“John, are your OFS really independent contractors or not? If you’re giving them benefits, that means they’re employees, right?”
I get this A LOT.
I’ve talked about how your OFS are independent contractors but I also talk a lot about the benefits you can give your OFS. But benefits are something that most people only give to employees, so when I talk about giving my Filipino team their benefits, people assume they’re employees.
Believe me, I understand the confusion.
So, I’m going to clear the air here.
Your OFS are independent contractors.
If you can figure out a way where the Philippines government will allow you to classify them as an employee, let me know. They won’t. They are independent contractors.
I use the term “benefits” in the loosest terms. These benefits are not legally mandated or required. These benefits are completely optional. I call them benefits because they benefit my team. I give them to my team to motivate them and reward them for their great work and loyalty.
For example, you have a favorite restaurant. There’s a waiter there who always takes care of you. Because this waiter knows you, they know what your usual is, they’re attentive, and they make sure that you get your order as soon as possible.
To show your appreciation, I bet you tip this waiter a bit more.
The waiter is not your employee, but you’re giving them something to motivate them to give you better service.
That’s what these benefits are. My business grew and became more profitable because of them. I give them a salary, but I also give them 13th month and health insurance, so they don’t have to worry about that stuff. I want them to be happy working for me. I want them to be productive working for me.
You know what happens when an OFS wants to work for you?
- You have less turnover.
- If they’re freelancing, they’re more likely to prioritize your job over everyone else.
- If you offer them a full-time position, they’re more likely to take it and work for you exclusively.
If you’re just starting out, you don’t need to offer “benefits”. Just pay them what you agreed to.
If “benefits” are preventing you from hiring someone because it’s an added complication, stop it! Just hire someone. No benefits needed. That person you hire would much rather have a job with no benefits than no job at all.
Benefits are to reward loyal, long-term people.
Great article. Could this apply to domestic independent contractors as well?
John’s reply: To be honest, I don’t know, but I don’t think so. I would’t apply anything I say to US independent contractors. Whenever I’m talking about OFS I’m talking about the Philippines specifically.