Hiring independent contractors in Europe: Everything you need to know

As global hiring becomes more common, many companies are looking to Europe to close gaps in their workforces. The continent offers plenty of promising prospects. In the past decade, Europe's highly skilled workforce has grown and diversified substantially, increasing the availability of talent to source.

However, hiring in Europe comes with pitfalls. Every country has its own labor laws, for example. Additionally, when hiring in the EU, there’s an ever-shifting body of EU-wide legislation to consider. If you want to hire independent contractors in Europe, it's important to do your due diligence.

Below, we talk about the benefits of hiring independent contractors in Europe—and flag some of the risks that come with doing so. Our guide also includes tips and tools that can simplify the process of hiring in Europe.

Why hire independent contractors in Europe?

Global hiring is a noteworthy trend in the 2023 job market. Advances in technology, like project management software and video conferencing tools, have made it easier to collaborate across distances.

Additionally, the COVID-19 pandemic has made remote work increasingly common and acceptable. While some companies are aiming to return to the office, others are embracing remote or hybrid work models.

All of this makes it easier than ever to hire people in other countries—or even on entirely different continents. For companies looking to grow quickly with an expert team of experienced talent, hiring independent contractors globally is a logical move.

But why go to Europe? Consider the following advantages.

First, Europe offers a highly skilled workforce due to high levels of education. In 2022, almost 84% of EU residents aged 20 to 24 had completed at least an upper secondary education. Meanwhile, more than 40% of individuals aged 25 to 34 had completed a tertiary education (education provided by an institution of higher education, like a university).

Europe also offers the opportunity to work with people who have diverse cultural backgrounds and linguistic skills. The EU alone has 24 official languages ranging from German to French and beyond. If you want to diversify your workforce with native speakers of various languages, this is a prime place to look.

Here's another fact to consider: Labor markets in Europe are projected to contract in the decade ahead. By 2030, 40% of Europe's inhabitants may live in a shrinking labor market. This means that international employers looking to find talent in Europe may be met with great enthusiasm from jobseekers hoping for opportunities.

What to know when seeking contractors in Europe

With its talented workforce and readily available pool of skilled contractors, Europe is a popular place to source talent from. If you're a finance leader or people manager considering hiring European talent, you've made a smart choice.

However, you may be worried about the logistics of hiring overseas. Here are some points to keep in mind when hiring independent contractors in Europe.

Employee misclassification

If you hire someone as an independent contractor in Europe, you need to make sure your relationship with them meets the criteria for classification as an independent contractor. If you misclassify a worker, you could face charges of fraud. 

A lot of attention has come to this issue in recent years. A research survey of the 28 EU Member States, plus Norway, found that 23 out of 29 countries covered reported significant fraudulent claims of self-employment.

Why is this such a big deal? If someone is self-employed, they're responsible for their own taxes, health and social insurance, and pension contributions. However, if they're employed by a company, the company is responsible. Employers who misclassify someone as "self-employed" when they're really in an employer-employee relationship are skirting a lot of administrative and financial responsibilities.

Countries are introducing various measures to counter the abuse of faux "self-employment" status. For example, Serbia now has an independent contractor test, while Poland has introduced fines for the misuse of self-employment status.

Making payments

Payment is another complicating factor when hiring in Europe. It's a bit more complex than simply converting currency and depositing it into an account. You want to consider payment options that are convenient for both you and the contractor—like options that minimize extra processing fees.

Potential employers must also take currency conversions into account. Many European countries use the euro—but not all of them. Remember that contractors expect to be paid in their local currency. You can use a global payment platform that takes care of the conversion step for you.

Even the salary you pay someone is an issue to consider. A salary that might appear great in one country where the cost of living is lower, such as Portugal, may not be as desirable in a country where the cost of living is higher, like Sweden. EU salaries vary widely. For example, national salaries in Luxembourg are €72,200 on average compared to €10,300 in Bulgaria.

Adhering to European labor laws and regulations

Lastly, be aware that every European country has its own rules. Even something as basic as standard working hours can vary. In Spain, for example, overtime is allowed, but employees can't work more than 80 overtime hours per year. In Germany, overtime is only allowed if specifically stated in the employee's contract, and overtime pay is capped according to region.

Labor laws are always changing, and as an international employer, it's up to you to stay on top of their evolution. There are discussions going on in EU political spheres right now that could affect your future hiring.

For example, European regulators are talking about a "right to disconnect" law. The aim is to allow workers to digitally disconnect outside of working hours—no more peeking at emails from the boss and feeling the need to respond. The following EU member states have already implemented a right to disconnect at a national level: Belgium, Italy, Spain, France, Slovakia, and Greece.

In 2023, the European Parliament also introduced a new directive that may threaten the self-employed contractor model. If implemented, it will require greater transparency around how employees are engaged—even covering details like how technology is used in recruiting. Such changes may impact the way staffing agencies and employers of record operate.

Finally, it’s crucial to know that European countries have some of the strongest labor protections for workers in the world. Norway, Belgium, Denmark, the Netherlands, and Germany are all notorious for stringently safeguarding workers' rights.

Using Oyster to hire and pay European contractors compliantly and easily

Figuring out how to hire independent contractors in Europe can be intimidating, but Oyster makes it easy. With our global employment platform, you access expert contractor management tools and remain in compliance. Oyster is available in over 180 countries worldwide, including Europe.

Gain peace of mind knowing that you have a reputable partner keeping your company on the right side of the law when it comes to hiring international contractors.