The ultimate guide to remote work contracts

Hey,

I'm Sergio Pereira, and this is the Remote Work newsletter 👋

Last week I told you all the 3 steps I'd take to land my first remote job, if I was in that position today. Obviously using JobsCopilot.ai would make applying to hundreds of opportunities much easier than I had in 2016, when I manually applied to 300+ openings to land my first remote job.

Today's edition is about remote work contracts. And I'm making it a guide, as I compile all my knowledge on the topic to answer common questions that fellow remote workers send me, such as:

• How do I invoice my foreign employer?

• How do I pay taxes in my country?

• Do I need a visa for remote work?

• What about sick leaves and retirement plan?

Well, let's start with the basics. There are only 3 types of contracts you can have in a remote job:

1/ Permanent employment contract

In this case, you have a direct contractual relationship with your employer, with a permanent contract valid according to the local laws of your country.

To work remotely under a permanent employment contract, you'll need to have the right to live and work in the country where your employer is based. So you must live in a country where your employer has its headquarters or a subsidiary company.

With this contract you're fully covered by your country's labor law, and you usually benefit from paid leaves, retirement plan contributions and in many countries it's common for employers to support health insurance costs. On the other hand, this option is usually the one that pays the highest taxes.

Here's a few examples from the JobsCopilot database where it's likely that companies would offer a permanent contract to the hired candidate:

• Director of Data Engineering @ LiveRamp ($183k - $270k)

• Full Stack Engineer @ Assured ($180k - $220k)

• Software Engineer @ 0x ($95k - $230k)

2/ Contract through an employer of record (EOR)

This is a recent market segment to serve the growing demand for remote contracts that abide by employment laws. Especially for situations where employers don't have a subsidiary company in their employee's country, which are the majority of cases in global remote work. Teams are sometimes spread across dozens of countries, there's no way employers would open those many companies just to render local contracts.

As such, EORs like Remote, Deel or Oyster are a fast growing segment to play the middleman role between employer and employee. These companies have subsidiaries in 100+ countries, and they hire employees on their employer's behalf, for a fee of course.

So, while employees are officially contracted by the EOR, they can fully benefit from the upsides or having a local employment contract. However, in this setup besides the high taxes, there's also the EOR's fee to be deducted from the company's cost with each employee.

Here's an example from the JobsCopilot database in which the company explicitly mentions that salary is paid through an EOR:

• Fullstack Engineer @ Ergeon ($67k - $83k)

3/ Direct freelance contract

This is a direct contract between you and your employer, however it's not an employment agreement. It is a service agreement that states the scope of work, and the financial terms. Technically speaking it's regulated by commercial trade laws, not labor laws.

These contracts cause great anxiety to people who do it for the first time, since they come with significant overhead. If you're a contractor you're responsible for paying your taxes and complying with your country's laws, which usually requires having an accountant and some admin overhead.

These also create the biggest room for tax optimisation, and that's why these are frequently called "B2B contracts", because in many countries it's more tax efficient to open a personal LLC company to sign the contract and invoice the client. I've personally been doing these contracts for the last 8 years, and I don't regret it at all. 

Here's a few examples from the JobsCopilot database in which the company would prefer signing a contractor agreement with the hired employee:

• ML Engineer @ Automattic ($100k - $200k)

• Fullstack Engineer @ Nebulab (€40k - €80k)

• Designer @ Trunk ($120k - $150k)

Given the broad spectrum of contract possibilities, some people ask me:

• When I look at the salary range in a job description, I never know how much would be my actual net income.

And that's a really fair point. The net income varies based on factors such as the contract type, the country of residence of an employee, and several other complex factors. It's hard to compare similar salary ranges.

As a rule of thumb, salaries paid via local employment contracts or EORs have the biggest tax toll. Here's an example from France, where income tax can eat up to 60% of an employee's salary:

In contractor agreements there's more room to optimise taxes, and it's common for contractors to pay around 15-25% of the income in taxes, even in high salary tiers. It's a very big difference, eg: for that case in Pierre's tweet, those €300k paid by the company would result in €225k net earnings for the employee, almost 2x the net salary earned on a local employment contract.

Another common question I get when writing about remote salaries is:

• But I need a Visa to work remotely for those high paying remote jobs for US companies, right?

Well, that's not the case. You usually need a visa only if your remote job requires you to fly to the US very often of for extended periods. If you're working from your country remotely for the US you don't need any visa, same for most other countries.

In the case of working remotely for a US company, you'll likely be asked to fill the W8-BEN form, as I tweeted here. That avoid double taxation and is very standard for remote workers (I've filled it in more than 10 times myself).

Now that you know about remote salaries, taxes and visas, you're fully equipped to go search for that remote job you're dreaming of. JobsCopilot.AI can be your Swiss army knife, since it pulls over 50k remote jobs every week. In fact, the Jobs Copilot finds you the jobs and it also applies on your behalf to the jobs you select. It's automated by AI agents, you're in the supervisor's seat to simply review the application process. No more grunt work scrolling job boards and filling application forms.

This is how the JobsCopilot works:

1/ Your auto-application profile

Once you switch to the Premium plan, you'll be prompted to fill in a profile section with your replies to common demographic questions found in job application forms:

2/ Your auto-apply flow

Besides that initial setup, you'll now find this new button in the jobs card. Just click the "Auto Apply" button on the jobs that are relevant to you, and that will trigger the auto-apply backend flow (no application is sent before your final revision):

3/ Application form is fetched and pre-filled for you

All jobs you've ticked "Auto Apply" are moved to the "Jobs to Apply" tab. And for each of them our backend pulls the application form, and our AI generates replies to each of the form questions based on the job description and your profile. Within a couple minutes you can find the pre-filled job application form in each job card:

4/ One-click confirmation

For now, I'm requiring you to review and click this submit button for every job, as I want you to feel in control of your applications, and I want to capture feedback on quality of this flow. I might make it more automated upon some configs in the future. 

Once you submit a job for Auto Apply, the copilot will submit your application in the following minutes/hours (depending on work load). You'll get these messages on your email on a frequent basis, like I'm receiving for the past couple weeks during testing:

I'm very happy for this launch. Developing JobsCopilot under such aggressive bandwidth constraints has been hard work, but I'm thankful for your feedback, and for all positive messages and engagement. You truly are an amazing bunch :)

If you have any issues or questions about JobsCopilot, just drop me a message on jobscopilot@sergiopereira.io, for faster response. I count on your feedback to make this product the best in the market and help us all find great jobs!

Thanks for reading this newsletter until the end. You can read all past editions here. Make sure to share it with your friends and colleagues so they can read it too.

See you next Friday,

Sergio Pereira, 
Startup CTO & Remote Work Lover