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What is a virtual employee?
Virtual employee
A virtual employee is someone who provides services remotely, i.e., without being physically present in an office—a model that has become increasingly common, with 35.5 million people teleworking in the first quarter of 2024 alone. Virtual employees tend not to be employed directly by the company, but through a third-party outsourcing or staffing agency.
Looking for specific details on how to hire around the world? Check out our hiring guides. (There are over 50!)
What does a virtual employee do?
Virtual employees handle any work that can be done remotely without requiring physical office presence, focusing on digital tasks and specialized services. In fact, in industries like computer systems design, data processing, and software publishing, the majority of workers were already working from home in 2021.
Common virtual employee roles include:
Administrative tasks: Data entry, email management, customer service
Technical work: IT troubleshooting, web design, software development
Creative services: Social media management, content creation, graphic design
Financial tasks: Bookkeeping, accounting, financial analysis
Virtual employees vs. remote employees vs. contractors
While these terms are sometimes used interchangeably, they have important distinctions. Understanding them helps you make the right hiring choice for your business.
Virtual employees are often engaged through a third-party service, like an Employer of Record (EOR), which handles their legal employment, payroll, and benefits. The focus is on getting tasks done digitally, regardless of location.
Remote employees are typically direct employees of your company who simply work outside of a central office. You are responsible for their payroll, compliance, and benefits.
Contractors are self-employed individuals engaged for a specific project or period. They manage their own taxes and benefits and are not considered employees.
What are the benefits of hiring a virtual employee?
So, what makes virtual employees such a smart choice for growing businesses? They let you expand operations fast by covering immediate needs.
EOR services make it even easier—you can hire globally without the usual legal headaches. This expands your talent pool and cuts hiring time significantly. Find out more about hiring a global team with Oyster.
The benefits go beyond just convenience:
Speed: Faster hiring process than traditional employees
Cost savings: Often cheaper than local hires, plus no office overhead. Research shows that an increase in remote workers is associated with a decrease in unit office building costs.
Flexibility: Choose part-time, full-time, short-term, or long-term arrangements
Global access: Tap into talent markets with competitive rates, which is crucial when a recent survey found only 16% of executives feel comfortable with the amount of technology talent they currently have available.
How to hire virtual employees
Wondering how to actually get started with virtual employees? It's simpler than you might think. The key is finding the right platform to handle the complexities:
Define the role and responsibilities: Clearly outline the tasks the virtual employee will perform.
Choose an employment model: Decide whether you need a full-time employee via an EOR or a contractor for project-based work.
Use a global employment platform: A platform like Oyster helps you generate compliant contracts, manage payroll, and handle local benefits, removing the legal and administrative burden from your team.
How to manage virtual employees
Managing virtual employees effectively is about trust, clarity, and the right tools. When done correctly, this approach is highly successful, with research showing that over 90% of global service hubs transitioned to remote work with virtually no loss of productivity. Here are a few tips to set your team up for success:
Communicate clearly: Set clear expectations for tasks, deadlines, and communication channels.
Embrace asynchronous work: Focus on outcomes, not hours worked. This allows for flexibility across different time zones.
Provide the right tools: Ensure your virtual employees have access to the software and platforms they need to do their job well.
Foster a sense of belonging: Regularly check in and include them in team communications to make them feel part of the company culture.
Start building your global team with Oyster
Hiring virtual employees opens up a world of talent, allowing you to scale your business efficiently and cost-effectively. By handling the complexities of compliance, payroll, and benefits, a global employment platform removes the barriers to hiring anywhere.
Whether you need to engage contractors or hire full-time employees in other countries, Oyster provides a single, intuitive platform to manage your entire global team. Ready to access talent without borders? Start hiring globally and let us handle the rest.
FAQ
What's the difference between virtual and remote work?
Remote work means your direct employee works outside the office, while virtual work typically involves third-party arrangements where an EOR handles the legal employment.
How do you set up virtual employee arrangements for your business?
Partner with a global employment platform that acts as an EOR—they handle contracts, payroll, and compliance so you can hire internationally without setting up local entities.
What types of businesses benefit most from virtual employees?
Startups and SMBs benefit most, as they can access specialized skills and scale without high overhead costs. For traditional employees, the fully loaded cost is often 1.25 to 1.4 times the base salary, making virtual employees a cost-effective alternative.
FAQ’s
What’s the biggest compliance risk when you bring on a virtual employee?
Misclassification is the one that catches teams off guard. If you treat someone like an employee—set their hours, manage them like a team member, and make them core to the business—but pay them as a contractor or through an informal “virtual” arrangement, you can trigger back taxes, penalties, mandated benefits, and even IP ownership disputes in some countries. The safest move is to match the working relationship to the right model early, then document it properly with a country-appropriate agreement.
If my virtual employee is in another country, who is responsible for taxes and labor law?
It depends on the employment model, not where you sit. If the person is a contractor, they typically handle their own income taxes, but you still need a contract that reflects local rules around IP, confidentiality, and independent status. If the person is employed through an Employer of Record (EOR), the EOR is the legal employer in-country and takes on the local employment responsibilities—things like payroll calculations, statutory contributions, and required benefits—while you manage day-to-day work. This is why EOR is often used when you need employee protections and stability without opening an entity.
What should I budget for beyond a virtual employee’s salary?
Base pay is only the visible part of the cost. In most countries, employing someone includes mandatory employer contributions, statutory benefits, and sometimes payroll taxes or social security equivalents that vary widely by location. You’ll also want to account for optional benefits that are “market standard” even when they’re not legally required, because that’s what keeps offers competitive. If you’re trying to build a credible plan for Finance, the right approach is to estimate total employment cost by country before you make the offer.
How do virtual employee benefits work across countries?
Benefits aren’t one-size-fits-all, and forcing a US-style package globally is a fast way to look out of touch. Every country has statutory benefits you must provide when someone is an employee, and then a layer of expected benefits that serious employers commonly offer to recruit and retain talent. The practical trick is to separate “mandatory,” “expected,” and “nice-to-have” by country, then make sure your offer letter and policies match local norms on time off, leave, and health coverage. This is where teams often need local guidance, because benefit competitiveness is country-by-country—not role-by-role.
Can I pay bonuses, commissions, or equity to a virtual employee?
Usually yes, but the details matter a lot. Variable compensation can change tax withholding, payroll reporting, and even how a worker is classified, depending on the country and how the plan is structured. Equity is even more nuanced, because securities rules, tax timing, and reporting obligations differ across jurisdictions, and the same grant type can create very different outcomes for the team member. Before you promise anything in an offer, sanity-check whether the compensation element is feasible in that country and what it will require operationally at payout or vesting events.
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About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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