1. Reserve Payments
When hiring employees through Remote’s Employer of Record (EOR) and Contractor of Record (COR) service, a reserve payment is required as part of the onboarding process.
A reserve is a refundable amount temporarily held by Remote to help safeguard against potential large or unexpected severance costs if a team member's employment ends.
In many countries, labor laws require employers to pay statutory severance. Depending on the employment agreement, there may also be additional contractual obligations. Reserve payments help ensure funds are available to cover these costs if they arise.
Note: Reserve payments are required only for Employer of Record (EOR) employees and Contractor of Record (COR) contractors. They are not applicable to Global Payroll (direct employee) or users of our Standard Contractor Management and Contractor Management Plus platforms.
Employer of Record
Remote’s standard reserve is the baseline reserve requirement for hiring employees through Remote's EOR service. It is typically equivalent to 1 month of the employee’s Total Cost of Employment (TCE), which includes:
- Base salary
- Mandatory employer costs
Reserves do not include Remote’s management fees.
Remote offers a credit review to assess whether our standard reserve requirement can be reduced or waived.
Certain employment agreement provisions may require additional reserves on top of the standard requirement. See When might a higher reserve be required? for more details.
Contractor of Record
For contractors hired through Remote's COR service, the reserve is always equivalent to 1 month of the contractor's compensation outlined in their statement of work. The reserve does not include Remote's management fees and is not waivable.
Additional reserves will be required depending on your payment arrangements or specific employment agreement terms.
Extended payment terms
Moving from 14 day terms to 30 day terms will require an additional 1 month reserve per employee.
Non-standard employment terms
Certain employment terms can create additional financial obligations. Including these terms will result in a higher reserve requirement. These additional reserves are in addition to any applicable standard reserves.
Employment term | When additional reserves will apply | Example of reserve requirement |
|---|---|---|
Extended notice periods | If the contractual employer notice period exceeds the statutory requirement | If the statutory notice period is 1 month, and the contractual notice period is 3 months, an additional 2 month reserve is required |
Seniority recognition | When transferring an existing employee from another EOR provider or your own entity to Remote EOR, and you want to maintain their seniority | Recognizing previous service above 2 years requires additional reserves:
|
Non-compete/non-solicit clauses | When compensation is required during a post-employment non-compete/non-solicit period | If an employee is entitled to 50% of their salary during a 12-month non-compete, an additional 6 months is required |
Guaranteed severance | When an employment agreement includes a guaranteed severance payment | If the agreement guarantees $10,000 in severance, an additional $10,000 reserve would be required |
Other non-standard terms | When contractual amendments, including commission or bonus arrangements, increase employment-related obligations | Calculated based on the specific contractual obligations |
High salary employments may also be subject to additional review.
Please note: These examples are illustrative. Actual reserve amounts depend on the applicable employment terms and country-specific requirements. Reserves for non-standard terms will still apply even if a standard reserve waiver has been approved.
Where a reserve is required, payment must be received before the employee can be invited to Remote and begin the onboarding process.
Reserves are not Remote fees. They are fully refunded once the employee is offboarded or their onboarding is cancelled, after all outstanding invoices are paid. Refunds are processed within 60 days of the final invoice being paid, usually sooner.
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