The Client is a leading vendor of financial management software based in the USA.
The Client had growing interest from clients in Asia which required a dedicated local sales presence. They decided to base the sales person in Hong Kong. The Client intended to setup a subsidiary company in Hong Kong but estimated it would take 3+months to complete this process. They wanted the sales person to start work immediately. Additionally the preferred candidate was an expat who required work visa sponsorship. The Client needed a third party company to employ the salesperson in Hong Kong, sponsor the work permit and run the Hong Kong payroll. It was important they were able to transition the employee back into their subsidiary when it was ready.
The Client was not incorporated in Hong Kong and was expecting this to remain the case for at least 3 months. They had previously setup a satellite office in Beijing where they used Contractor Taxation to find a PEO to administer their Chinese staff. The Client requested Contractor Taxation assist them with an interim employment solution for Hong Kong.
Having dealt with the Client previously we knew they wanted to use a professional employer organization. A PEO would hire and sponsor the expat sales person on behalf of the Client. They would also handle in-country payroll and filing of taxes and social security. The Client wanted to keep the administration to a minimum. The primary goal was to have the sales person commence work at the earliest opportunity.
We worked with our local partner to provide quotes on net earnings and total employment cost at a range of salary rates for the prospective employee. Total employment cost included labour cost, employers social security, business tax and management fee. The Client used these to get budget approval and negotiate the offer of employment with their preferred candidate.
We already had a framework agreement in place with the Client from the China project. With some small amendments it was adjusted to be compliant with local labour laws as well as the requirements placed on the Client as a US based company. The employee signed an offer sheet with the Client and then signed their employment contract with our local partner. A letter of Assignment which corresponded with the individual employment contract was appended to the framework agreement. Whilst the employee went for orientation training in the regional headquarters our local partner processed their work permit.
The Client was invoiced in advance on a monthly basis. The employee received a detailed payslip and annual tax report. The Client also received copies of the statutory taxes filed on their behalf at the end of every reporting period. Additionally the employee was able to process their expenses through our local partner who submitted the expense reports for approval and then paid the employee as soon as cleared funds were received.
The Client was able to get the new salesperson onboard within a week of finalizing the offer with the candidate. Because their work permit was processed whilst they were attending orientation there was no delay to them commencing work in Hong Kong. The Client has been able to extend the service due to unforeseen delays in incorporating their subsidiary.
By having a local salesperson whose focus is solely on Asia they are experiencing much better traction with their customers in the region. Given the savings in cost and administrative overhead from keeping their operations in China and Hong Kong as lean as possible, they are considering a policy shift to outsourcing the employment of all staff outside the USA.
Products and services your company used
- Local Payroll
- Work Permit Sponsorship
- Outsourced Employment
- Calculation of net earnings and total employment cost
- Reporting and payment of taxes
- Payment and Expense Processing for Employees
Services provided by other groups or companies
Contractor Taxation used the services of one of our specialist local partners in Hong Kong to act as the PEO and run the local payroll for the employee.