How to hire and pay Georgia contractors

Georgian contractors represent a growing pool of skilled professionals, making this labor force an attractive option for companies looking to expand their personnel. But if you want to hire contractors in Georgia, you need to comply with local regulations.

Thankfully, you can do this without the hassle or legal headaches of setting up a local entity with Payoneer Workforce Management (more on that later!)

First, let’s explore the difference between contractors and employees in Georgia, key local labor laws you should know, and how to find, hire, and pay contractors in Georgia.

How to hire contractors in Georgia

To hire Georgia contractors, you first need to understand the difference between contractors and employees’ legal classifications and get acquainted with local labor laws, as defined by the Labor Code of Georgia (Law No. 4113).

1. Understand contractor vs. employee classification

Knowing the difference between an independent Georgia contractor and a full-time employee is essential. Getting it wrong can lead to compliance risks, legal headaches, and potential fines. 

In Georgia, contractors are classified as workers who:

• Are self-employed and provide services to your company on a project or time-based basis
• Work independently and control how they complete their tasks
• Use their own tools or resources
• Are not entitled to company benefits like paid leave or health insurance

Employees, on the other hand:

• Follow company policies and work under your direction or supervision
• Use company-provided tools and equipment
• Are entitled to statutory benefits such as paid time off, severance pay, and pension contributions

Misclassifying a contractor as an employee can trigger legal penalties in Georgia. You may have to pay unpaid income taxes, social security contributions, and additional penalties. 

To avoid hefty fines and expensive classification mistakes, why not use a workforce management platform to hire Georgian contractors? 

2. Understand local labor laws

Labor laws vary by country, so you need to get to grips with the local regulations of each country where you’re hiring local workers to mitigate risks. 

Georgia’s labor laws are framed after the Labor Code of Georgia, which covers workers’ rights who are employed in local businesses. If you hire a contractor in Georgia, then these laws wouldn’t necessarily apply. However, it’s best to be familiar with them as contractors may still expect you to match the below.

• Minimum wage: The official minimum wage remains extremely low at around GEL 20 per month ($7.30), but in practice, market wages are much higher, around GEL 1,040 ($390). Georgia contractors typically set their own rates. 

• Working hours: The standard workweek for employees is 40 hours, spread over five or six working days. Any overtime must be paid at a higher rate. 

• Public holidays and annual leave: Employees in Georgia are entitled to 24 paid vacation days and 15 public holidays per year. Various other types of leave are also covered, including maternity, parental, sick, and educational leave.

• Rights and legal protections: Employees receive protections around non-discrimination, health and safety, and social security contributions. 

• Termination: Employees are protected under specific termination rules, including notice periods and severance pay under certain conditions. Contractors can typically be terminated per the terms outlined in their service agreement.

• Contract terms: Employers must sign a contract to establish a professional relationship with their employees. This sets out the pay, responsibilities, leave, entitlements, and more, and must comply with the Labor Code of Georgia. 

Because contractors don’t receive the same protections or benefits as employees, it’s important to distinguish them from your company’s employees. 

3. Find Georgia contractors

When hiring abroad, you need to know the best places to find the best talent.

LinkedIn and job boards like Indeed, Monster, or ZipRecruiter are popular choices in Georgia, though be sure to clearly state that the role is project-based or freelance. Many contractors are also active on freelancer platforms, like Upwork, Freelancer, or Toptal. Some workers also use local hiring websites, which may give you better access to local talent familiar with regional business norms.

When evaluating candidates, ask for references or client testimonials from similar projects. They should provide a portfolio of their past work, too. It’s also a good idea to discuss availability and time zones to be sure you’re on the same page. 

4. Hire contractors in Georgia 

Once you’ve selected a contractor, make sure that both parties sign a written agreement that includes a clear scope of work, payment terms and schedule, deadlines and deliverables, confidentiality and IP clauses, and a communication schedule. You can also specify the worker’s classification here to mitigate any future misclassification issues. 

