FAQ - Employer of Record

General information on EOR Functioning and responsibilities of EOR The impact of using the EOR service on the company's operations What to look for when choosing an Employer of Record Difference between EOR and other similar services History of the creation of the EOR service EOR service in different countries
General information on EOR
What is the role of the Employer of Record?
The Employer of Record's main role is as an intermediary between the company using its services and the employee hired. Employer of Record allows the company to source employees from all over the world, offering to hire them through its local entity located in a particular country. Formally, the Employer of Record becomes the employer of the selected candidate, however, the employee in practice performs all tasks related to the client company's position. Occasionally, you may come across the practice of "co-employment," which means the hiring of an employee simultaneously by two different companies, however, these are only isolated cases. If a company opts for a form of employment through the EOR service, the service provider will be officially recognized as the sole employer. However, this does not affect everything else, as the EOR shoulders only the responsibility related to employment. The client company retains considerable control over the employee. Role of Employer of Record provider
What has influenced the rise in popularity of Employer of Record?
The main reason why the EOR service is an increasingly popular solution for employers around the world is primarily due to the rise in popularity of remote work over the past few years. This requires a change in the way hiring is organized. A company wishing to satisfy the expectations of potential employees and aiming to allow work to be done fully remotely has a fairly limited choice in how it wants to accomplish this. One can choose to go the traditional route, which is to register a separate business entity in the country where the employee resides. However, this involves a lot of costs and has a lot of downsides. The second way to enable remote work is to cooperate with an Employer of Record service provider. Recruiting potential job candidates is only the beginning, the real challenge begins when they need to be formally registered as employees. This requires expert knowledge not only of labor law and the employer's obligations to the employee, but also knowledge of any local tax or business regulations. Rather than abandon their plans for international expansion or risk committing an error and incurring penalties, employers are choosing to place some of their responsibilities in the hands of the Employer of Record. Factors that influence EOR’s popularity
Is it possible to hire employees from different locations around the world using Employer of Record?
There is nothing stopping you from hiring an employee from any country in the world through Employer of Record. In the past, only candidates who were from the company's immediate vicinity or possibly from the country where the company has its headquarters or branch office were considered for recruitment. With increasing globalization, national borders have also been opened in the context of the labor market. Nowadays, it matters less and less whether the employee who performs their work remotely is located near the company or perhaps thousands of kilometers away. In fact, most companies choose to work with Employer of Record precisely because of the ability to hire employees from different countries without having to set up another business entity. Each jurisdiction has different regulations for hiring employees, which would mean an employer would have to learn a huge amount of regulations. By using an EOR service, a company can rest assured that it will remain in compliance with the local laws. Not having to register an additional business entity in the target country is also a great savings for the company, even taking into account the potential costs of working with an Employer of Record. The company thus saves not only financial resources, but also, most importantly, valuable time, so that it can immediately move on to recruiting talented job candidates from around the world. Hiring employers from different locations through EOR
Is the EOR service legal?
Employer of Record services are legal in the vast majority of countries around the world. However, before deciding to undertake this type of cooperation, it is important to consider a couple of countries that are exceptions - that is, those where the EOR service is banned or is restricted in some way. One of these types of jurisdictions is Germany, where an Employer of Record can hire an employee for a company, however, this cannot last longer than 18 months. This means that we can only use the EOR service in this case on a short-term basis to test the market a bit before setting up our own business entity. Nevertheless, it is still worth taking advantage of this opportunity rather than throwing ourselves into the deep end right away. It is crucial to take an interest in the availability of the EOR service in the country of interest. The EOR service provider primarily takes over the responsibility of managing international payrolls from the client company. Each Employer of Record makes every effort to ensure that the function it performs complies with the laws that apply in the country in question. There may be questions about what formal role the Employer of Record plays for the client company, and how it is viewed by government authorities. In the vast majority of cases, official documents show that it is a third-party company providing an employment service. Employer of Record can be found on the company's payroll, for example, as an entity that manages the payroll administration of personnel working remotely abroad. It is also worth noting that at the very beginning of cooperation with the Employer of Record a contract is signed, the terms of which are agreed in advance by both parties, so this type of activity is completely legal. EOR services around the world
How much does it cost to use the EOR service?
