Compensating Remote Workers

5 Compensation Strategies for Remote Workers

To hire top-tier remote workers, you need to know these five remote worker compensation strategies and find the approach for your business.

5 Compensation Strategies for Remote Workers


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The shift to remote work has truly changed the game for companies in the U.S. With a wider scope of talent to choose from, you can unlock new expertise and opportunities to grow your business.

But hiring remote workers also comes with its set of distinctions, mainly because it requires looking through a new lens compared to in-house and local hiring. One of the questions businesses seeking to hire remotely ask is how they can compensate remote workers fairly and strategically. 

Should their remote salaries be the same as in-office workers, or should you consider the minimum wages in their country? Read on to better understand which remote worker compensation strategies and approaches you should take.

Why You Need a Good Compensation Package

Remote hiring benefits your business by providing access to a broader talent pool. But it can also be a double-edged sword because your broader talent base means you have more competition. You’re competing for qualified talent with global companies instead of being limited to your locality. 

There lies the importance of having a good compensation package. With a competitive offer, your business stands out to remote candidates and entices them to work for you over other companies. And when they are onboarded into your organization, a competitive salary will also improve their satisfaction and retention

Components of Remote Worker Compensation

Coming up with a compensation package isn’t just about thinking of a number and going through with it. You must calculate and factor in the amounts to pay for the base salary, benefits, and local taxes.


While you can save hiring costs by hiring remotely, that doesn’t mean you can cut down on the salary your candidates deserve. Remote workers know their value and have salary standards that align with global perspectives. 

Narrowing down a range for a remote worker’s salary is no easy task, partly because compensation rates vary from region to region. But to find the ideal figure you should offer, factor in their location and overall value. Take a look at things such as their experience, skills, and responsibilities concerning the role. 

Generally, remote teams expect salaries that are in line with in-office jobs. But to come up with a more comprehensive computation, try our free salary calculator. 

Benefits and entitlements

3 Remote employee benefits that matter

Salary offers get candidates in the door, but total compensation packages keep them. These can be in the form of monetary incentives. Still, remote employees would also appreciate these top 9 benefits and entitlements

  • Work-life Balance - Ensures harmony between work and personal life by reducing work stress, setting career boundaries, etc. 
  • Flexible Schedule - Many employees opt to work remotely instead of in-office because it allows them to work when they find it most convenient. Hence, a flexible work schedule should always be on the table. 
  • Stock Options - Allows employees to purchase company stock at a discounted rate, which enables them to benefit from stock value increases to boost their salaries. 
  • Performance Bonuses - Offer fair monetary compensation for good performance. You can offer this quarterly or annually. This entices employees to continue performing well. 
  • Healthcare - This can include comprehensive health, dental, and vision insurance. 
  • 401k or Related - Retirement savings plans will help employees save for their futures. 
  • Educational Budget - Allows employees to pursue further education or pay off student loans. 
  • Home Office Setup Budget - Gives employees the funds they need to optimize their home office setup so they can work more productively. 
  • Parental Leave - This allows employees to take off from work to tend to parental matters, such as paid paternity or maternity leave


Remote Employee Tax

Taxes must be factored into salary adjustment and computation, as this affects your workers' take-home salary and disposable income. The exact specifications also differ depending on whether the remote worker is an employee or an independent contractor. Learn more about how to set up taxes for remote workers in our comprehensive article. 

Compensation Models/Strategies

According to a survey conducted by Willis Towers Watson, 6 out of 10 business owners compensate their remote employees the same way they do their in-office employees. On the other hand, 18% of employers factor in the employee location’s affordability and skills using a tiered approach.

You can take several systems to structure your compensation package for your employees. These are: 

Based on the main location or regional office 

If your company has a physical location and hires local workers, the easiest approach to compensate remote employees you hire would be to make the package relative to their local counterparts (location-based paying line with current employees).

This is an excellent way to standardize median salaries and ensure that everyone in the same position and doing the same work gets paid equally. 

However, this may not be the best approach if you’re hiring remote workers from a location with a cost of living severely different from your company’s state or locality. The standard salary in your business location may be too little or too much, depending on the cost of living where your remote worker lives. 

Based on the employee’s home or remote work location

Setting up compensation policies based on geography has been the most common way of compensating remote employees. In this approach, you factor in the cost of living and labor in the city where your remote worker lives and pay them accordingly – i.e., what is enough to pay for their expenses. 

While this may be a popular approach, it’s becoming taboo in today’s remote working landscape as remote workers become more global workers. They are demanding salaries commensurate with their workload – not based on where they are. 

