Remote International Hiring

Remote International Hiring

Currently, South Africa faces a crisis of depleting numbers of good local tech talent. With remote working fast becoming the new norm, many big international firms are recruiting aggressively in countries like South Africa, which is contributing to the ICT skills shortage.

While South Africa does have growing numbers of developers and other tech talent, as well as those currently studying or in junior positions, it will still take years before we have the volume of skills that are needed in the country now.

To help firms navigate tech talent shortages, Dynamic Talent has developed a heatmap to track countries globally to highlight where certain skills exist. Dynamic Talent uses this tool along with other talent intelligence services to help companies navigate the current developer ecosystem and help them find the best recruits.

Recruiting tech skills from an international platform is easy and makes good business sense for first world countries. However, B-BBEE and EE legislation in South Africa make it complicated for local firms to follow the lead of big international corporates when it comes to recruiting talent from outside SA borders, and onboarding remotely.

There are several factors that need to be taken into account when you consider hiring tech talent from outside South African borders:

  • B-BBEE and EE rating. Hiring foreign employees negatively affects both your B-BBEE scorecard and the required EE standards of a business, as foreign nationals are recorded as “white” on both platforms (even if they are from other parts in Africa or African American). While independent contracting is a viable route for many, it needs to be approached in a balanced way. Dynamic Talent can support and guide companies in this process to both achieve business objectives with international talent AND use this to upskill local talent, thereby providing sustainable business growth.
  • Independent contractor vs permanent employee. An independent contractor is a better option for remote working, because independent contractors source and manage their own resources. Additionally, your company is then not bound by the labour law of the country in which the independent contractor lives. Abiding by local labour legislation in this way can be complex and costly – often requiring you to set up a local company and payroll. The gig economy is growing quickly, and more workers want to be independent contractors. However, make sure to navigate misclassification carefully.
  • Risk of misclassification. Employee misclassification is when workers are labelled as independent contractors, rather than employees. This can be deliberate or due to lack of knowledge on the part of the company. It does allow employers to avoid paying unemployment and other taxes on workers, and from covering them on workers compensation. “It is important to understand the distinction between ‘independent contractor’ and ‘permanent employee’ as it is defined in the country you are looking to hire from, i.e. in terms of the legislation observed in each case. Understanding how this differs from local classifications can ultimately save your company from being charged with misclassification,” says Phumelele Ndlovu, Talent Specialist at Dynamic Talent. Companies can go to the Department of Labour page of the country from where they are looking to recruit, to clarify the legislation. Dynamic Talent has recruited and worked with candidates and independent contractors from a diverse range of countries, including Kenya, Nigeria, Botswana, Mauritius, Senegal, Poland, Ukraine and the UK, and is able to offer specialised support with this.
  • Salary ranges. Rates and remuneration will have to be competitive in the market you are planning to recruit from, to be commensurate with that country’s currency. Do a search for salary ranges for specific roles in specific countries, i.e. in South Africa you can search the Department of Labour or the South African Labour guide or go to job sites such as PayScale to find information on salary ranges. Just search the job and open the job posts to see the normal rates of the job or contact Dynamic Talent directly for assistance. Specifically within the tech sector, our team has in-depth knowledge of market-related salaries and the variables that affect this.
  • Payroll and payment methods. Contractors working remotely are paid in the currency of their country of residence and can be paid using your company’s payroll if it has international provisions. For permanent employees, the tax, incentives, and benefits from the employee’s country of origin will take precedence over South African legislation and may have legal implications; but this does not apply to independent contracts. Companies can also use 3rd party payroll companies that are based in the country that the hire is based. Companies such as Shield Geo can assist with tax, payroll and legal compliance for international hires.

Ndlovu further advises that, before deciding, companies need to consider the pros and cons of independent contractor hire, which she outlines as follows:

Independent contract hire – pros for companies

  • Independent contractors offer scarce skills that meet specific roles/projects, global market reach, diversity, global experience, the candidate can impart/train on specialised skills and knowledge to locals, especially previously disadvantage groups.
  • Possible reduction in company tax responsibility. In South Africa there are certain categories where companies must include contractors on payroll & pay PAYE. Dynamic Talent can advise on this per country.
  • Flexibility, low commitment, and purely outcomes focus (appropriate for senior resources).
  • Possible lower costs such as UIF and subsidiary costs to company, however, this is dependent on the country of origin.
  • Quicker hires.
  • No need to comply with local labour legislation of employment.

Independent contract hire – cons for companies

  • An independent contractor does not add to the company’s B-BEE and EE initiatives (however, they are able to contribute towards upskilling and skills transfer).
  • Company cannot control how the Independent contractor performs their tasks, where and when, and the resources used, the employer can only control the end result of the task/project.
  • Lack of control and accountability. However, Dynamic Talent has been a remote-working, distributed team model since inception. We have refined our approach to this many times, and therefore are uniquely positioned to provide insight into effective remote worker management.
  • Risks of misclassification.

While independent contractors are a viable route for many businesses, companies need to go through the above steps. It is critical to have an expert talent acquisition partner who is equipped to guide your business every step of the way, to ensure compliance to all legislation and to protect your company and the employee.

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