It is impossible to say with certainty how much it costs to use an EOR service. It all depends on the company you decide to work with. Each EOR service provider has the right to set its own prices, so we can expect different costs for the same service. It is worth knowing that EOR service providers usually use one of two pricing models in their business - these are flat fee structure and percentage pricing. How do they differ from each other? Well, first of all, flat fees have the advantage of always being clearly defined in advance, so the client company knows what amount it will have to account for. In addition, more often than not, flat fees are lower than interest rates. Working with a service provider that settles by charging a percentage instead of a flat fee looks a little different, which is something to keep in mind before signing a binding contract. The set percentage that the employer will charge is fixed, which consequently may induce the client company to keep the salary of employees as low as possible. As a result, the fee that will have to be paid for the EOR service will also be lower. This carries a number of negative consequences, leading to dissatisfied employees, who are then more likely to decide to lay off, which in turn will translate into increased turnover at the company. For this reason, companies are more likely to choose to work with an Employer of Record, who is able to offer a fixed rate for the services performed. The price of using EOR may also vary depending on the country of employment of the employee, however, this is not as much of a problem for a professional Employer of Record as it might seem. With their experience in numerous labor markets, they can determine with a very high degree of accuracy the amount a company will have to pay in exchange for their services. It is estimated that the average cost of using an EOR service, if the provider uses a flat pricing model, is around $200-300 per month per employee. It's worth bearing in mind that this price will fluctuate depending on the location chosen. What is the cost of EOR service
Is it risky to use Employer of Record services?
Cooperation with Employer of Record is very secure. The EOR service provider is listed in official records as the official employer of the client company's designated employees. Consequently, it assumes all responsibility for their employment. It is the Employer of Record who signs employment contracts with employees, manages their employee benefits and also draws up payrolls. If there are any legal irregularities related to these matters, the Employer of Record is the only entity that will suffer the consequences in such a case. The client company is completely free of this type of risk. Let's assume that due to some erroneous hiring operation, the authorities of a particular country decide to conduct a tax audit. If in fact any transgression is detected, the Employer of Record is solely responsible for it. Both the employees and the client company are protected. In fact, situations of this type are extremely rare, as it is in the interest of EOR service providers to ensure maximum compliance with local regulations. They also have years of experience and access to experts in numerous fields, so that all regulations are familiar to them and it is a very straightforward process for them to follow. Is cooperation with EOR risky
Companies in what industries use the EOR service?
The EOR service is not limited to specific sectors or any type of business. Indeed, it is a tool used by companies involved in very diverse fields of industry. Neither are there any conditions as to how extensive the company using the EOR service should be. The requirement for using this option depends on whether the position in the company is flexible enough for the related duties to be performed remotely, from a distance. If the answer is affirmative, then there is nothing to prevent you from hiring an existing employee in this manner or from getting someone who comes from another country. Despite the absence of any restrictions, a certain trend can be observed as to what kind of companies choose to cooperate with Employer of Record. Most often these are small and medium-sized companies that have limited budgets and are just starting to develop their business. Experience and expertise in finance, law and human resources is invaluable to this type of company, and Employer of Record offers all this at an attractive price. The client company can also count on the support of local specialists working with Employer of Record. Thanks to the solution offered by the EOR service, small and medium-sized companies can start expanding into foreign markets. Otherwise, with no access to this type of option, preparing for a similar move on their own could take up to several years and would definitely be much more stressful. Employer of Record extends a helping hand by offering to take over some of the responsibilities, allowing business owners to spend their valuable time planning the company's future strategy. Despite the preponderance of smaller companies, we can also find very large companies among EOR's clients around the world. Even companies permanently on the Fortune 500 list are choosing to use the Employer of Record service. The EOR service is appreciated by all organizations, regardless of their size and industry. It provides opportunities that in many cases would be unattainable for them. Employer of Record offers a chance to simply and quickly test foreign markets and increase global mobility, all under the watchful eye of experienced professionals. What kind of companies work with EOR
What is the process of entering into a partnership with an Employer of Record?
