Whitepaper Onboarding Automations: Faster turnarounds, better hiring experience
Whitepaper Onboarding Automations: Faster turnarounds, better hiring experience
Download Download
Download Download

Employer of Record A guide for understanding and implementing global hiring

Employer of Record: A guide for understanding and implementing global hiring

Employer of record (EOR) is a beneficial service that allows businesses to outsource their administrative responsibilities, when hiring an international workforce. EORs are third-party entities that become the formal employer of employees from a foreign country. In this partnership, businesses are relieved of tedious paperwork, as handling payrolls, compliance benefits, and all HR-related functions become the responsibility of the EOR.

Benefits and key considerations when using an EOR

Global compliance

EORs are experts in local labor laws and regulations, as they hail from the employee’s country. Using an EOR is advantageous as it assures businesses that their international workforce is operating in due compliance with significant legal obligations. Hence, when outsourcing an EOR, you should confirm that your selected EOR has a strong record of compliance, especially in your target countries.

Risk mitigation, payroll, and HR

As EORs are the formal employer, legal obligations also get transferred to them. Therefore, using an EOR reduces the legal and financial risks associated with global hiring on the SMB’s part. EORs simplify complex hiring procedures by handling payroll, taxes, visa sponsorships, employee benefits and other HR requirements. In fact, EORs also ensure that the international employee benefits are coordinated with the local standards. This helps businesses by saving a lot of time and resources. Although EORs offer numerous benefits, you should evaluate the cost-effectiveness of every potential EOR service before finalising one.

Easy access to a new market and scalability

By eliminating the need to establish a legal entity in a foreign country, EORs fast-forward the process of global expansion. EORs also offer flexibility, which allows businesses to scale themselves as per their personal needs, without abiding by the complexities of traditional hiring methods.

Types of EORs

Traditional EORs

Traditional EORs are a comprehensive solution for an efficient global hiring process. They serve as a legal employer for the international workforce, on behalf of an organisation. EORs also manage all HR-related functions including payroll, taxes, and compliance with local laws and regulations.

Professional Employer Organization (PEO)

PEOs are like traditional EORs but require businesses to open a local entity in the target country and enter a co-employment arrangement. While traditional EORs become the formal employer for international employees, PEOs share the responsibilities of being an employer, with the client organization. Additionally, PEOs provide the same services as EORs.

How to select an EOR?

Selecting the right EOR is a crucial decision for scaling international growth. Listed below are some steps that can come in handy for businesses when choosing an EOR:

Business needs

Each business is unique and has special goals and requirements. Businesses should select an EOR that understands their distinct needs and provides personalised services to attain them.

Direct entities

Organizations should choose an EOR that has a proven record of successful expansion in their target countries. Undertaking this initial research streamlines the administrative process and reduces potential complications associated with global hiring.

Price

Organizations should consider their special hiring requirements and compare pricing models of potential EORs before finalising them. A transparent budget should be discussed before signing any contract. There should not be any hidden charges or surcharge fees. All costs should be provided upfront, by the chosen EOR.

Takeaways

For global hiring, EORs are indeed a beneficial choice for SMBs. EORs allow SMBs to venture into the global market and hire efficient global talent at reduced costs. By outsourcing the administrative responsibilities involved in international employment, businesses can focus on their growth alone. With the right EOR partner, businesses can leave the complexities of global hire to the experts and freely thrive on a global scale.

When selecting an EOR, you should carefully consider intricate factors like cost, compliance, expertise, and the type of service that best aligns with their global expansion strategy.