EMEA hire - facts to consider

Congratulations! Your EMEA (Europe, Middle East, Africa) sales finally warrant a dedicated sales rep in the region (vs. you flying over from North America to meet clients all the time). You’ve got a great product that resonates with the region, you’ve found the perfect seasoned sales professional with deep relationships (both direct and indirect) but you don’t know a thing about European Employment Law or how to get this person on board.

Which country is the best to have a European presence in?

From an employment law standard, the UK is arguably the best place for a start up to set up shop. UK Employment law is very similar to the USA and Canada (common law) and by continental standards, the UK operates a highly liberal labour market with the minimum of legislative intervention and administrative ‘red tape’. If you’re keen to do your own research on the other countries check out the Federation of European Employers site. Another good thing about doing business in the UK is you are more likely to find a candidate that can work with North America as well as continental Europe - think of language and business persona.

Should this person be a contractor or an employee?

As we have said before, the national governments really dictate whether the individual should be hired as a contractor or employee based on the nature of the work. Ideally, you always want to hire them as an independent contractor so that they are responsible for the tax liabilities, etc. but given the description of employee vs. independent contractor as provided by HM Revenue & Customs (HMRC) the odds are very high that your sales rep is considered an employee. Once you have determined the status of the individual, because the law is similar to USA and Canada, use your North American employment agreement updated to match the requirements of HMRC or use the one provided by Business Link. Should you decide that the individual is an independent contractor, I would suggest including the following terminology in your agreement:

You confirm that you are an ‘independent contractor’ as defined by HM Revenue & Customs and you are responsible for registering as self-employed and for completing a Self Assessment. You confirm that you are responsible for your tax obligations and National Insurance contributions (NICs) and will act accordingly.

If you have any doubt about which classification the individual falls under use the HMRC Employment Status Indicator tool.

Now that we have determined that we need an offer letter for our employee, what comes next?

If you are going to have a presence in the UK by taking on an individual, it is your responsibility to brush up on employment rights (e.g. number of hours in the work week) and benefits. I would double check that your boilerplate offer letter does not violate either of these. In particular, make sure you align on pay, hours of work, holiday entitlement, sick pay arrangements, notice periods, information about disciplinary and grievance procedures, just to name a few.

I’m a bit freaked out … is there a checklist to make sure I do all the paperwork correctly for the UK hire?

Yes! Business Link has a great checklist that will take you through all the steps to hiring someone in the UK while remaining compliant with HMRC. Phew!

Finally, because you now have a presence in the UK you will also need to research your Value Added Tax (VAT) and other tax obligations. Fortunately the good folks at Business Link have provided a section for that as well.

It’s a lot of work but well worth it to be compliant so that you are ready to go for the next hire, and the next, and the next …