The process of entering into cooperation with an Employer of Record can look very different, depending on the terms of the service provider you choose. As a standard, however, there are 3 basic steps that can be distinguished in almost any process of establishing cooperation with an Employer of Record. They may differ in detail in a given situation, but the assumptions will generally remain the same. The first step towards undertaking cooperation at Employer of Record is to conduct initial preliminary discussions. These are necessary so that both parties can evaluate each other. The client company has to decide whether the chosen service provider is able to meet all its expectations, or whether it is necessary to continue the search to find someone better. Instead, the Employer of Record can assess what the prospective client's company's actual needs are and what duties it will have to perform if the two parties decide to move forward together. This first stage is often treated light-handedly, as just another casual conversation. However, it should not be taken lightly, as the selection of an EOR firm can determine the future of a company and whether it will be successful in the future. The Employer of Record will assume much of the responsibility associated with managing employees, so getting to know him and finding out as much information about him as possible is crucial. It is also necessary to clearly communicate what goals we care most about achieving in connection with the cooperation we are undertaking. This is also a good time to make preliminary arrangements, such as the planned number of employees to be hired through EOR and the countries in which we want to expand our operations. With all this information, the EOR service provider will be able to determine what it needs to focus on at the outset in order to begin providing services as soon as possible. After successful initial discussions, the second stage follows, which is for both parties to jointly define the terms and conditions that will apply during the cooperation. This is a key moment when it is necessary to find a compromise so that both the EOR service provider and the client company benefit as much as possible from the cooperation. At this point, the Employer of Record also becomes intimately familiar with the way the client company operates and its company policies. In many cases, a deposit for the service is expected to be paid at this stage. However, you should not worry, as these are usually only symbolic amounts. The final, third stage is the signing of the contract and the start of joint operations. The selected Employer of Record begins to perform the established duties to the client company, on a pre-established basis. At the very beginning, there is the hiring by the EOR service provider of the employees selected by the client company and the handling of all matters related to their assumption of the position in the jurisdiction. Once the legal issues are dealt with, the other functions agreed upon in the contract are carried out. How to establish partnership with EOR
Is using Employer of Record a good way to try new markets?
Registering a new business entity in a new country is a decision that should be approached calmly and carefully. If the company is not sure that this type of move will be profitable, it may consequently involve incurring quite large costs later on. Before shouldering another commitment, it is better to test the chosen foreign market at the outset, without setting in motion the whole machinery of registering a new business. This is possible thanks to the EOR service, which can register selected employees in the jurisdiction of interest on our behalf, without us setting up a new entity. Many companies praise this solution, as it also entails great savings in terms of money and time. It may always turn out that our chosen market in a particular country is not as attractive as it might initially seem. In such a situation, withdrawing from it involves virtually no consequences and can be done very quickly. If we throw ourselves in at the deep end and want to start a business without first ascertaining whether it will bring us the expected profits and suffer disappointment, the withdrawal process will take much longer and will certainly entail much higher financial costs. The complete opposite can also happen, that the profits from entering a new market exceed our expectations and the company will grow at a surprising rate. Also then, we will not benefit from using the EOR service in advance, because if we eventually decide to establish a business entity in the country, the cooperation can be quickly and easily dissolved. Deciding to cooperate with the Employer of Record is a safeguard for the company against loss of resources in the initial phases of entering new markets. More and more conscious companies are opting for this step. Is testing markets with EOR a good idea
Can the EOR service be used to offer employees the opportunity to work remotely?
