What is a Security Deposit?
A security deposit is a one-time, refundable payment required when onboarding a new employee. This deposit protects both you and your employee by ensuring salaries are paid on time, even if payment delays occur.
Standard Deposit Amount
The standard security deposit covers 1 to 1.5 months of total employment costs.
Standard deposit includes:
1 month of gross salary
1 month of employer costs
1 month of EOR platform fee
Example: If your monthly total cost is USD 6,149, your standard security deposit would be approximately USD 6,149 to USD 9,223.
When the Deposit Increases
In certain circumstances, the deposit amount may increase to 2 months or more of total employment costs when these scenarios occur:
Removing Probation Period
Standard deposit: 1 - 1.5 months
Without probation: 2 months deposit
Why: Higher risk without a trial period
Generous Paid Time Off (PTO)
If PTO exceeds legal minimum by more than 8 days: 2 months deposit
Example: Country requires 20 days; you offer 30+ days
Why: Higher potential payout liability upon termination
Note: This doesn't apply to sick leave
Extended Notice Period
Standard notice period: 1 - 1.5 months' deposit
3-month notice period: 3 months' deposit
Deposit matches the notice period length
Why: Covers extended employment obligations
Variable Compensation or Incentive Plans
Includes commission, bonuses, or performance-based pay
Deposit amount: Reviewed on a case-by-case basis
Why: Variable costs need additional security
Contract Amendments
Significant mid-contract changes may require deposit adjustments
Examples: Major salary increases, benefit additions
Why: Ensures adequate coverage for new obligations
Multiple Changes
Even with multiple amendments, the maximum deposit is typically capped at 2 months
Exceptions: Notice period extensions, incentive plans, variable compensation
How the Deposit Works
When You Pay
Timing: Before the employee can be included in payroll
Payment methods: Aspire cards (1% cashback), bank transfer, or other cards
Currency: Invoiced in the employee's employment country currency
Throughout Employment
Held securely: Deposit remains in your account throughout employment
Not used for regular payroll: Only for emergency situations or final settlement
Adjustable: May increase if contract terms change significantly
When the Employee Leaves
For Resignations:
Employee submits resignation letter
The final payroll invoice is generated
The deposit is used to settle the final invoice (if the deposit exceeds the invoice)
The remaining deposit balance is refunded
For Terminations:
The termination process is completed per local labor laws
All statutory entitlements are calculated (severance, unused leave, etc.)
The final invoice is settled
The deposit is refunded after all obligations are met
Deposit Refund Process
Timeline
Refunds processed within 60 days after:
Employee's final day has passed
All invoices are fully paid
All payment settlements are complete
Note: The 60-day timeline starts after termination is finalized and all payments are settled, not from the date of resignation notice.
Refund Amount Calculation
Scenario 1: Deposit Exceeds Final Invoice
Deposit: $6,000
Final invoice: $4,500
Refund amount: $1,500
Scenario 2: Final Invoice Exceeds Deposit
Deposit: $6,000
Final invoice: $7,200
You pay an additional: $1,200
Refund amount: $0 (deposit fully used)
You must settle the outstanding balance before refund processing begins
Scenario 3: Deposit Equals Final Invoice
Deposit: $6,000
Final invoice: $6,000
Refund amount: $0 (deposit fully offsets invoice)
Currency Considerations
Matching Currency:
If your refund bank account matches the deposit currency: Direct refund, no conversion fees
Different Currency:
If currencies differ: FX conversion applied at the time of refund
Exchange rate used: Current market rate at refund processing time
Note: To avoid FX fees, provide a refund bank account in the same currency as the original deposit.
Monthly Cost Example
Here's a complete breakdown for an employee:
Employee Profile
Location: United Kingdom
Gross Salary: £4,000/month
Healthcare: Enhanced plan
Life Insurance: Included
Cost Breakdown
Component | Monthly Amount |
Gross Salary | £4,000.00 |
Employer Costs (National Insurance, pension) | £480.00 |
Healthcare Contribution | £150.00 |
Life Insurance | £50.00 |
EOR Platform Fee | £320.00 |
Total Monthly Cost | £5,000.00 |
Security Deposit (One-Time)
Scenario | Deposit Amount |
Standard (1x monthly cost) | £5,000.00 |
With enhanced benefits (1.5x) | £7,500.00 |
Annual Cost Summary
Monthly: £5,000.00
Annual: £60,000.00
Security Deposit: £5,000.00 - £7,500.00 (one-time, refundable)
Frequently Asked Questions
Is the security deposit refundable?
Yes, the deposit is fully refundable after the employee has left and all invoices have been settled.
When do I get my deposit back?
Within 60 days after termination is finalized and all payments are completed.
Can I use the calculator without creating a contract?
Yes, the cost calculator is available for budgeting purposes before committing to hire.
Why did my deposit increase from the quote?
Deposits increase when you remove probation, add generous PTO (8+ days above minimum), extend notice periods, or add variable compensation.
What if my final invoice is less than the deposit?
The deposit settles the final invoice, and you receive a refund for the remaining balance.
What if my final invoice is more than the deposit?
You must pay the difference. The deposit is applied first, and you're invoiced for the outstanding amount.
Do employer costs count toward the deposit?
Yes, the deposit includes gross salary + employer costs + platform fee.
Can I pay the deposit in installments?
No, the full security deposit must be paid before the employee is included in payroll.
What happens to my deposit if the employee is terminated during probation?
The deposit is still refunded after the final invoice is settled, following the same 60-day timeline.
Are there any non-refundable fees?
No. The security deposit is fully refundable. Only the monthly platform fees and actual salary/employer costs are non-refundable operating expenses.
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