What the Fee Covers
The fee buys employment administration in a jurisdiction, and the list is shorter and more specific than it sounds.
The service agreement with the provider
The employment contract with the person
Who the employer is in law
What you are buying with the fee
YoursThe provider'sCrosses the twoNeither contract
Four matters, and no share: what any one agreement covers differs by agreement. One crosses both, and the handoff is where these arrangements fail. The distinction everything else in this collection rests on.
The fee buys employment administration in a particular jurisdiction: somebody to be the employer, run the payroll, make the filings and carry the employer-side obligations that follow.
The handoff described in “What the Fee Covers” depends on records that both the operating team and payroll owner can understand. When evaluating see the official solution overview for employee monitoring data security, use project and time data to reconcile work before payroll cut-off, while leaving tax treatment and statutory calculations to the accountable local specialist.
Stated that way it sounds thin. Done properly in a country you have never traded in, it is worth a great deal more than it sounds.
Teams reviewing “What the Fee Covers” can cross-check their approach against the Microsoft Work Trend Index. The comparison should produce written questions for the provider, adviser or internal owner instead of a copied checklist.
The two numbers on the invoice
A service fee, flat per person or a percentage of salary, and the employer costs passed through at actual.
The second is the larger figure almost everywhere and it is the one buyers underestimate, because the quoted price is the first.
| On the invoice | Set by | Varies with |
|---|---|---|
| Service fee | The provider | Headcount and negotiation |
| Employer contributions | Local law | Salary and country |
| Mandatory bonuses | Local law or custom | The calendar |
| Compulsory insurance | Local law | Sector and role |
Being the legal employer
The core of it. A company exists in that country, is registered as an employer, appears on the person's contract and payslip, and answers to the authorities as the employer of record.
Standing up that entity yourself takes months and carries obligations that do not end when you stop using it. The fee is largely for not doing that.
The threshold where your own entity becomes cheaper is counted in people rather than in months, and it moves by country. Several providers will tell you roughly where it sits, which is a reasonable test of whether they are advising or selling.
Payroll, run locally
Gross to net under local rules, on the local cycle, in local currency, with a payslip in the local language and format.
Payroll rules change more often than people expect, and keeping up is work. A provider doing this for four hundred people in one country is doing it better than you would for one.
Scale is the honest argument for the whole product. Nothing here is beyond a competent finance team; it is simply not worth that team learning a second country's rules for one person.
Withholding and contributions
Income tax withheld at source, social contributions calculated and paid, year-end reporting filed, and the correspondence handled.
The provider is the filer of record, which means penalties for getting it wrong land on them. That transfer of exposure is a real part of what the fee buys.
Statutory entitlements
Leave, public holidays, sick pay, parental leave, notice and whatever else the country requires, applied correctly without you having to learn any of it.
Correct application of a floor you have never read is the quiet value here. Most buyers only notice it when a provider gets it wrong.
Contract issuance
A compliant local employment contract, in the right language, with the clauses that country requires and the ones it forbids left out.
Issuing an employment contract that is void in part is an easy mistake for a foreign company and an expensive one. The provider does this weekly.
Local filings and registrations
Registrations with the tax authority and social funds, periodic returns, year-end declarations, and in some countries notifications nobody outside the country has heard of.
The filings themselves are routine. Knowing the list exists is the part you are paying for.
A named contact
Somebody to ask. Response times vary enormously between providers and are worth testing rather than reading about.
Ask what the stated response time is, and ask what happens when it is missed. A service level with no remedy behind it is a target rather than an obligation.
Offboarding, administratively
Final pay calculated, accrued leave settled, deregistrations made, documents issued where the country requires them.
Endings are where local rules are most specific and most easily got wrong. Competent offboarding is a bigger part of the value than it looks on the way in.
What a good provider adds without charging
Telling you when a plan will not work locally. Flagging that a salary is below a sectoral minimum. Mentioning that a thirteenth month payment is customary and your offer omits it.
None of that is contractual. It is the difference between providers and it is visible within the first two hires.
How to compare two quotes honestly
Build the full annual cost: service fee, employer contributions, mandatory bonuses, insurance, deposit, and anything invoiced separately. Then compare.
Headline per-person fees are close across the market. Total cost of employment is not, and the gap between two providers in the same country can be substantial.
What the fee cannot buy
Somebody who knows your work, judges it, makes this person want to stay, or notices in month seven that they have quietly disengaged.
The provider has no view of any of that and is not paid to have one. Buying the administration well is worth doing; expecting it to extend into the part that is yours is how an arrangement that was working ends without anybody being able to say exactly when it stopped.