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The Ultimate Guide to Hiring Overseas for Nonprofit Organizations

Nonprofit organizations and NGOs often have the opportunity to fill their staffing needs with workers located overseas.  For some nonprofits, this will be a natural result of their mission where they require local staff on the ground in a foreign country, as well as skilled expats assigned to fill certain technical or leadership roles.

Other nonprofits may look to hire employees abroad simply based on skill sets and availability to work remotely from their own country.  These roles are not ‘country-specific’ and instead are a way of accessing global talent regardless of the worker’s location.  Some nonprofits might want to fill roles with staff from multiple countries, so that would require extra planning and coordination by HR prior to hiring, to meet differing foreign employment rules.

What Nonprofits Need to Consider Before Hiring Overseas

Before hiring workers abroad, there are a few points to consider to be sure that your nonprofit knows how to be in compliance with local employment laws.  Your nonprofit status does not bring any exceptions to meeting employment requirements, and you will be treated just like any other employer.

1. Are there hiring restrictions in the host country?

Some countries impose hiring restrictions, especially for expats that could be viewed as taking a position that could be filled by a local. For instance, in the Philippines, an expat employee must have skills or talents that are not locally available, or they won’t qualify for a work permit.

Additionally, most countries will have some type of anti-discrimination law to be followed during the hiring process, based on age, gender or race.  If you want to run a background check on a prospective recruit, you may find that local authorities are reluctant to release information to foreign entities, so you will have to rely on other methods.

2. What are the local contract and employment laws?

Every country sets its own employment laws, and the contracts and policies that you use in your home country may not be applicable.  For example, France will require that all contracts be drafted in French, even if you also supply an English version, and should reflect French labor laws. 

Hiring an employee might be easy abroad, but termination of employment in countries like the UAE, Singapore and Malaysia will require notice of one to four weeks depending on the length of service.  There must be some type of justifiable cause for the dismissal, unlike the US where an employee can be terminated for any reason, at any time.

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3. Which types of visas and work permits are required?

Expat employees will need to have valid work visas for stays longer than a month or two, along with a local sponsor that is duly incorporated inside the country.  What this means is that a company located abroad can’t be the sponsor without a local entity.  In Nigeria, sponsors are limited to a certain number of work permits by a quota that can’t be exceeded at any one time.

4. What are the employee’s annual leave, holiday and sick leave entitlements?

One thing to consider prior to hiring is the leave entitlement for employees in the host country.  Those may be more or less generous than for home office employees and might affect the total compensation package.  In the Netherlands, holiday leave is 20 days per year which may be more than your organization usually offers, and on top of that, an 8% holiday allowance is paid in addition to salary.

5. Which tax laws are applicable to the employee and nonprofit organizations?

As legal host country employees, your workers must register, file and pay local taxes, and the employer is responsible for withholding the correct amounts in payroll.  There are no countries with exceptions to this rule unless there is no income tax collected such as the UAE.

In some cases, foreign entities could find themselves liable for corporate tax as well, via ‘permanent establishment’ (PE), where your presence and activity are generating sufficient revenue for taxation.  This is less of a problem for simply hiring remote workers, but if you are staffing a fixed office, PE may be triggered.

How to Legally Hire and Employ  Workers in a Foreign Country

Once your organization has reviewed the host country requirements, you will need to decide how to legally hire your worker.  You can’t just put foreign workers on your home payroll, so there must be some way to hire and pay them abroad.

Hire an Independent Contractor

Many companies will look to an independent contractor role for workers abroad, and this is a valid option depending on the role and how it is structured.  Hiring a contractor is best for short term or project-based roles, where the contractor clearly operates as a self-employed.

Otherwise, the contractor could be reclassified as an employee under local rules, negating all of the advantages of using a contractor and even resulting in company penalties for misclassification.

Use a GEO/EOR Service 

A safer way to hire overseas is using a GEO service that has a local employer of record (EOR) that is already set up and can run a compliant payroll for your employees.  The GEO service gives you the flexibility to hire even a single employee without incurring excessive costs, and all payroll and employment administrative tasks are handled for you.

Having a third-party GEO employ your workers abroad can help to reduce the risk of PE due to employee activity, and will give you access to multiple global locations with a single provider to handle your employment.

Set up a Local Entity

If your nonprofit is looking to establish a long term, multi-staffed operation in a foreign country, then it may make sense to set up your own local corporate entity.  When you choose this route, you are making a commitment to the country and will need local experts and resources to guide you through the process.  Setting up an entity can take a few months, and some organizations will use a GEO service to temporarily employ workers in the interim.

The Benefits of Using a GEO

Nonprofits can protect themselves from compliance risks by using a GEO solution for their foreign employment needs.  GEOs provides an end-to-end service for their clients and their employees, to ensure that the entire process goes smoothly, from hiring, onboarding, running payroll and offering statutory benefits.

ShieldGEO clients receive cost-effective employment administration overseas, and employees have the assurance that their experience working abroad will have professional oversight and attention. 

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