An Employer of Record is an organization or entity that hires an employee to carry out certain tasks on behalf of the main hiring company. Hiring international talent creates possibilities for new market penetration, improved range of skills, and creativity, to mention but a few.
However, fully comprehending and ensuring compliance with international labor laws, operations of the payroll system, and employment regulations is often challenging for businesses.
Thus, a Global Employer of Record (EOR) can assist in ensuring businesses fully meet all compliance requirements.
This article explains what EOR means, how firms can utilize EOR services, and further details the benefits of engaging the services of a global EOR.
Also read: Benefits of PEO
Global Employer of Record or global EOR is an organization that focuses on the recruitment and payrolling of employees for foreign outfits without physically setting up branches across the world. It is especially helpful for managers that want to grow their business fast, cover more sales markets, introduce products and services, attract customers and clients worldwide, and at the same time avert distinct legal complexities and high expenditures.
Employer of Record, also referred to as a co-employment provider, is a third party that fully and legally employs workers for another company. As part of all employer-related affairs, like human resources management, employee introduction and orientation, employees’ salary and wages, and labor laws of the country.
Whereas the EOR handles these duties, those targeting and hiring the employees remain in charge of how the staff is run and directed.
In other words, an EOR can help free up resources in a business so it can concentrate on its strategic objectives and at the same time, manage all the employees’ legal responsibilities.
Also read: Co-employment Laws, Risks and Benefits
An EOR offers many services that allow companies to lawfully and effectively harness talents in the worldwide market.
Here are some of the primary functions an EOR performs:
The services of a global EOR are advantageous to companies that seek to expand their operations in different countries.
These benefits include:
An EOR is a very useful partner for different reasons, especially when it comes to dealing with a dispersed staff and when participating in the international market.
Here are some specific situations where an EOR can be particularly beneficial:
If your company is interested in entering a new market but is not prepared to establish an in-country entity, an EOR is perfect for beginning your market entry process compliantly.
Allowing one to quickly obtain a team in new markets, create new revenues, and reach new consumers, an EOR eliminates the commitment and cost of entity establishment.
With so much competition for jobs nowadays, getting a job that will allow one to work from home is a bonus. An EOR means you can select candidates from anywhere in the globe; for this, the talent database is expanded.
Besides, if the employees require mobility, an EOR ensures that the company can keep the best talent as it facilitates international recruitment.
To set up a local company, it takes time, capital, and legal assistance to understand the legal systems of the country. An EOR can act as a stop-gap measure since one can recruit employees and start operations as one forms the entity.
Thus, depending on the specific stage of the entity establishment, the EOR can give suggestions or even submit some kind of assistance.
Contracting people abroad may be affordable if the contractors are hired from overseas. However, the case changes when the company expands, and there is a higher chance that workers are misclassified.
The misconception of wrongly classifying the employees as independent contractors brings legal/financial repercussions.
For this reason, an EOR reduces this risk as they work under the contractors as employees, thus following the laws of the land.
Choosing the right EOR company is one of those things that must be done properly if you are going to successfully navigate your business into other countries.
Here are several important considerations when selecting an EOR partner:
That is why ensure that the EOR you hire has an appropriate policy on prices that you have to pay. In this case, one should avoid such partners as they are usually characterized by hidden costs that are likely to be charged at their discretion.
An EOR should be able to provide accurate estimations on the employer’s cost liability in terms of social security, health care, labor insurance, and several leaves, among others. These costs are variable in the various markets, and through the engagement of an EOR partner, you should be able to obtain these correct approximations.
Ideally, your EOR should have information as to the various markets you are planning on hiring in. A good partner also minimizes compliance risks while at the same time decreasing the likelihood of various operational disruptions in the business.
Therefore, it is possible to go through all the EORs and determine which of them offers help as soon as possible and without delays.
When they choose an EOR partner, they should allocate a client account manager who can address the needs, the new hires’ orientation, and their time and language zones.
Assuming you have an EOR partner who has been defined as such in the foregoing reputable bodies.
In this case, it is important to find the right EOR solutions for the management of international employees or use the industry experts’ analysis, which involves the comprehensive study of the target customers.
While both EOR and PEO provide HR support, they differ significantly in structure and legal responsibility:
Employer of Record is often a complex service that relieves businesses from all challenges associated with employment. Engaging a reputable EOR ensures effective expansion across borders in compliance with all statutory regulations. Thus, contact us today and we shall be glad to assist you.
Also read: PEO vs EOR
One of the most well-known and reliable employers of record companies in the MENA region is Payroll Middle East. Our team of experts has years of expertise in assisting companies like yours to expand and be successful in new markets.
We are prepared to assist you in overcoming the difficulties posed by international expansion because we are aware of them.
Contact us right away if you want to learn more about our global employer of record services or our employer of record payroll services in the UAE.
With a vast experience of 10 years, Jean Rodas is a specialist in managing all aspects of Payroll and HR. Within Payroll, she has comprehensive knowledge in areas such as computation of final settlement, payslips, WPS registration, salary transfers, leave trackers, and end of service benefits among others, which she has successfully carried out for clients from diverse industries.