In today’s globalized economy, it has never been easier to find talented workers from around the world to fill key positions in your business. thanks to advances in technology, communication is no longer a barrier, and businesses can now find and hire the best people regardless of where they are located.
However, there are a few things you need to before expanding your search for talent beyond your borders. In this article, we will discuss what an employer of record is and how it can help you when hiring international employees.
Employer of record (EOR) vs professional employer organization (PEO)
An employer of record (EOR) is a company or organization that acts as the official employer of record for another company or organization. In other words, the EOR assumes responsibility of a legal employer, particularly for all employment-related matters for the international workers hired by the client company. This includes but is not limited to payroll processing, taxes, benefits, and worker’s compensation insurance.
Unlike a professional employer organization (PEO), which actually co-employs the workers, an EOR does not take ownership of the workers. The client company is still responsible for managing their day to day activities and ensuring that they are completing their tasks satisfactorily.
Why do you need an employer of record when hiring international remote workers?
You can employ international workers without working with an EOR but you will likely need to register your business in the foreign country, obtain a work permit for the worker, and even establish an office abroad. All of these costs can quickly add up and delay the hiring process significantly. With an EOR, you can avoid all of this hassle and expense while still offering competitive wages and benefits to your international remote workers.
It can be difficult (and sometimes impossible) to navigate foreign labor laws and regulations on your own. By using an employer of record service who specializes in international HR law, you can ensure that your company is compliant with all applicable local employment laws and regulations.
Additionally, an employer of record services can help you avoid the costs associated with setting up payroll and other benefits in a foreign country.
Advantages of using an employer of record
There are many advantages to using an EOR when hiring international remote workers. In addition to providing the legal, administrative, and compliance support that your business needs, an EOR can also provide peace of mind. By offloading the burden of labor law compliance to a knowledgeable and experienced EOR, you can rest assured that everything is being taken care of according to local regulations.
Duties performed by an employer of record
An EOR typically performs a range of duties related to the hiring and management of remote workers. These duties include:
Registering the employee with the local government for tax, health insurance, and social security purposes
Handling payroll administration, including taxes and other deductions
Processing employee benefits such as vacation pay or sick leave
Ensuring compliance with local tax laws, labor laws and regulations
Providing worker’s compensation insurance
Issuing employment contracts and other legal documents
What an employer of record does NOT do
Onboard your new hires: While an EOR can provide you with the paperwork and other documentation needed to hire a remote worker, it is up to your company to actually onboard them and make sure they have the necessary training, tools, and support that they need.
Find new employees: An employer of record does not typically take on the task of actively hiring workers for your open positions. That is still your responsibility as the employer, though you may be able to leverage your EOR’s knowledge and contacts in their country of operation to find suitable candidates.
Act as a direct manager: An EOR does not typically take on the role of direct manager. This means that it is up to you, as the employer, to oversee day-to-day business operations and ensure that your remote workers have all the tools and resources they need to succeed.
Evaluate employee performance: An EOR is not responsible for evaluating employee performance. This task should be completed by your company, with the help of an objective third party if necessary.
Provide professional training: Similarly, an EOR does not provide professional training or development services. These are tasks that you, as the employer, must take on.
How to find and choose an EOR to work with
Finding the right EOR to work with can be a daunting task. Here are some tips that can help you navigate the process:
Do your research: Make sure you have done your due diligence on any potential employer of record before making a decision. Read reviews, ask for references, and check for compliance certifications.
Look for experience and expertise: Look for an EOR that has extensive knowledge of the local labor laws and HR regulations in the country where you are hiring remote workers.
Make sure they have a good reputation: Ask around to see if anyone has had any past experiences with potential employers of record. If they have a good track record, it is a good sign.
Assess the cost: Make sure that you are getting value for your money. The EOR should have competitive rates and be transparent about their costs and fees.
Consider a global employer of record: If you’re planning to hire in multiple countries, consider working with a global EOR, which will have already set up entities around the world.
When searching for an EOR to work with, you should keep in mind that the best option may not always be the most expensive. Instead, look for a provider that has experience in dealing with international labor laws and regulations. You should also inquire about their customer service practices and any additional services they offer.
Common challenges of working with an EOR
When working with an employer of record, there are a few potential challenges you may run into. These include:
• Language barrier: Depending on the country where you are hiring remote workers, there may be a language barrier that can complicate communication and understanding.
• Cultural differences: In order to ensure a successful relationship between your company and the EOR, it is important to respect cultural differences and be mindful of local customs.
• Time zone differences: If you are hiring remote workers in a different time zone than your own, this can cause delays in communication or difficulty scheduling meetings.
• Data security: It is important to make sure that any data shared with the EOR is secure and compliant.
Conclusion
Overall, working with an employer of record can be a great way to bring on remote workers from other countries without having to set up a legal entity in those countries. However, it’s important to do your research beforehand and make sure that you have chosen an experienced, reputable EOR that is a good fit for your company. This way, you can ensure smooth operation and happy remote workers!
