax and the employers social security on top of the SGD 10,000. The employee will receive the SGD 10,000 into their account.
11. Can you run out of cycle payments?
Yes we can normally process payments outside our normal payroll cycle, with a few exceptions specific to certain countries. We charge a fee of USD 150 to process a payment out of cycle. This fee covers the additional bank fees and administration costs which can sometimes include having to re-run the payroll.
12. How do you handle taxable benefits?
Many employers will want to offer their GEO employees benefits like private medical insurance. In some countries, these benefits may be treated as a taxable benefit under the host country regulations, which means they are subject to income tax and social security. We can still deliver the net benefit to the GEO employee by “Grossing Up” the taxable benefit. This does result in a higher cost to the end client.
We advise whether each benefit is taxable or non-taxable according to the tax regulations of the host country. Non-taxable benefits are not subject to tax or social security. Depending on host country requirements they may be handled in a few ways:
- paid by the employee and reimbursed
- paid by our local partner
- provided directly by the end client
We will advise you whether your preferred approach is possible.
However “taxable benefits” need to be “grossed up” by adding the income tax, employee social security, and employer’s social costs. We then have to process this through the payroll and paid with the employee’s salary:
- We will invoice the client for the “grossed up” total.
- Then we deduct tax and social security.
- Then we pay the remainder (which equals the net taxable benefit amount) to the employee.
For example in Spain, private medical insurance is viewed as a “taxable benefit” and therefore subject to income tax and social security. So companies that wish to provide this benefit to their employees need to fund it through the payroll in the same way as salary. To calculate this, we “gross up” the benefit amount. If the private medical insurance costs EUR 1400 per annum we need to calculate the Income Tax and Social Security that applies to it. Then we’d invoice you for the “grossed up total”. This would be EUR 1400 + Income Tax + Employees Social Security + Employers Social Security
13. What are the reasons why expenses are viewed as taxable?
- Not a valid business expense according to the tax regulations of the host country e.g. gym membership
- The amount is in excess of limits on expense reimbursements. E.g. client entertainment expenses can be claimed if the amount is less than USD 100
- Supporting documentation insufficient. E.g. no original receipt, receipt in the wrong format
For example in Spain, private medical insurance cannot be reimbursed as an expense. It is considered a “taxable benefit” and subject to income tax and social security. So if you wish to reimburse your employees for this cost, these expenses would need to be “grossed up”. If the private medical Insurance costs EUR 1400 per annum we need to calculate the income tax and social security that applies to it. Then we’d invoice you for the “grossed up total”. This would be EUR 1400 + Income Tax + Employees Social Security + Employers Social Security.
14. How do we inform you of changes to the monthly salary or payroll?
Salary approvals are controlled by you but actioned by us. So we will contact you on the 1st of each month asking you if you have any additional inputs. And then we will incorporate any changes into our calculations from salary increases, bonus payments, or leave without pay.
15. Does Shield GEO manage expense reimbursements?
Yes. The client should submit approved expenses to their Shield Account Manager by the input deadline each month in order to reimburse the employee with the payroll. Local tax regulations sometimes require us to review and record the expenses in a particular format. Generally, we must receive an itemized expense report and scanned receipts.
16. Can we still reimburse employee expenses directly when using an employer of record service?
We recommend expenses be paid through the local Employer of Record. However, it is not obligatory in every country. Please remember that if expenses are reimbursed by the client directly to the employee, Shield GEO will not be responsible for ensuring it is done compliantly.
17. Do you support different currencies when processing payroll and invoicing? If so, what method do you use to calculate the exchange rates?
Yes, we can invoice our clients and accept payment in 11 currencies (USD, EUR, GBP, CAD, CHF, HKD, AUD, JPY, NZD, THB, ZAR). We have to payroll the employee in the local currency of the country. However, our clients understandably wish to be invoiced in their home currency or a “major currency” like USD or EUR.
Our standard approach is to calculate the salary and employer inputs in the host currency and then convert it into the desired currency at the published rate on www.oanda.com site +2% for foreign exchange variance.
18. How do you handle foreign exchange?
If the client invoice currency and employee payroll currency are different, we apply a foreign exchange (FX) variance of 2-3% (depending on the location) to any local currency inputs on the client invoice. For example, if the client will pay us in USD but we must pay the employee in KRW, then we’ll calculate the USD total based on the current USD/KRW exchange rate +2%. FX fluctuation can occur between the date when we raise our USD invoice (between the 3rd and 7th of the month) and the moment we have converted the USD into KRW (between 20th and 25th of the month). The 2% buffer allows us to account for any change in the USD cost of paying the employee salary and statutory contributions.
We have found that 2-3% is enough to cover most currency fluctuation. In case of a pronounced FX shortfall or overpayment, this would be accounted for on the invoice the following month. The FX variance is not a fee kept by Shield GEO.
Immigration and Work Permits
1. Can you sponsor work permits?
Yes. The GEO as a valid, legal entity can sponsor work permits for employees on assignment.
2. Can you arrange the work permit but we continue to employ the person directly?
In order to obtain a work permit from immigration, the GEO employer of record must directly employ and payroll the employee inside the host country.
3. Do you help with business visas?
Business visas for use outside the host country: As the Employer of Record in the host country we are often required to support GEO employees in business visa applications for travel outside the host country. We are happy to provide whatever support is required although it may incur an additional fee.
Business visas for use inside the host country: A GEO employment solution eliminates the need to obtain short term business visas since all employees will be issued valid work permits. This avoids any complications with immigration authorities around the overuse of business visas for multiple stays in the country.
In some countries, we can dramatically reduce visa processing times and expense by using a business visa for the employee to enter the country and then lodge their work permit application. Sometimes it is even possible for the employee to start work in the host country from the moment their work permit application is lodged. If these options are available we will inform our client during our initial assessment.
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