We recently witnessed an upheaval of the sort when Facebook announced that it would start to pay its remote workers based on their geographical location. Those who lived in more affordable places saw a reduced salary, while those who landed in areas with a high cost of living saw a salary bonus. 

This difference in employee salary based solely on where they live can cause conflict in the workplace, not to mention reduced employee morale, especially for those who are getting paid less than their coworkers. 

Based on national or regional rates

A good remote compensation strategy for competing for on-demand and top talent is to set a total package based on the national or regional pay medians. This approach doesn’t consider the employee's location and will stay the same regardless of where they live now or months down the line. 

In addition, this approach also works better with add-on compensation for good performance and certain skills. 

Paying employees based on this single-rate scheme is an excellent option to attract top-tier talent. However, the national or regional standard might be less competitive compared to companies willing to pay 10% to 20% higher than the average.

Based on international standard

Suppose the national or regional average isn’t competitive enough for the type of talent you want to attract. In that case, you can widen your scope and choose to compensate remote talent based on the international standard. This will likely be the salary range that your remote candidates are already expecting, making it easier to close the deal. 

International standard compensation allows you to promote fairness in your company by ensuring that the pay is the same across the board. It will also make it easier to compare salaries and provide equitable compensation. 

However, this approach will also come with its drawbacks. If your remote worker is in a company with strict labor laws, any discrepancies may put you in the hot seat. 

Based on employee credentials

To foster a more personalized compensation structure, you can also pay your remote workers based on their credentials. For example, you can assess their resumes and look at their experience, education, soft or hard skills, etc., which will help you formulate a fair salary for them. 

This is an excellent way to ensure that your remote workers' pay is commensurate with the value they can provide to your company. And as they develop their skills and performance, you can increase their salaries or design a bonus structure to incentivize them. 

However, this is going to take a lot of work for you. With different salary ranges to benchmark against and unique numbers across your employee pool, you’ll need to shell out more monthly resources when the time to initiate payments comes. 

What Is the Best Compensation Package for Remote Workers?

The best compensation package for you will ultimately depend on your business strategy. When choosing one of the approaches above, make sure you consider the values of your business and what sort of employee characteristics you are incentivizing. 

With that in mind, weigh the pros and cons of each approach and find the one that best suits your business philosophy. 

How To Create a Competitive Compensation Package

To help you develop your compensation package for remote workers, here’s a step-by-step guide you can use as a roadmap. 

Step 1. Look for the average salary of the position in the candidate’s region (i.e., LatAm)

According to Numbeo’s Cost of Living Index, the salary ranges in different regions of Latin America differ significantly, mainly because of the differences in the cost of living. Hence, as a first step, look for the average salary rates in the region you’re looking to hire. Then, zero in on the position you need to fill. 

Step 2. Look for the average salary of the position in your business’ market (i.e., US market)

After you get the average salary of the position in the region where the candidate is located, compare it to the average salary of the same role in your labor market. Study and assess industry trends and local wage data, then find a figure aligned with salary expectations and your competitors' offerings. 

Step 3. Match the high end of the compensation of the role in the region to the average of your market 

Now that you have the average salary figures for the region in Latin America and the average for your market, you can match the figures together and come up with a competitive compensation package. Usually, you’ll end up with a final number that is 40% to 60% of the average salary in your market rate. 

Step 4. Complete the package with benefits and entitlements

The number you’ve yielded so far only makes up the base salary. Complete your compensation package by adding benefits and entitlements to entice remote workers. 

Frequently Asked Questions on Remote Worker Compensation

Are remote workers covered by workers' compensation insurance?

It depends on the jurisdiction where the remote worker lives. Workers' compensation insurance may cover them if the laws of their state or country and your insurance policy's criteria are met. 

Do remote workers get paid less?

How much do remote workers earn? infographic

Remote workers typically get paid a comparable or higher range than in-office workers. The exact difference will depend on the job market, their location, and their skill levels, among others. 

Can remote work compensation be negotiated?

Yes, your remote worker can negotiate a higher salary than you’ve initially offered. Similarly, you can negotiate a lower wage than the worker’s expectations depending on other factors such as learning opportunities and benefits. When negotiating, approach with a clear understanding of the candidate and the value they can bring to your company. 

Final Thoughts 

Creating a solid compensation strategy will help attract and retain high-class remote talent. You can take several approaches, but before deciding on one, find the option that aligns with your business values and philosophy. 

If you’ve come up with a compensation package to offer your remote candidates, start your search for talent in Latin America with Near.

Frequently Asked Question

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