Events that have taken place around the world over the past two years have significantly changed companies' perceptions of remote work. It has been realized that some positions which previously involved the need for an employee to show up at the office every day can just as well be filled by people working remotely even from another country. Of course, it can't be denied that before the pandemic broke out, the trend of working remotely was getting bigger and bigger every year, however, it is the reason why so many job candidates now pay special attention to the possibility of working from their own home. The ability to work remotely, or at least hybrid work, is a win-win for both the employee and the companies. The employee incurs much lower costs, does not have to spend money on transportation to work and does not waste time commuting. Often, remote work also means much greater comfort for him. The employer, on the other hand, enjoys huge financial savings, as it does not have to maintain a massive office space. More and more companies are realizing the numerous benefits of remote work, which is why we can find an increasing number of such offers. As we can find out in a survey conducted by McKinsey, an overwhelming number of executives, both from huge and smaller organizations, strongly support remote work at least two days a week. Unfortunately, changing a desktop work organization to fully remote or hybrid work is quite complicated and requires more changes than it seems. It's not just about simply allowing an employee to work from home, but also about making the necessary changes to the company's organization, especially in terms of HR. It is impossible to change the work mode overnight, it is necessary to prepare in advance especially in the context of labor law, tax law, data protection or social security. As you can guess, it is very difficult to do this without having sufficient experience and specialized knowledge. Taking advantage of the EOR service is a considerable convenience, as the service provider has a number of professionals who can help the company with the change of working mode and all that is involved. Is it possible to work remotely with EOR
How is the future of the EOR service envisioned?
The future of the EOR service looks bright. According to predictions, the continued growth of the economy will foster demand for such services. As interest grows, we can expect them to become more advanced and professional as service providers will compete more for customers. One of the main reasons why the EOR service will be increasingly used is the constant changes in employment and immigration laws in numerous countries around the world. Government authorities are looking for solutions to problems such as fraud by employers involved in illegal practices or loss of tax revenue, so laws are becoming more restrictive. Employers who hire workers from various locations around the world have a huge challenge keeping up with these changes. Unfortunately, this is almost impossible to do, and if a company does undertake it, it has to spend a lot of money and time on it. The solution to this problem is the EOR service, with the help of which all the company's responsibilities for ensuring employment compliance with the law are taken over by a group of specialists. How does future of EOR service look
Functioning and responsibilities of EOR
What are the duties assumed by the Employer of Record?
Among the main responsibilities that the Employer of Record takes over from the client company, the main ones are:
- Creating and maintaining employment contracts,
- Advising on local employment laws and practices,
- Onboarding newly hired employees into the workforce,
- Collecting and processing timesheets,
- Offering and administering benefits,
- Handling workers' compensation claims,
- Processing and funding payroll,
- Obtaining employee visas and work permits,
- Handling unemployment,
- Maintaining certificates of insurance,
- Filing of tax returns,
- Closing contracts with employees,
- Issuing W-2 forms,
- Performing background checks and drug testing,
- Completing and maintaining I-9 forms,
- Compliance with E-Verify regulations,
- Representing the company as an attorney registered as a legal employer in the region.
What is the difference between hiring an employee and managing their performance?
Hiring an employee and managing employee performance are two completely different functions. Hiring an employee is primarily a legal relationship, while performance management is considered an employment relationship. Each of these functions carries completely different responsibilities, however, they are also fraught with different legal consequences that should be kept in mind. The entity that employs the employee is bound by a legal relationship that obligates it, among other things, to provide the employee with access to all their labor rights. Details on this can be found in the labor legislation for the country from which the employee is hired. An employment relationship, on the other hand, is considered to be the management of the employee's performance, and therefore arises from the nature of the work performed by the employee. Most of the problems associated with distinguishing these two functions disappear on their own when both the employer and the employee are in the same country and covered by the same laws. In such a situation, the employer most often handles all legal liability obligations for the employee as well as performance management on its own. The problem arises when the employee covering the position is in another jurisdiction. Setting up more business units in numerous countries is rarely cost-effective, which is why many companies choose to work with the Employer of Record. Is there a difference between hiring an employee and managing performance
How much of the responsibility for employees falls on the Employer of Record?
