Hiring internationally and managing global payroll can be complicated and time consuming, with statutory requirements and payroll processing varying drastically from one country to the next. An Employer of Record (EOR) service is often the right solution for efficiently achieving business goals while saving time, money and hassles in international hiring.
EOR services have numerous use cases, including global market expansion and seamlessly tapping into talent pools abroad. An EOR partner can even help a company quickly achieve compliance ahead of corporate transactions, such as initial public offerings (IPOs), mergers and acquisitions (M&As), carve outs and wind downs. Companies may also engage an EOR partner to help them streamline HR functions and empower internal teams to operate more efficiently.
In determining whether an EOR service is the right solution for a company, it is first necessary to fully understand what an EOR is and how it can potentially fit into a global talent strategy.
Defining an EOR
An EOR is an organization that has legal entities already established in the target countries in which a company (the EOR’s client) wishes to hire talent. Effectively, the EOR legally employs that talent on behalf of the hiring company, rather than the hiring company directly employing the worker. Hence, the EOR assumes the liabilities of operating a local business as well as the responsibilities of administering payroll and employment in the country.
An effective EOR offers a combination of specialized knowledge in local HR regulations, statutory requirements, customary benefits, culture and hiring practices. They also provide the administrative acumen and due diligence to ensure international employees are welcomed locally, onboarded efficiently and well-cared for throughout the entire employment tenure.
Relieving the burdens of global payroll
Relying on an EOR’s expertise can relieve a lot of the administrative burdens that come with expanding into new countries or employing talent in countries where a company is not already incorporated. For example, if a company expanding into a new market wishes to hire locally, it must go through the process of setting up a legal entity in-country. The company’s HR team would then be tasked with learning and understanding payroll, visa, tax requirements and other regulations specific to that jurisdiction.
The EOR model helps companies circumvent this arduous process. By handling key back-office tasks – including payroll, tax withholdings, benefits, visas, onboarding and compliance – the EOR partner can onboard new team members quickly and compliantly.
Employment risks also largely lie with the EOR, freeing the hiring company from many legal liabilities and risks. Still, in the day-to-day operations, the hired person completes their work for the company like any other employee.
Key back-office tasks handled by an EOR partner
|Payroll||Tax Withholdings||Statutory and Supplemental Benefits|
|Visa & Immigration||Onboarding Tasks, Including Background Checks and Drug Testing||Compliance with Labor Laws Such as Termination Protocols|
Global hiring made borderless and seamless
Partnering with an EOR helps companies hire the best talent for the job, regardless of where they are in the world. By knowing their business is operating compliantly and seamlessly, the company can then focus on the core business-growth activities that matter most. In the end, by using a trusted EOR partner, a growing company gains agility, efficiency and peace of mind in global hiring and business expansion.