About half of Canadian charities have no employees. However, about half do have employees. Some charities even have thousands of employees. While some charities are internationally focused, such as those dealing with international development and humanitarian assistance, they have always had to grapple with having employees in many different countries.
However, with improvements in technology and also in increasing employee mobility, it is now more common for Charities, which might even be focused on providing services in Canada, to have employees who are potentially not living in Canada.
For example, a Canadian charity that does medical research may hire a staff member in a foreign country to help with the research. In some cases, this may be a short-term assignment, and the staff member may be working on many different projects for different organizations, and they may be appropriately classified as independent contractors depending on the country.
In other cases, the person in the foreign country may be working full-time for the charity, and it may not be appropriate to classify them as independent contractors under Canadian or foreign law. What constitutes an employee vs. independent contractor will vary from country to country.
Charities will sometimes set up payroll in a foreign country or perhaps even set up an entity that would set up the payroll in the foreign country. This may make a lot of sense when the charity is hiring a number of people and/or has plans to work in a country for a long period of time.
However, sometimes, that may be a lot of effort, for example, for a part-time employee in a country where the employee may or may not continue with the charity, and then all of that infrastructure will need to be wound down.
So, there is the concept of an Employer of Record (EOR). It is defined differently by different people, but essentially, this is a for-profit service provider that has entities in many different countries, and they can handle HR and payroll for your charity staff in many different countries. The EOR will also have expertise in local HR requirements and have systems to deal with employees in many countries.
There are many advantages as well as disadvantages of using an EOR.
Some of the advantages are may be very quick to have an employee hired in a foreign country and you have local support for HR issues such as employment agreements, paying the employee, making remittances, etc.
Some of the disadvantages can be the cost associated with using an EOR and whether the offerings of the EOR are consistent with the requirements of the charity.
Charities should be careful when hiring staff outside of Canada to ensure that local laws are being followed. Increasingly, many countries are cracking down on charities and employees who are not complying with local law, including, but not limited to, remittances of taxes to the local government.
An EOR can help a charity that will operate in several different countries and does not have the expertise or capacity to understand the local requirements.
There are other options, including Professional Employer Organizations (PEOs) that generally don’t hire the staff person but instead provide back-end support on compliance and other requirements.
There are many advantages of hiring a staff person in almost any country in the world rather than just relying on staff who could be in your own home country. However, it is important to be aware of the risks to your charity and your staff if you’re not complying with local law.
The old idea of just calling the person an “independent contractor” and not dealing with the complexity of these relationships is a very risky strategy for both the staff member and the Canadian charity and its directors.
Some examples of the more commonly discussed Employers of Record who may or may not have the services that your charity may require include but are not limited to:
Deel, Papaya Global, Remote, Rippling, Remofirst, ADP, Near, Oyster HR, and Globalization Partners.
For Canadian charities doing international work or just hiring people outside of Canada, there are many ways that one can manage risk and using an EOR can be one example of a strategy that can in some cases be helpful.