Entering into a partnership with an Employer of Record results in the responsibility for employees being spread over both the client company and the EOR service provider. This responsibility is not equal, as the size of the accountability depends on what functions are performed by each party. Most important, however, is the fact that no one party is entirely responsible for an employee. The Employer of Record's liability covers all formal matters related to the employee's employment, which usually includes performing administrative tasks, complying with payroll and tax regulations or paying employee benefits. The client company using the Employer of Record's services, on the other hand, is responsible for managing business operations and ensuring that the employee has appropriate workplace conditions that are safe and in compliance with applicable regulations. Does EOR take responsibility for employees
What is not the responsibility of the Employer of Record?
Employer of Record can relieve the client company of many duties, but there are, however, some obligations that unfortunately it cannot take over. In the offer of an EOR service provider, in most cases you will not find a service related to the organization of the recruitment process. Employer of Record usually begins to play its role once the company has already carried out the recruitment process and selected the most suitable candidates for the positions. That's when the Employer of Record steps in, starting with registering the selected candidate as an employee and seeing to the issues related to his employment. In addition to this, the Employer of Record does not claim any rights to management functions and does not assume supervisory responsibilities of the client company. The total control and decision-making related to the employment of an employee remains in the hands of the client company. The Employer of Record is not responsible for decisions related to the employment of an employee, the amount of his salary, the assignment of work duties, the assignment of projects to be carried out or the final termination of the contract. All these issues to a function that continues to be performed by the client company. What EOR is not responsible for
What are the two types of companies offering EOR service?
Among EOR service providers, there are two types of companies that engage in this type of activity. These are companies that use a consolidator or aggregator model in their operations, and companies that operate on an infrastructure model, meaning all ownership. These two models differ significantly when it comes to operation. The consolidator model uses smaller intermediary entities in its operations, which are based in countries around the world. By working with them, Employer of Record is able to provide its clients with employment for their employees. It can be said that a company operating under the consolidator model is an umbrella organization. Undertaking cooperation with numerous entities can be quite dangerous. It involves the risk that the entities selected by Employer of Record are not able to provide the company with the level of compliance it desires. This is related to a lack of adequate knowledge of tax and HR laws and a lack of experience. The mere fact that Employer of Record has outstanding specialists on its team and a good reputation is not enough if it cooperates with smaller entities that are not as trustworthy. When deciding to work jointly with an EOR service provider operating on a consolidation model, be sure to carefully vet any intermediary entity with which company employees may come into contact. It will also be good practice to find a way to safeguard against the possibility of irregularities. The second model commonly used by EOR service providers is the infrastructure model. It is much safer than the consolidation model because it does not include cooperation with any intermediaries. An Employer of Record operating under this model has its own entities, located in numerous countries around the world, and can certify that each of its entities is properly equipped to provide this type of service. As a rule, EOR service providers using the infrastructure model are much more trustworthy than the previously mentioned users of the consolidation model. A great sense of security is provided by the fact that the affairs of our employees are in known hands, and not handled by an unknown entity. The infrastructure model is much more frequently used than the consolidation model. What kind of companies offer EOR service
Is the EOR service a short-term or long-term solution?
