Companies often turn to global hiring to explore new markets and reach their growth goals. Independent contractors can be a helpful asset if you’re looking for specialized talent for specific projects. If you intend to hire an independent contractor in Bangladesh, make sure you understand local regulations and other important responsibilities when engaging with this worker type.
Hiring independent contractors in Bangladesh
Before hiring independent contractors, you should understand the various conditions that define this worker type to avoid the risk of misclassification.
Independent contractors vs. employees
The defining difference between independent contractors and employees is the level of control the employer has. Employees must abide by employers’ instruction concerning work hours, location, and how tasks are performed. Since employers can enact this control, they are required to follow employment laws regarding minimum wage and benefits.
Independent contractors, however, are not under the control of the employer. Contractors use their own tools, define their schedule and work location, and determine how to complete the described project. This freedom also means contractors are not entitled to benefits.
Penalties for misclassification
Employers often misclassify employees as contractors by mistake or in an attempt to save on employment costs. In that case, the worker could sue for misclassification, and the company would likely have to pay past-due social security contributions and fines, as well as provide various employment benefits and rights to the worker.
How to hire independent contractors in Bangladesh
The contractor hiring process should involve 3 key steps.
1. Carefully conduct interviews.
Rather than focusing on personality or assessing if a candidate will contribute to company culture, ask potential contractors about their experience and skills. Interviews with independent contractors are more similar to business transactions. Questions about character may imply an intention of permanent employment.
It’s also helpful to clearly specify your need for a contractor in job advertisements to attract the right type of candidates.
2. Create a service agreement.
Independent contractors provide services, so they are not part of an indefinite employment relationship. For this reason, companies will need to create a service agreement. This document is similar to an employment contract in that it clarifies the terms surrounding the working relationship. A service agreement should cover:
- Pay rate and arrangements
- Description of the project or task
- Termination conditions
3. Introduce necessities.
While onboarding and training processes can signify employer control, you can offer contractors a brief introduction to your company. Include any key information needed to complete the project, such as important contacts and essential workflows.
How to pay independent contractors in Bangladesh
Independent contractors are responsible for providing invoices for their services, but both parties should determine payment methods in the service agreement. A contractor may rely on various pay arrangements, like receiving equal installments or requiring a down payment at the onset of the project.
Since employers pay contractors for services, not employment, they are not responsible for providing benefits or deducting taxes from these payments.
Terminating independent contractors
Independent contractors are not subject to termination protections like employees. Employers should outline a termination process in the service agreement. Termination is generally permitted if either party fails to meet these terms.
Turn to G-P when hiring independent contractors in Bangladesh.
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Contact us to learn more.