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Introducing Deel Premium
Hiring independent contractors is one of the quickest, easiest and most cost-effective ways for businesses to start building an international team. With a team of international contractors, you can scale your business in new markets and hire great talent fast, while keeping operational costs down without opening local entities.
However, one of the biggest obstacles with hiring independent contractors from another country is misclassification risks. If you don’t set things up correctly for each contractor in every country, your business can get into trouble with local governments. Even if your working relationship seems "all good," your business can end up paying hefty fines if your contract is incorrect.
Our new product, Deel Premium, is the gold standard of global contractor compliance for any business. Here’s an overview of everything you need to know about misclassification and how Deel Premium can help you reduce any unnecessary business risk.
What’s misclassification?
When you hire international team members, you usually pay your team in one of two ways: as contractors or as full-time employees. Misclassification is when a local government decides that a business has wrongly (or even accidentally) hired workers as independent contractors instead of employees.
How a government classifies whether someone is an employee or a contractor varies from country to country. Most commonly, contractors:
- Determine their working hours and conditions
- Use their own equipment to complete a job
- Have the sole responsibility to pay their own taxes and benefits
Why does it matter whether someone is an employee or a contractor?
How you classify team members has a wide-reaching impact for the employer, team member and the government of the country that you’re hiring in.
When hiring contractors, employers are not required to pay taxes, insurance and pension contributions to the government, which means that business costs can be cut by 40%. This, in turn, means that local governments lose out on a substantial amount of tax revenue. It’s also much easier to fire contractors and running payroll is much more straightforward for businesses, without having to calculate benefits or social contributions.
On the team member’s side, employees are entitled to more benefits and protections than contractors. Depending on the country, benefits can include access to minimum wage, overtime pay, unemployment benefits, health insurance, vacation, and more.
Therefore, every country has laws in place to govern how team members are classified to ensure that the government’s and individual’s rights are met.
What would happen if I misclassified a team member?
Aside from the reputational and potential PR damage, employers who misclassify their team members are at risk of substantial financial penalties. Misclassified employees can file a complaint against their employers and demand reparations. If a court case arises for a case of misclassification, the business may be liable to pay:
- Legal costs: You may be required to pay for a lawsuit against a worker that claims they are misclassified
- Back taxes and fines: You may be liable for back taxes to governments and any associated penalties for paying late
- Back benefits: You may be required to compensate workers for lost benefits that resulted from the misclassification
Introducing Deel Premium
When working with international contractors, Deel is a great place to do things compliantly. Deel mitigates misclassification risk with a rigorous model to ensure contractors are correctly set up to work in 150 countries. No matter where in the world, we ensure compliance with airtight contracts localized for every country, automatic tax and work permit collection, properly issued equipment, data processing agreements, and more.
With Deel, every contractor is set up with the right contract in place that correctly defines the working relationship with their employer. We also check that each team member has registered as a contractor in their country of residence, with all the right documentation. Our practices and contracts are vetted by over 200 local legal experts and are constantly evolving based on changing local regulations.
We are so confident in our tried and tested model that, today, we’re excited to introduce a global first for contractor compliance: Deel Premium. 💎
Deel Premium is an additional layer of protection for businesses against misclassification risks. Essentially, when you upgrade a contract to Premium, we’ll cover any legal costs, tax penalties and third-party indemnity costs if authorities challenge your team member’s classification. For just $50 per contract, Deel will cover your costs up to $25,000 in total for:
- Legal costs: We’ll cover your legal costs if you’re required to pay for a lawsuit against a worker that claims they are misclassified
- Back taxes and fines: We’ll cover the cost of any taxes or associated fines to be paid to the authorities or team members
- Third-party indemnity: We’ll compensate any third-party who is negatively impacted by misclassification
How do I upgrade?
To access Deel Premium, you’ll need to use the contracts that Deel provides in the product rather than your company’s own contracts. This is because our contracts are carefully vetted and constantly updated to align with the classification requirements for every country. If you choose to upgrade, you will need to answer a few questions that will help determine whether your contact is eligible.
To upgrade your contract, simply:
- Head to Contracts on Deel and choose a contract
- Open the Contract details and upgrade
- Answer a few questions to check whether your contract is eligible
- That’s it. The $50 monthly cost will be added to your invoice
How would I make a claim?
If you believe you have a claim under your Premium Plan, you should promptly notify Deel by emailing us at premium@letsdeel.com. In your email, provide all of the facts and circumstances surrounding your claim. You may include any additional documents or materials related to any losses suffered according to your claim. Upon receipt of your email, a representative of Deel will contact you.
How can I downgrade from Deel Premium?
Downgrade your contract from Deel Premium at any time via the contract details of the contract. Your Deel Premium cover will end 30 days after you downgrade.