This both sets expectations and protects each party if something goes wrong. All that’s left now is to establish a reliable, compliant way to handle payments, without delays or complications. 

How to pay contractors in Georgia

Paying contractors in Georgia involves choosing the right payment method and ensuring contractors have the correct tax information. While an employer isn’t liable for a contractor’s tax payment, you should still know about their responsibilities.

1.  Determine how to pay 

Once you have onboarded your Georgia contractor, you’ll need to choose a reliable way to send payments. Here are some of the most common methods:

• Bank transfers: Top banks in Georgia include Bank of Georgia, TBC Bank, and Liberty Bank
• Digital payment wallets
• Cryptocurrency: While uncommon, some Georgian contractors accept crypto like USDT or Bitcoin
• Dedicated online platform: Hiring and paying contractors can be a lengthy process, but platforms like Payoneer WFM make processing international contractor fees easy.

2. Ensure your Georgian contractors have the right tax information

Independent Georgia contractors are responsible for handling and filing their own income taxes, 

at 20% of their revenue, and registering for VAT at a rate of 18%, if the annual revenue exceeds 100,000 GEL. 

However, if they are registered as individual entrepreneurs and earn an annual revenue of less than 500,000 GEL, they qualify for a 1% turnover tax. If their income exceeds 500,000 GEL for two consecutive years, the tax rate increases to 3% of the turnover.

As the hiring company, it’s in your best interest to ensure your contractors are properly registered with local tax authorities and that you have the correct tax information for them. It’s best practice to:

• Confirm they are registered as individual entrepreneurs (if applicable)
• Ensure they provide a valid tax identification number
• Clarify that they are responsible for reporting and paying their own income tax and pension contributions

3. Pay your Georgian contractor

Now it’s time to process contractors’ fees. Workforce management platforms like Payoneer  WFM simplify this process by handling cross-border payments, currency conversions, and recordkeeping all in one place.

Don’t forget to account for hidden costs when budgeting for international contractors. These might include currency exchange fees and platform service fees or international bank charges. 

Why Payoneer WFM is the easiest way to hire and pay contractors in Georgia

Hiring and paying Georgia contractors can get complicated fast, especially if you’re also managing multiple countries, currencies, and legal requirements. Payoneer Workforce Management removes that headache. 

Payoneer WFM is a unified platform that helps you employ independent contractors and full-time employees in 160+ countries, including Georgia, without setting up a local legal entity.

With Payoneer WFM, you can:

• Onboard new hires quickly and compliantly
• Run and automate global payroll securely with a single click
• Stay up to date with local employment laws
• Manage taxes, benefits, work permits, timesheets, background checks, and more

From fast onboarding to multi-currency payments, Payoneer WFM gives your business everything it needs to manage, hire, and pay contractors in Georgia and beyond. 

Georgia contractors FAQs

What is an independent contractor in Georgia?

An independent Georgia contractor is a self-employed individual who provides services under a contract. They control how and when work is done, often work for multiple clients, and are responsible for their own taxes and benefits.

What are some advantages of hiring Georgian contractors?

• Reduced costs: Avoid expenses related to full-time employment like benefits, paid leave, and social security. 
• Flexibility: Hire contractors in Georgia as needed, based on projects.
• Skilled workforce: Georgia is a tech hub with access to highly skilled professionals in areas like software development, design, and digital marketing. 
• No need to register as a local entity: Reduce administrative and compliance burdens.

Can you manually pay contractors in Georgia?

While you can manually pay contractors in Georgia, you probably shouldn’t. Doing so often involves higher fees and a lot more administrative work, especially when managing currency conversions and cross-border compliance. Manual payments also increase the risk of errors and make maintaining clear records for tax purposes harder. 

Using a workforce management platform instead streamlines payments, reduces hidden costs, and provides transparency for everyone involved.