The EOR service can be used by companies on both a short-term and long-term basis. It all depends on the individual situation of the company. Above all, the EOR service is a guarantee of great flexibility. For example, if a company plans to establish cooperation with Employer of Record only on a short-term basis, however, during the course of the cooperation it decides to extend it, there is nothing to prevent it from doing so. The situation is analogous if, nevertheless, the company decides to establish its own subsequent business unit in a particular country and therefore decides to terminate the contract early. Changes in the company's operations can be made very quickly. The same is true of hiring employees, which is much easier with the help of EOR's services than it would be in the case of running one's own business. If a client's company will benefit significantly from cooperation with Employer of Record, absolutely nothing stands in the way of operating in this way for many years - in fact, many highly developed, international companies function exactly like that. Still, this does not mean that using this service short-term is in any way inferior. It can be used for as long as the company deems best. For an EOR service provider, it doesn't matter much whether it's dealing with a dedicated client or merely working with a company that aims to scale its business faster and meet current market needs with its help. When embarking on Employer of Record cooperation, the company also does not have to decide right away how long the joint operation will last. It is often recommended to try it out for a few months, initially with just a few employees, and only then decide on long-term cooperation or dissolve it. EOR as a long-term solution
Does using the EOR service deprive the company of some control?
The Employer of Record assumes some of the company's responsibilities, so it is inevitable that some control will also be assumed. Admittedly, it is the Employer of Record that is listed as the formal employer of the selected employees, however, it is the client company that has a supervisory role in assigning specific duties related to the position taken on. However, there is no denying that if there are formal disciplinary proceedings, it is the Employer of Record that handles these matters. It is important to realize that a joint action with the Employer of Record is precisely a collaboration and not an individual action. Many decisions are made jointly and the functioning of the EOR service provider and the client company are somewhat dependent on each other. This is why it is so important to give due importance at the stage of searching for the right Employer of Record to who we ultimately choose. The consequences of choosing the wrong EOR service provider for a company can be very severe, and can involve, among other things, increased delays in the duties of employees or failure to meet the guidelines set by the client company, which then has further effects on the operation of the client company. It is true that before actual cooperation is undertaken, both parties agree and conclude a contract, in which it is precisely specified that the EOR service provider is to perform activities that meet the expectations of the client company. Nevertheless, experience shows that the implementation of these expectations looks very different in practice. Actions that are erroneous or inconsistent are also often the result of misunderstandings rather than deliberate efforts. Few countries allow a contract between three parties, the EOR service provider, the client company and the employee. As a result, the chances of any of the parties making a decision that is not their responsibility or taking too much control are slim. Does employer of record have any control in the company
Is the EOR service a good choice for a very large company?
It is estimated that the greatest profitability for a client company in using Employer of Record services is when it has no more than 10 employees in a single country. Once this number is exceeded, the profitability decreases somewhat. Another situation in which we may see a similar decline is when a company sets its sights on an extensive expansion in a selected foreign market instead of hiring only single employees. When a client company is certain that its business operations are inextricably linked to expansion in a particular country and intends to expand there to a similar extent as in its home country, it will usually be more advantageous than using EOR services to establish its business entity in that jurisdiction. In certain cases, this has its advantages, as the company retains all control over any formal issues, has far more freedom to make key decisions and also can afford to recruit the necessary professionals who operate locally. However, this does not exclude the complete presence of an Employer of Record. Before taking such a big step as registering a new business entity in another country, it is worth trying out the new market a bit. By hiring local employees and testing a bit the opportunities that another country has to offer us, we can safely reassure ourselves of our decision. This is not to say that the EOR service is never used by larger companies afterwards. It is very popular with global corporations that, for example, want to establish medium-sized offices in a particular country, rather than representative functions. Is EOR profitable in large company
Is hiring through an Employer of Record possible in every case?
In the vast majority of cases, hiring employees through Employer of Record is possible and brings great benefits. There may also be situations where it is unfortunately impossible. This solution will work best if the company wants to hire an employee who performs their duties from another country remotely, and their sending the results of their work is completely sufficient. It looks different if the company intends to focus on a broader activity, on expansion in a foreign market or globally. You should then consider whether it would be more beneficial for the company to register a new business entity of its own in the country and hire employees in the traditional way, instead of using EOR services. Without its own business entity, unfortunately, the company will not be able to perform such activities as contracting for supplies with local carriers or applying for government grants available locally. Of course, this is associated with incurring much higher costs, being more time-consuming and having to deal with a tremendous amount of paperwork than as if working with an Employer of Record. Nevertheless, with extensive expansion, it is necessary for a company to take full advantage of its potential and the opportunity offered by foreign markets. Few companies, however, choose to immediately register their next branch without first checking whether it is profitable to do so. The EOR service is often used before such a binding decision is made to familiarize oneself in advance with conditions in a given labor market, competition and the local work culture. When is it possible to hire through EOR
Are there any restrictions related to the time of employment?
