This document summarizes and organizes the practices prevalent in Edgeryders around employing people. They are not being changed, simply made explicit.
Edgeryders the company, was founded on top of a pre-existing online community. Since incorporation (in 2013 in the UK, in 2017 in Estonia), the company and the community have continued to exist in symbiosis. The community is highly global, with members all over the world. This was always an important factor of competitiveness for the company, which could claim access to thousands of “eyes on the street” in very many places – a key ingredient of collective intelligence. As a consequence, the company has to date done almost all of its work in a very international milieu, employing people (almost always members of the aforementioned community) in many countries. Also as a consequence, the work has moved from project to project, and from country (or region) to country.
This poses the problem of employment. The traditional model of employment does not work well for Edgeryders. Because:
- We prefer to recruit people who are embedded in the societies and specific networks that our projects are about. Ripping them away from, say, Armenia to bring them to Tallinn or Brussels would weaken their local ties.
- Projects are typically fairly short-lived – a few months to 2-3 years at most.
- Traditional employment is not designed for global operations. At any point in time, Edgeryders has on the payroll people from 10 or so countries. With the traditional model (whereby the employer pays social security contributions on behalf of the employee, and transfers her a net salary) we would need to contract payroll companies and accountants in all 10 countries. This would create an unrealistically high overhead.
Instead, we follow a policy of putting collaborators on retainer contracts. This means:
- Contracts are tied to specific projects and are made with natural persons.
- They specify a set of tasks that the company needs done.
- They specify the name of someone that the collaborator reports to.
- Of course, they specify a salary that the company will pay the collaborator. The salary is paid in periodic installments. For short contracts, there may be only one installment.
- They specify an approximate worktime that the tasks are supposed to require. This means that the company is buying the collaborator’s time. Collaborators are required to track their worktime, using our online facility (currently at edgeryders.freeagent.com).
- To calculate the annual productive hours for projects funded from Horizon 2020 Programme, Edgeryders applies the following method (as per the Annotated Model of the Grant Agreement of the European Commission):
1720 annual productive hours (pro-rata for persons not working full-time).
1720/12 = 143.33 hours.
In Edgeryders, we prefer to attribute the same PM cost of 6,000 EUR/month to all collaborators. This means that our hourly rate is 41.86 eur.
To understand the total number of hours the collaborator is required to work, the sum from the contract is divided by the hourly rate.
Minor deviations and differences resulting from miscalculations when reporting minutes are tolerated (and consequently minor mis-match between timesheets and invoices). However, we strongly advise that the collaborator reports full hours to avoid mistakes.
- The intellectual property rights derived from the collaborator’s work stays as property of the company.
- The work needs to be carried out from the company’s physical premises (currently we rent office space in Brussels and Stockholm), and/or on its online channels (primarily this platform). The Collaboration category, and especially the Company Manual, contain detailed descriptions of these channels and how to use them.
- The collaborator is paid the entire gross amount, and is expected to pay her own income taxes and social security contributions according to the laws of her country of residence. Most of our collaborators are natural persons, who emit invoices. This is not a way to dodge our responsibilities as an employer: we do pay social security, even though we leave it to the employee to make the “last mile” of the payment in his or her country of residence. This way, the money we spend goes to our employees in the form of salary or social security contributions, rather than to accountants or lawyers. We also try to accommodate mutualistic forms like that of smart.be. What we would really like, however, is a “European single labor market”, where we pay social security to a low-overhead continent-wide scheme.
- These costs are classified as
Collaboratorsin our accounting system. This is a subcategory of
Costs of labor, which is itself a subcategory of
Costs of sales.
- To reduce our overheads, we prefer to pay retainers quarterly. However, exceptions can be made, for example when employees are financially vulnerable and need quick payments.
In the language of the annotated model of grant agreement for European projects, Edgeryders collaborator contracts are equivalent (to employment) appointing acts.