Comment by ayende | Hacker News Reader

Comment by ayende | Hacker News Reader

Huge hassle regarding taxes, legal details, etc.

For example, if you hired someone in Israel, you are mandated to pay taxes, contribute to pension plan, etc. There are labor laws details that you need to know how to work through, etc.

As a fine example, let's say that you have hired someone in Israel and they worked for you for 5 years. You covered payment and told them that they'll cover local taxes, etc.

You now want to fire them.

The following sequence of events happen:

* They sue for wrongful termination (there is a particular process to follow) * They sue for missing pension contributions (the law says that if you didn't contribute to the pension, you are both civilly and criminally liable). And it can be that you are found to be effectively the "pension fund". * They sue for severance pay, which is calculated as 1 month of salary X years worked.

That can be a huge surprise for you.

That is leaving aside things like what happens around work accidents. Did you carry local insurance for that? Or are you on the hook for millions because of that?

Those are all things that can be solved, but they are a major headache.

We had a real problem with this a few years back when we hired two people from the Netherlands (from a Ireland-based company) and they immediately offered them a fixed position (instead of the more usual temporary contract), and they both turned out to be net-negative contributors: didn't actually get any work done, and created hassle/problems for others (one was referred by the other, and they were problematic in more or less the same ways, this was at an early stage before we realized the depth of the problems).

But due to offering the "wrong" contract we also couldn't let them go, since that's very difficult (IMHO, too difficult) outside of gross misconduct, and is probably going to be expensive regardless. They also gave me such a contract by the way, as the first Dutch employee, but that wasn't an issue as no one wanted to get rid of me :-) I actually told them that was not a good idea, but after some turnover in the HR department it seems that got lost.

Both left on their own account eventually, but taking in to account their wages, the increased workload for others, the fact that others literally quit the company because of these toxic assholes, by my estimation each individually cost the company well over a millions euro with nothing to show for it (I'm fairly certain zero code of one survived, and very little of the other).

But wouldn't employing them as _contractors_ would sidestep all these difficulties?

Most European countries have laws that punch through a contractor relationship if it looks indistinguishable from an employee/employer one. So you need a legal judgement that your contract is written appropriately to avoid that

It's not hard necessarily, but you do need to get it right for each individual country. I can understand a company exec just not wanting the hassle.

You can employ through contracting agencies in the target country that handle all this stuff, but you'll still have a certain amount of pain when you run into different countries' Ideas of what is appropriate behaviour when firing someone.

0 problem with that in Poland. There are even special lower taxes for that here.

And I thought that Polish IT contractors were hired into the UK because they're good (they generally are).

You in general don't work for UK companies directly because of the laws around contractors, you have to have proxy companies to skirt the UK law.

Not quite, it's illegal but not enforced. If you get inspected within 5 years of a relationship like that you might be legally liable to repay all of your ZUS, health contribution and taxes.

And a change like that will likely come, there is a reason why all invoices are now digitalized and reported, most of fake employment relationships are one SQL query away from being found out. Just find people who submit one invoice a month to one client.

You can operate as a company. Those apply if you are an individual freelancer only.

In the UK you can operate as a ltd company all you like, but it won’t make a jot of difference if HMRC decides that IR35 applies to your role.

An “employer” can structure the contract to avoid IR35, but that’s precisely my point - now the “employer” needs local legal knowledge to maintain an arms length contractual relationship. (HMRC has also made the “employer” liable for IR35 problems: you can’t just punt the legal liability onto the “employee” and forget about it anymore.)

I am not so familiar with the uk. It seems you are right. From what I read it is possible, but you have a less beneficial arrangement, since you pay more tax.

> You’ll need to ensure you pay the correct PAYE tax and National Insurance (NI) for any contract which is inside IR35 because you are, in the eyes of HMRC, an employee. You can, however, manage this through your limited company.

https://www.crunch.co.uk/knowledge-tax/can-ir35-contractors-...

I wonder if 2 companies is enough to bypass this.

If you have one client that you work 9-5 for, in most countries that would be just false employment, both the employer and the "contractor" would see consequences of that.

In most countries operating as a limited company would solve that. The "consequences" as a personal freelancer would involve paying some more tax, which is not desirable, but is an option.

If someone is working as a contractor under employment like terms then that person is, in many countries, considered an employee and what you’re doing is illegal.

Well then they're not employees, they're contractors.

The difference is that in the former, they're a representative of my business, in the latter, they're providing a service to further their own business.

It's more complex than that.

For example even if you have a "contractor contract", but you only work for one client, you could be considered an employee.

At least in Germany, this means you will pay more taxes that you wouldn't otherwise, not that you would go to prison. I think it happens if more than 80% of your yearly revenue comes from a single client. You can always start a company and this is not a problem anymore.

Some sure. I see UK startups that hire EU "contractors" to ramp up, and it works well. Even in the relatively free-wheeling UK there are limits though. There's usually 2-year limit to the contract, for reasons perceived or real.

Is there no app/api that abstracts all this away?

There are agencies that do this. They have international offices, they hire the remote-abroad employee as a real employee of theirs, and the hiring company contracts the agency as a B2B deal. The agency is on the hook for all these things.

I don't know anyone who has ever used these so I guess they are expensive and awkward.

To answer your question more directly, it's not an app but rather a conglomerate of international brick-and-mortar businesses, with legal departments, HR, payroll, insurance... Not lightweight.

We used remote.com for this and it was a pretty smooth experience actually. It's not "cheap" (around 600 per month per employee), but not massive relative to the cost of employing someone.

> are agencies that do this

You're describing, in a nutshell, consulting.

No, consulting does recruitment themselves. This means they just deal with legally employing person you've recruited.

If you want to abstract away the legality, you abstract away the legality. Consulting provides that. Everything else involves massive legal bills and is uncompetitive.

It's different.

Consulting firms offer you someone. Maybe it's someone you pick, maybe it's someone they pick, but it is someone whose full time job is working as a consultant at said firm. Here, the firm finds someone they want to hire, and the agency deals with the legal nitty gritty.

If you mean consulting as an individual, it's still different, for both parties, because you recreate an employment situation. The employee has legal employment, notice period, employment rights, insurance, yada yada. Employee has long-term commitment.

If you're saying consulting as an individual is the same as.l employment, well... I guess then every two things are the same...

Consulting companies can also find a freelancer that they know and work with that will solve your problem without any hassles.

They know vs you know. The "know" part here is a very important distinction. Maybe not for you, if you have cookie cutter problems.

> Consulting firms offer you someone

Every consulting firm I’ve worked with is highly responsive to feedback regarding specific people. If I want that person, I get that person. They work on my team. Someone else handles the paperwork and abstracts away the legal questions.

Correct; the difference is, who comes up with the initiative of a particular person.

You come to a firm, talk to some of their guys and you like Alice best, you work with Alice -> consultancy.

You find Bob somewhere in the world, like him, want to hire him, find a company that deals with the legal details -> remote work agency.

In a previous role, I saw a whole team in Kyiv via an agency https://www.ciklum.com/ working for a company in London.

Those guys were good. I hope they're doing OK.

there is if you pay

deel.com

Lol, no. This is a people and legal issue, across national jurisdictions, not a technical problem to solve with an API.

Reply on news.ycombinator.com