Before expanding overseas, it’s important to understand all aspects of building a team including the topic of limited term employment. Hiring this way is different than employing a full or even part-time employee. While there are many advantages and disadvantages to limited term employment, there are also disadvantages.
Depending on your business needs overseas, limited term employment may or may not be the best option for working with international team members. To help you understand this form of hiring, let’s take a look at the advantages and disadvantages.
Defining Limited Term Employment
Limited term employment is a term that the federal government uses to describe contracted employees whose appointment does not exceed three years in length. Also, the employment term cannot be extended or renewed.
Advantages of Limited Term Employment
Employers who use limited term employment contracts can minimize their risk of damages by hiring with contracts that limit entitlements or benefits upon termination. This option allows employers to manage their liabilities and are free to terminate contracts as their business needs evolve.
Limited term employment is usually appropriate in situations when you know a definite end to the employment relationship.
Despite the benefits, you need to ensure that you’re crafting safe, compliant contracts overseas. Velocity Global’s International PEO (Professional Employer Organization) solution can help your company craft contracts—as well as hire on your behalf, virtually anywhere.
Disadvantages of Limited Term Employment
The largest employer disadvantage of limited term employment is that this type of contract can be dismissed before its expiration date. If the relationship ends, contractors typically receive full compensation whether or not the job results in success. Include an early termination clause in the original contract to keep your company safe.
Also, if a contractor has multiple short-term projects with your firm, you may face a misclassification charge from local courts. If this is the case, the employer must provide all of the entitlements of full-time employees to the contractor. To avoid this situation, don’t employ contractors for multiple, successive contracts.
Keep it simple and straightforward. Also, work with an International PEO to help you manage complicated employment relationships.
Temporary employees can provide great results for your company under the right circumstances, but we always suggest working with an international consultant or in-country attorney to help you navigate working relationships overseas. Especially in regards to contractors. If you need guidance, get in touch with us today.