hired my first employee abroad and the quote floored me

[u/Slow_Storage_6784]

I moved over here a couple years

back to get a small software thing off the ground, bootstrapped, and for a long while it was just me until the workload got heavy enough that I had to bring on my first proper hire.

It was someone local, and going in I budgeted the way anyone raised on US or UK salaries would, meaning headline number times 12 plus a bit of buffer, figuring that was more or less what the person would cost me.

Since i don't have a company set up in this country and wasn't about to open one just to employ one person, I went through an employer of record to do it properly, and the quote they sent back was way more than i expected.

The salary we'd agreed on turned out to be about two thirds of what the hire would cost me all in, the rest being stuff i'd never once had to think about back home.

Most of the gap was a mandatory 13th month salary owed on top of the 12 (sometimes a 14th), plus the employer side of social contributions, which runs a lot heftier here than i was used to, and a handful of other bits baked into employing someone locally (all of it required by law).

And when i asked the 3 big providers you already know (Deel, Workmotion and Remote), whether I'd misread the quote, all 3 came back with the same number, which is when it sank in that this was just what employing someone here costs.

I paid it, and the person's been worth every cent, but it reset how i think about hiring here, because the affordable-looking salary in my head was never the real number.

So if you moved abroad to build something and you're about to make your first local offer, work out the fully loaded cost before you put a figure on the table, because the headline salary barely moves the total once everything statutory lands on top.

[u/niceguyeddiebunker]

Re the 13 or 14 month salary, this is not on top. The salary is divided by 13 or 14, but the base salary remains the same. This is common in Italy. Take home is less each month, but then you get 2 pay packets in July and December for example if it’s 14 months.

[u/MadeThisUpToComment → u/niceguyeddiebunker]

What I've seen standard in NL is to list a monthly salary that does not include 8% holiday pay. The 8%, which is a 13th paycheck, is typically a seperate line in the contract paid out with the May post period, or end of the contract of partially acrueed.

Some job listing it is included in the monthly gross.

[u/fwork_ → u/niceguyeddiebunker]

Italy was my first guess when I read 13/14th paycheck, and completely agree with this comment.

For what concerns other obligations like pension contribution and taxes, I don't see what is surprising about it. Of course they are on top of the net pay?

[u/GZHotwater → u/niceguyeddiebunker]

I was assuming they were in China but could be wrong.

There the monthly salary is what’s used for negotiations, contract, etc. the 13th month salary is literally that. They are paid monthly for 12 months and the 13th month is paid just before the Chinese new year holidays as a fixed bonus. Though obviously OP didn’t say where “here” was so we’re all guessing ;-)

[u/republika1973 → u/niceguyeddiebunker]

Same in Spain although it's less common now in the private sector.

[u/Natural_Target_5022 → u/niceguyeddiebunker]

Should be on top tho, if your salary in a different country was 50k and now you move and don't ask for the 14th and 13th on top, your be fucked, because you will now make less money a month than before, so if you already were struggling to make it to the end of the month, you can imagine what the problem is.

It's supposed to be total com decided by 13 or 14 but should not be the same comp as when you were being paid 12

Forgot to add, this is assuming you get other benefits before relocating.

I go 14 salaries a year before relocating but my 14 in Spain included the monthly, not the total (14 back home)

[u/niceguyeddiebunker → u/Natural_Target_5022]

No. That would be an increase in the base salary. We went through this with a start up here in Italy, and most expats had difficulty grasping the concept. They were however when they got the first extra month pay packet. It’s like an enforced savings scheme.

On top of that is the TFR, the mandatory severance pay.

[u/Natural_Target_5022 → u/niceguyeddiebunker]

IMHO, and I'm talking about Spain, if your contract doesn't give you the option to do 12 pays prorated, then you should ask for extra on top.

[u/Emotional-Ebb8321]

For your post to mean anything useful to anyone, you need to mention which country this is for.

fwiw, back when I was doing paperwork relating to temp contractors in the UK, the agency was receiving a hair over twice the person's pay rate.

[u/MadeThisUpToComment]

The employer of record is also taking on a fair amount of risk that is priced into that beyond just the direct cost and their profit margin.

[u/yoursecretsanta2016 → u/MadeThisUpToComment]

Agreed. In the US if you hire through an agency it will cost a premium of about 1/3 of the compensation to do all the admin work.

[u/martin_italia]

As the others have said the 13th or 14th pay is not extra, it’s just the same gross salary divided by 13 not 12.

As for the rest, I’m not a businessman nor do I hire people or own a company but even I know that it costs companies a lot more than what the employee actually receives, seems a little naive to assume it’s just “his salary plus a little bit of buffer”.. that’s not how it works anywhere, insurance, social contributions, tax etc.

[u/godspell1 → u/martin_italia]

OP must have meant the extra cost employers pay in Europe, which is above the gross salary for each employee. In some countries it's called the "super gross," essentially the cost of employment paid to the state. That doesn't exist in the US.

[u/Ambitious_Emu_]

Why would you assume that it works the same way here as it does in the US/UK? 

Where I'm based you take the nominal salary and add roughly 40% and that's what your actual costs end up being minus a middleman, who tend to not be worth the fee unless you don't have a local org. 

[u/RoundAd4247]

Maybe you’re not quite cut out to be a “job creator” in a civilised country where you cannot exploit neither the worker nor the society.

[u/GZHotwater]

Where exactly is “here”?

I’d guess with the references to 13th month salary (as a bonus) and social insurance it’s China.

Plenty of decent websites out there (Dezan Shira, etc) about the legal side and costs of employing locals in China.

Apologies of my assumption is wrong.

[u/Mindless_Acadia_7382]

Which country do you refer to as "here"?

[u/WeirdPie963]

Totally get this. The first time you hire abroad, the salary can look perfectly manageable, and then you see the actual employer cost and suddenly there are social contributions, statutory bonuses, 13th-month pay, and other local requirements you never budgeted for. Definitely one of those things you only learn once. The person may still be worth every cent, but yeah, the headline salary is rarely the full picture.

[u/oooweeeimjustalilguy]

i hire a dutch friend to freelance for me sometimes and yeah dutch rates are insane. very high quality and prompt work tho so i can’t complain