Global employment guides

Remote Independent Contractor vs Remote Employee

Published on:
December 20, 2022
Written by:
Lucas Botzen

Remote working is becoming more and more popular. You, as a remote worker, benefit from the perk of working location independently.

Table of contents

Remote working is becoming more and more popular. You, as a remote worker, benefit from the perk of working location independently. 

There are generally two options: you can work as an independent contractor or as an employee. In many situations, a remote employee is required to be self-employed in connection with payment arrangements. Both options have both advantages and disadvantages that are important to weigh up against each other.

Independent contractor

Benefits

  • You have a certain amount of freedom to manage your own agenda;
  • You have the option to earn more money; you can invoice overtime, while overtime as an employee is often included in your contract;
  • You can work on personal projects that are not managed by an employer;
  • As an independent contractor, you do not pay tax on every euro you earn; you pay tax on the amount you have made, minus the costs of running your business.

Cons

  • As an independent contractor, you need to earn about 60% - 100% more to replicate the total compensation of a full-time salary;
  • You rarely get any of the major benefits, including paid time off, health care, tuition allowance, continuing education, life insurance, disability, retirement plan, travel allowance, sabbatical time, etc.
  • You will never really be part of the company, and it is not possible to grow in function or to be promoted;
  • You are often the first to be let go in less favorable times.
  • You always have to deliver quality; otherwise, there is a good chance that the collaboration will end (you are less "safe").

Why you should switch to salaried employment

Choosing to switch to salaried employment can be a difficult choice for an independent contractor. There are advantages and disadvantages. You will have to sacrifice the benefits of being an independent contractor. Why become an employee at a company for which you have been working for a while on an independent basis?

  • The benefits, paid leave, health care, tuition reimbursement, continuing education, life insurance, disability, pension scheme, travel allowance, sabbatical time, etc .;
  • If you work for the same client for a long time as a self-employed person, you run the risk of being seen as a false self-employed person (read more about this here);
  • You do not have to register yourself as an independent contractor if you are starting your first remote job;
  • Possibility to grow internally, also remotely;
  • You are (contractually) more protected than an independent contractor.

When you work remotely from a country other than the company itself, you almost always work as an independent contractor. This is because it is easier for a company to hire an independent contractor than to hire an employee. However, as an independent contractor, you miss many benefits. Most of the time, a company is not aware of the alternative. Rivermate acts as an intermediary between employer and employee so that both get all the benefits of being employed by a company, regardless of distance or country of company/employee (Read more about Rivermate here).

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