Employer of Record Services (EOR) | Everything You Need to Know

Employer Of Record Services (EOR) is a special service that businesses hire and contract with service providers to outsource various HR services such as payroll, employee benefits, employee compensation, compliance, etc. It means letting a third party become a legal employer for a business and manage its workforce. A business can hire an Employer Of Record Services in any country whether it owns a legal entity there or not.

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However, most businesses hire employers of record solutions in countries where they do not have a legal base. So, the employer of the record acts as the employer in such countries on behalf of the business that hires it.

Here are the frequently asked questions that might arise in mind when seeking an employer of record.

What Does an Employer of Record Mainly Do?

Employer of record mainly manages the workforce of a business, especially those employees that a business hires in a country where it does not have a legal entity. Employer of record recruits workers in the target country and also performs termination tasks. It also makes all types of contracts with the employees whether short-term or long-term. Employee benefits, compensation, insurance, etc., all are managed by the employer of record.

Payroll and all of its related functions are also executed by the Employer Of Record. Additionally and most vitally, the employer of record manages the workforce by keeping in compliance with the legislation of the target country.   

Is It Beneficial to Hire an Employer of Record Services?

Hiring an employer of record is highly beneficial for businesses that want to expand. When a business plans to expand in a new country, it needs to legalize itself in that country in the first place. After legalizing the business, employees can be hired by the labor law of the target country. This process takes a lot of time, effort, and resources. When a business plans to expand in another country, the same process needs to be repeated. It means the slow progress of a business.

In today’s day and age, services such as EOR are helping businesses to expand in various regions of the world in a matter of days instead of months and years. 

Also read: Benefits of Employer of Record Services

Who Needs to Hire an Employer of Record Services?

Any business can hire EOR services whether in a country where it is legal or to expand in other countries. However, businesses that want to expand are the ones that need the EOR services the most. It is not any law but there are many good reasons to hire an employer of record.

Searching the talent from various parts of the world is a tiring task even if a business succeeds in legalizing itself in all target regions. It is equal to putting some extra burden on the human resource department. When the main goal is expansion, these factors are retarding the process. Hiring an employer of record is the best solution for the easy and successful expansion of a business.   

Also read: A Guide On Global EOR (Employer of Record)

EOR or Independent Contractors, Which Is Better?

With EOR, a large number of employees can be hired at a time. On the other hand, independent contractors are individuals that are usually hired for single projects. A business can certainly hire an independent contractor depending on its needs. But if the goal of a business is to expand in a target country, how many independent contractors will it hire? It means it is not a wise idea to choose independent contractors over EOR as far as expansion is concerned.

Moreover, EOR is a safe option when you choose a responsible firm. On the contrary, you do not even ensure that the independent contractor you are working with remains an independent contractor in the record in most cases. They can claim any time to be an employee or claim unfair dismissal if they have not taken any precautionary steps. A business can not afford such risks when expanding. 

Also read: Employer of Record for Independent Contractors

Is There Any Difference Between EOR and PEO Services?

Both EOR and PEO perform similar functions but there is some difference between these two options. The main difference is that the PEO shares employment responsibilities with the business, whereas the EOR takes complete responsibility for the employment function of the business.

With PEO services which is a type of co-employment contract, you still have some control over what functions your employees perform, their hiring and firing, etc. Contrary to that, a business is free from all these responsibilities when it hires EOR services.  

Also read: The Difference between EOR and PEO Companies

Are EOR Services Costly?

Most firms provide cost-effective EOR services. Nevertheless, if we have a look at costs generally, EOR is the most cost-effective option for businesses that plan for expansion. Even a layman can understand the difference between the costs of globalizing without EOR and with EOR. There are plenty of formalities that take up amounts of resources when a business tries to expand without any external aid.

Legalizing in target countries, building subsidiaries there, and searching for talent, employment, etc, are just a few of the responsibilities that are required to be completed in the process of expansion. With EOR, all these functions can be performed on a preset budget. 

Choose the Best HR Outsourcing Services

If you are planning business expansion and seeking the best employer of record, choose us. Letting an outside firm manage your workforce means trusting someone with the progress of your business. Choosing the most efficient firm is highly significant because it is going to impact your business growth.

If you want to expand your business easily and swiftly in the UAE, consult our expert employer of record services. We aim to help your business achieve the recognition and success it deserves. If you found this article useful, reach out to our experts for additional guidance and support.