"Compliance" is the catch all term for "not doing something awry of someone's law just in case they come after me".
They're worried about unknown unknowns, and it's a ridiculously complicated area. Not just tax, but things like health insurance and pensions and employment law.
For instance, a US employer expects to be able to fire an employee at will. Few other countries allow that. So it creates uncertainty: if I need to fire them, what would I do?
It's far easier to just avoid it all by saying "Remote, US only".
This area of law also has more of a "rule of man" rather than "rule of law" feel. Tax law is a constant moving target, and even a tax professional can't say 100% what would happen in the many gray areas. It's a crapshoot.
So most employment is done only where the employer has a company in the employee's jurisdiction, or via quasi employment where the employee is actually contracting via another company (either their own company or an EOR).
The short of it is that employment in the 21st century has massive government involvement, there are hundreds of states in the world, and therefore there are enormous permutations of employee and employer country pairings, each with unknown unknown compliance consequences, and therefore most employers don't want to wade into that.
Comments
Mostly compliance.
"Compliance" is the catch all term for "not doing something awry of someone's law just in case they come after me".
They're worried about unknown unknowns, and it's a ridiculously complicated area. Not just tax, but things like health insurance and pensions and employment law.
For instance, a US employer expects to be able to fire an employee at will. Few other countries allow that. So it creates uncertainty: if I need to fire them, what would I do?
It's far easier to just avoid it all by saying "Remote, US only".
This area of law also has more of a "rule of man" rather than "rule of law" feel. Tax law is a constant moving target, and even a tax professional can't say 100% what would happen in the many gray areas. It's a crapshoot.
So most employment is done only where the employer has a company in the employee's jurisdiction, or via quasi employment where the employee is actually contracting via another company (either their own company or an EOR).
The short of it is that employment in the 21st century has massive government involvement, there are hundreds of states in the world, and therefore there are enormous permutations of employee and employer country pairings, each with unknown unknown compliance consequences, and therefore most employers don't want to wade into that.