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When you’re outgrowing your in-house software development team and need to bring on engineers to help with a specific task or challenge, outstaffing can be a great solution.
But before you jump headlong into this pursuit, there are a few legal factors you need to consider. In this article, we’ll outline the top outstaffing employees legal compliance to consider when working with an outstaffed software development team.
And since real world examples are always better than theoretical ones, we’ll also explain how TurnKey’s awesome legal department works and give you some examples of outstaff arrangements we’ve helped our clients set up.
Outstaffing is becoming increasingly popular for startups and tech companies looking to hire specialized talent without having to expand an in-house software development team. Offshore staff augmentation offers a range of benefits such as cost savings, access to global talent, and more flexibility.
However, it’s important to understand the legal aspects when working with outstaffed employees so that you remain compliant with local laws and regulations of the countries you are operating in. This blog post will discuss some of the main legal factors you should be aware of when hiring outstaffed software developers for your startup or tech company.
To begin, it’s important to understand the laws surrounding labor contracts and service agreements in the country you are targeting. Outstaffed employees can either be hired via direct employment model or via an independent contractor model.
Labor contracts outline the terms of employment in a strict accordance with local labor law, setting out working hours, an exclusive list of responsibilities, mandatory vacation policy, benefits determined by the Government, and payments in local currencies. On the other hand, service agreements for independent contractors propose more freedom to choose how, when, and where the tasks may be performed, the currency of payment, and to agree on different types of benefits.
It’s also important to be aware of any taxes or fees associated with hiring outstaffed software developers, especially if they are from another country. Outstaffers may need to pay certain taxes in their home country depending on their local regulations so it’s important to understand what taxes you may need to pay and who should be responsible for them (and how to stay compliant!).
We are experts in helping your company cope with all the legal hassle of outstaffed software development.
Finally, it’s important to provide outstaffed software developers with the same protections as any other employee. Outstaffers should have access to the same or similiar insurance and benefits that are available to other workers, such as paid vacation days or retirement plans. Outstaffers should also be given the same opportunities as other employees when it comes to career advancement and training.
Overall, understanding the legal aspects of hiring outstaff software developers can help ensure that your startup or tech company remains compliant with local laws and regulations.
Thus, let’s dive into the major legal factors you should consider in detail.
When hiring outstaffed software developers for your startup or tech company, it is important to consider all of the legal aspects involved. You must create clear and legally binding employment conditions that specify the rights and obligations of both the employer and the developer. The following are some key points to consider:
When hiring offshore software developers, it is essential to ensure compliance with all applicable labor or civil laws in order to avoid any legal consequences. Here are some important steps you should take to adhere to local laws:
When hiring offshore dedicated development team, it is important to keep accurate tax records in order to comply with the law and ensure your business’s tax obligations are met. Here are some helpful tips for keeping tax records:
Protecting the data privacy and confidentiality of both your company and the offshore staffing or contractor is a key consideration as well. Here are some tips to ensure that your team’s confidential personal data remains secure:
Adhering to health and safety guidelines is essential when it comes to managing outstaffed employees and contractors. Here are some important steps you can take to ensure that your team members are working in an environment where their health and safety is prioritized:
Having appropriate insurance coverage for offshore employees and contractors is important in order to protect both their wellbeing and that of your company. Here are some things you should consider when reviewing the insurance policies:
First, it is important to have a clear understanding of the scope and purpose of the intellectual property right being assigned. It is also important in this step to create an agreement that assigns the IP right to both parties involved.
Second, you have to adhere to all applicable laws related to assigning IP rights. Depending on the jurisdiction in which your offshore employee or contractor resides, there may be different requirements for assigning these rights. Be sure to research any laws or regulations relevant before proceeding.
Third, consider any potential risks associated with assigning the IP right and how best those risks can be mitigated. This could include obtaining waivers from either party or ensuring third-party contracts are in place for additional protection.
Finally, document all actions taken during the assignment process and store them in a secure location. This ensures that should any questions arise pertaining to the IP right assignment, they can easily be answered by referring back to those documents.
Assigning intellectual property rights offshore can be complicated but with proper planning, research and documentation it is possible for an effective result.
If a company fails to comply with the legal regulations that pertain to offshore employees and contractors, there can be a variety of consequences for both the employer and employee or contractor.
#1. Failing to meet legal requirements when it comes to hiring outstaffed employees and contractors could result in civil penalties including back wages, liquidated damages, injunctive relief and/or criminal prosecution. This could lead to irreparable damage to the company’s reputation and further financial losses.
#2. If an employer does not provide legally required benefits such as workers’ compensation insurance or unemployment insurance coverage for offshore employees, they can face hefty fines by the appropriate public authorities. Furthermore, if an injury occurs and there is no workers’ compensation insurance in place, the company can be held liable and must cover any medical costs incurred by the injured employee.
#3. If an employer does not properly classify an outstaffed employee as an independent contractor (where applicable), they may be found liable for unpaid payroll tax contributions such as Social Security and Medicare taxes, in addition to other associated big penalties and interest charges. Without proper classification, employers also risk being held liable for unpaid wages or overtime pay.
#4. Non-compliance with applicable labor laws could lead to expensive litigation costs if any lawsuits are filed against the company. In some cases these types of lawsuits may even have class action status which increases the potential financial exposure for companies who do not follow proper legal requirements when dealing with offshore employees and contractors.
It is important to remember that the legal regulations when it comes to offshore employees and contractors vary depending on the country, state and even city. Therefore, it’s essential for employers to do their research and make sure they are up-to-date on all applicable laws before hiring. This can help protect companies from potential legal risks and ensure a smooth working relationship between both parties involved. It’s better to be safe than sorry!
At TurnKey, we know how important it is to have legal support when hiring offshore software developers and contractors to ensure that all regulations are followed accurately.
Our legal team provides expert guidance on relevant employment laws and regulations for all the countries we operate in throughout Eastern Europe and Latin America, including those relating to workers’ compensation, remuneration, health & safety management, and the terms and conditions of employment contracts or service agreements.
We also help ensure that your company remains compliant with applicable labor standards and provides adequate protection for your offshore team. Having a legal advisor on board dramatically reduces the risk of costly or damaging disputes arising from non-compliance with local laws.
Luckily for you, we have a professional Legal department to help you cover all these questions. For example, do you want to find great software development talent in Colombia or Poland, but don’t know what the taxation is? Instead of spending money hiring legal advisors in each separate country, TurnKey has already done all the math for you!
Here’s what TurnKey’s awesome legal support entails for all our clients:
And if you still have any questions, the TurnKey legal team conducts additional research for any country you choose.
In short, with TurnKey you can Rest Easy knowing that we’ve got you covered on all things legal!
If outstaffing your software development sounds like too much hassle, give turnkey a call. We specialize in hiring the best and brightest offshore software developers for startups and tech companies.
Hiring offshore employees and contractors is great way to save money, but if you don’t do it correctly, it could end up costing you plenty.
That’s why it’s important to have a legal advisor on hand when hiring outstaffed employees and contractors — they can help make sure that everything is done in accordance with the law and that all your paperwork is filed properly. Not only can they save you time and hassle, but they can help you avoid hefty penalties.
Having an experienced legal advisor –like our awesome TurnKey legal team! – ensures that your offshore software development efforts run smoothly and worry-free. Contact us today!
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