This guide will address the basic questions a US employer will have before hiring a foreign employee, and the types of obligations that must be met in a foreign location.
What is the difference between employees on assignment vs foreign employees?
There is a long history of US companies assigning their employees overseas to fill technical, management, and project roles. That practice is still common but is now complemented by a trend in hiring local resident employees in foreign countries. These foreign employees may be part of a remote team or will be filling an active role locally to expand and support business activity.
Foreign employment laws apply equally to local residents and expats, but the foreign country will have a greater interest in ensuring their own citizens are receiving all employment entitlements and benefits. There may even be special tax rates or lower social contributions for expats, but resident employees will need to be treated on par with other employed citizens in the country. It will depend on the company's specific needs and location of hire when evaluating the pros and cons of placing an employee on assignment vs hiring foreign employees.
Can foreign employees be put on US payroll?
A US employer could try to put a foreign employee on the US payroll, otherwise known as running a ‘remote payroll’. At first, this looks like an easy solution, but the problem is that the foreign employee does not have any connection to the US such as an ID card, social security number or W-4 form, which creates a US tax compliance issue. A remote payroll might work for a US expat, but it presents a real dilemma with a foreign employee...read more
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