How to mitigate Co-Employment Risk?

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There are specific rules and risks depending on the country in question, but in general, documenting the employee’s relationship with Remote and preventing direct contracting with and payments from the client preserves the Employer of Record (EOR) relationship and limits co-employment risk to the client. 

For Remote to perform its obligation as an employer, Remote must handle all HR issues directly with the employee, such as changes to the terms of employment, disciplinary actions and terminations.

Decreases Co-Employment Risk Increases Co-Employment Risk
No contract between employee and client. Client contracts directly with the employee
Contract between Remote and employee that clearly sets out the employer/employee relationship between Remote and the employee and sets out the employee's job duties. Client explicitly refers to the employee as customer’s employee on public materials
Remote pays taxes for the employee and reimbursements are paid by Remote The employee is reimbursed directly by the client for expenses

Please note, these examples are not substantive

Co-employment risk can be higher depending on Remote's business model in a country. Below are example actions or practices carried out by clients, which may contribute to increasing their exposure to co-employment risk and should therefore be avoided especially in selected countries:

  • Sending offer letters or employment amendments: We are not involved, so clients are the one assuming risks if they choose to send offer letters directly to candidates or employment amendments to existing employees. For offer letters, the risk in not too big, but in some countries, this can create a binding employment contract, which cannot be rescinded without following a termination process. Also, clients are now able to request offer letters from the Remote platform.
    See also:
  • Paying for travel expenses: Ideally, in all cases and countries, employees are advised to make the bookings themselves and then request a reimbursement through Remote. 
    See also: Add an expense

  • Processing payments directly: All expenses undertaken in the course of employment should ideally be processed via Remote, either as an advance or as a reimbursement.

  • Sending employment verification letters / travel letters: Employees can request this on the platform and we would issue the letter with Remote's entity as the employer by default. If an employee asks to get the client's name added as well, this is something we can do.
    See also: Can Remote provide a proof of employment letter?

  • Mentioning employees on the client's website: This is possible, however please ensure to refer to the employees as Team members or the like. Calling them your employees could increase your co-employment risks

  • Requesting employees to follow internal Company policies: Given that the company policy is not an employment agreement, it therefore, doesn't establish an employment relationship between the client and the employee. It also doesn't require a signature so the risk attached to this is minimal. We recommend that the policies refer to the employees as "Team members" to mitigate any co-employment risks.

  • Providing equipment: Ideally, employees should pre-pay for the equipment and request a reimbursement. If clients want to buy this directly, there's generally not a problem. However, if they want any agreements executed regarding the equipment, the agreement should not refer to them as an employee, but rather as an employee of Remote providing service to the client or Team members.

  • Using the client's own system to submit paid time off (PTO): The risk associated with this is very limited. This should however also be recorded on the Remote Platform.

  • Materials (training, handbook): There is always a co-employment risk each time the client sends documents directly to employees, but the risk isn't higher than usual. Our recommendation to mitigate the co-employment risk here is to refer to the individuals as "Team members" instead of employees.

Please note, the information contained in this is for general guidance. 

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