Whitepaper Cut the middlemen: Advantages of an EOR platform with local entities
Whitepaper Advantages of an EOR platform with local entities
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A Fast Guide to Employer of Record Services with Key Considerations

International growth is accompanied by numerous challenges because managing a diverse workforce, and complying with the complexities of country-specific labor laws is an arduous process. However, partnering with an Employer of Record can simplify global expansion and recruitment.

What is an Employer of Record?

An Employer of Record, often abbreviated as EOR, is a legal entity that recruits employees on behalf of a company. When businesses grow internationally, they may not have the necessary infrastructure or expertise to handle the intricacies of hiring and managing employees in a foreign country. Thus, EORs step in to act as a bridge between a company and its international workforce.

Certain businesses choose Professional Employer Organisations (PEO) for entering an international market, however, unlike EOR, it requires an organization to own a local entity and enter a co-employment arrangement. Therefore, EORs are a cost-effective solution for increasing the bottom line. An EOR is responsible for everything involved in the process of hiring an international workforce. It includes payrolls, employee benefits, compliance with local labor laws, taxes, visa sponsorships, and other HR-related functions.

In this partnership, the EOR becomes the formal employer ensuring that all employment practices are in accordance with the local regulations of the employee’s country. Besides, it allows businesses to open doors in a foreign country without bearing the expense of establishing a legal entity in that country.

Services & Benefits offered by EORs:

  • Employment Compliance: Being well-versed with the labor laws and taxation framework of all countries allow EORs, to comply with the government regulations in the client organisation’s target country. It also reduces the risk of facing legal penalties or monetary crisis.
  • Payroll Management: EORs take responsibility for all HR-related functions including recruiting, onboarding, and off-boarding employees. Even the payroll-related tasks comprising calculating salaries, taxes, and employee benefits are handled by an EOR.
  • Benefits Administration: EORs ensure that the client organization’s international employees receive the same rewards as their local workers by providing relevant health insurance, retirement plans, paid leaves, and other valuable employee benefits.
  • Risk Mitigation: EORs minimise the risks associated with international expansion including labor disputes, cultural misunderstandings, financial distress, and regulatory pitfalls.
  • Saves Time & Costs: Establishing an entity in a foreign country, hiring employees from scratch, learning about local laws, and complying with local taxation frameworks is a costly and time-consuming process. Hence, EORs can take care of international expansion while allowing organizations to focus on their company’s operations and development.

Key considerations when choosing an EOR

  • Transparent costs: Organizations should select an informed and transparent EOR. Businesses should request a complete breakdown of costs from potential EOR providers. Hidden charges, setup fees, taxes and cancellation fees should be discussed before signing any contract. The estimated budget should also include payroll expenses alongside health insurance, paid time off, and other relevant expenditures. As labor laws differ depending on the country, EORs should be upfront about its specific prices on all the required parameters.
  • Track record: Organizations should perform diligent research before outsourcing an EOR, this involves reading critical reviews and finding references to check the EOR’s performance with previous clients. When finalising, an organization should select an experienced EOR to ensure due compliance with all legal and regulatory requirements.
  • Communication and Support: Organizations should choose a trustworthy EOR that provides experienced and supportive HR professionals. The chosen EOR should be quick and efficient in responding to any queries a business may have, across all channels of communications including emails, chat support, and phone calls. The selected EOR should leave no room for any monetary or legal penalties.

Why should you choose an EOR?

Partnering with the right EOR is a productive and cost-effective solution for global expansion. It allows business owners to focus on their core operations and accelerate their international growth. Outsourcing an EOR simplifies global hiring by abiding with local regulations of the target country and getting a diverse set of employees on board. Overall, it is a simple, flexible, and affordable system for recruiting employees beyond borders.