Hire a worker for a non-US location
Hiring overseas in non-US locations can be challenging. Finding the right talent, understanding what to pay and getting the governance for payroll, taxation and legal right to work in the country can be complex. As in the United States, most other countries have laws governing the employment status of workers in that country and it is incumbent upon the University to ensure we understand and are in compliance with those laws. Failure to properly understand and follow the laws and guidelines exposes both the University and the individual to taxes, additional liabilities and potentially legal penalties. The purpose of these guidelines on hiring a local national in a non-US location is to support your research or project. These guidelines must be followed and the documentation completed and submitted prior to engaging anyone to provide services. outside the United States.
- All faculty and staff who engage individuals to perform services, process transactions related to the services and/or authorize payments outside of the US
- Sourcing and Procurement
- Global HR
- Accounts Payable
- Global Programs
General Statement of Procedures
Procuring services from an individual outside of the United States requires an evaluation process led by the Comptroller’s office to determine whether the individual should be classified as an employee or an independent contractor, as we would do in the United States. This classification has implications on how the individual will be paid as well as their tax status.
Types of hires:
There are many different types of roles for which you may be hiring overseas including, but not limited to: short-term consultants, lecturers, data collectors, and researchers. These resources likely fall into one of the following categories:
- An employee is an individual who works in either a part-time or a full-time position. The University is required to withhold taxes and provide other statutory benefits (i.e.: Social Security, overtime, etc.) in most locations outside of the US for these individuals. These individuals are not eligible for U.S. benefits and the laws in the country in which the work is performed govern the various employment requirements.
- Independent Contractor
- Independent contractors are individuals who are not considered as employees, are not eligible for benefits, and are not paid through payroll. Rather, payments are made through Accounts Payable and registration is done through Sourcing & Procurement.
- Vendors are companies that are paid to perform services or supply equipment. Payments to a vendor are through Accounts Payable and registration is done through Sourcing & Procurement.
Risks associated with hiring overseas:
Before engaging an individual (or a company with only one employee) to perform work for the University, we need to establish if that person should be classified as an employee or as an independent contractor. There are a number of reasons it is essential to make this determination before hiring a resource. Specifically the University must ensure compliance with:
- Local statutory employment and tax requirements. If a resource is determined to be an employee, the University may be required0 to withhold income tax, pay social security and provide minimum benefits required by law. Noncompliance can lead to back payments as well as legal fees and fines.
- Immigration laws. It is essential to hire individuals who have a legal right to work in the overseas locations. If a resource is determined to be an employee, the University is required by law in most countries to ensure these individuals is eligible to work in that country, similar to our I-9 employment eligibility verification process in the US.
- Permanent Establishment Risk. If the University is viewed as having employees working in a particular country, it may give rise to Permanent Establishment Risk. This means that the University would be liable for paying local corporate taxes. The University’s “not for profit” status is only valid in the U.S. and most overseas tax authorities will not view us as a “not for profit”.
How does the University determine if a resource should be classified as an employee or an independent contractor?
Please see this link for a document summarizing the decision process.
The classification of a worker and, more specifically, the classification of an individual as either an employee or an independent contractor is an area of complex compliance and regulation. To reduce risk for the University, the Comptroller’s Office and the Global HR team have created a centralized process for determining the status of workers hired or contracted in countries outside of the United States. To facilitate this process, we have compiled a set of questions and an online data gathering tool.
The Non U.S. Worker Classification Pre-Qualifying Questionnaire (“the questionnaire”) is available on the manager’s tool kit. This questionnaire should be completed to the best of your department’s ability to help determine the individual’s employment status with the University. The worker classification tool is designed to help assess status for in-country hires ONLY (that is, individuals who will be performing work in their country of residence/citizenship).
Once the questionnaire is submitted, the Comptroller’s office will email the worker additional queries, as needed, to ensure the appropriate classification of their relationship with the University.
What happens next?
The Comptroller’s office will advise you if the resource is to be classified as an employee or independent contractor. The standard turnaround time for a response is 2 working days after completion of the worker form. If you need more information around the process in Accounts Payable, please visit their website for further details.
How do we hire an employee?
If the Comptroller’s Office has determined that the resource should be classified as an employee, and the department would like to engage the resource, the University will hire the individual on the local payroll. In order to hire a local national overseas in a non U.S. location as an employee, the University is required to have a registered entity along with an operational payroll. In some instances the University may have a registered entity through our Global Programs office or other schools with global operations.
If there is no registered entity of Boston University, we are required to hire the individual through a global employment outsourcing vendor. The vendor provides us with the following services for a fee.
- Onboard and Administer employee Contracts
- Serve as Employer of record
- Maintain legally-required licenses, registrations and insurances
- Administer payroll and Expense Report payments to the worker
- Administer payments and tax filings to local authorities
- Off board and manage the termination process
- Maintain any statutory benefits required for the employee
Global HR, in collaboration with the Comptroller’s office, will calculate the cost to the department and help set up the hire and collect the required information from you. The cost of this service will be borne by the appropriate departmental or grant funds and should be included in the project’s budget. For a cost estimate, please contact global HR.
We currently have a signed agreement with a vendor to help recruit in the following countries:
Please click the country you are interested in to download the playbook for that country. These playbooks include information about the statutory requirements, market practices, and employment landscape of the country. This content is only applicable if the determination made is to hire host-country nationals deemed as employees of the university.
If the country in which you need to hire is not listed above, please indicate this to Global HR when submitting your request. Global HR requires 10 business days to engage a vendor and negotiate terms for a country not listed above.
How does the University setup an independent contractor?
If the Comptroller’s office concludes that the resource should be classified as an independent contractor, Global HR has drafted a template agreement which can be used to establish the terms of the engagement. Registration and payments will be managed by Accounts Payable.
Please click here to download a copy:
Independant Contractor Consultant Agreement 211216
Regardless of the duration of the assignment or the number of employees hired, work performed overseas can present a range of legal, financial, safety, and logistical considerations that create complications and add expenses. Poor planning can result in immigration issues, tax penalties, and other avoidable costs. If you require additional guidance of have questions, please contact the following individuals.
|Contacts||Department||Point of Contact for||How to reach|
|Dietrich Warner – HR Director, Systems & Operations||Human Resources||Interim support for international hiring and:
Global Employment & Global Human Resource Management
|Matt Abrams – Associate Comptroller||Payroll & Payment Services||Global payments to Independent Contractors and Vendorsfirstname.lastname@example.org
|Adeline Wong – Managing Director, Operations||Global Programs||Assistance with planning or implementing your global activity around the email@example.com