In most countries, there are absolutely no restrictions on hiring through Employer of Record. There are only a few jurisdictions where the operation of EOR services is actually somewhat restricted or prohibited. For example, if you want to hire an employee from Germany in this way, then by all means you can use the German equivalent of EOR, namely Arbeitnehmerüberlassung, but not for longer than 18 months. It is permissible to use this service only on a short-term basis. If you still want to hire an employee after 18 months, you will need to register your own business in Germany. Each country has different regulations so it is important to check this beforehand. Restrictions related to EOR
Can managers be hired through the EOR service?
The EOR service is extremely flexible, so companies can use it to meet their individual needs. Employer of Record can be an intermediary for hiring either single employees, but nothing prevents hiring even dozens in this manner. There are no restrictions on the positions of those hired through the EOR service. They can be short-term employees as well as managers or directors. Everything depends only on whether the duties of a given employee can be performed remotely. If it is of little importance where the employee is while performing their tasks, it is worth opting to offer remote or hybrid work. Based on the experience of companies that allow employees to work from home, it can be deduced that this type of decision has plenty of advantages. It has been proven that employees who work remotely stand out as being much more productive than employees who show up at the company's headquarters every day. The EOR service is an easy way to hire an employee remotely, regardless of the rank of the position they are taking or where they are located. Is hiring managers possible through EOR
Can using the EOR service result in unclear employment status for an employee?
Who will be officially recognized by state authorities as an employer depends on the regulations that are applicable in each country. In many cases, there may be a situation where, according to the laws of one state, one entity will be recognized as the employer, but in a neighboring country this matter will no longer be so obvious. In that situation, the contract drawn up between the EOR and the client company will be of no use, because compliance with the applicable regulations is required here. This is the only solution by which we can protect ourselves from a situation where the employment status of our employee is unclear. A good example in this regard is the use of EOR services in the United States. If we decide to take such a step, it is very likely that not only the Employer of Record, but also our company will be recognized as the formal employer of our chosen employee. Such a situation is an example of the occurrence of so-called "co-employment", which, unfortunately, greatly complicates any subsequent formalities related to the employment of the employee. If we are anxious to ensure that this type of event does not occur, it is necessary to carefully select a trustworthy and responsible Employer of Record. Only this is guaranteed to avoid similar situations. EOR and recognition as an employer
Is the EOR service in line with what the labor market will look like in the future?
Both the labor market and the current expectations of potential job candidates are constantly undergoing numerous modifications. Not so long ago, the only way for an employee to perform their duties arising from taking up a position was to show up at the company's office every day, usually at fixed hours. Now it is increasingly common practice to offer employees remote or hybrid work, very often with flexible working hours as well. A big influence on this change in the labor market has obviously been the pandemic, as people have seen that working from home is something that is as attainable as possible. This is an attractive prospect for most employees, and it is estimated that as many as 73%, if they had the choice to work remotely on a permanent basis, would opt for this type of work mode. Leading companies around the world were also interviewed, and as many as nine out of ten could confirm that their future strategy is primarily based on a precisely remote or hybrid work model. There is no longer any doubt that remote work is the future. It is worth adapting to the labor market rather than standing still and preventing the company from growing. Thanks to the EOR service, hiring employees who function remotely is extremely easy and fast. It saves the company a huge amount of money, time and also stress, ensuring compliance with current regulations. EOR and the labor market’s future
The impact of using the EOR service on the company's operations
Does the EOR service help in saving time?
Activities related to running a company, such as administering employee benefits or managing payroll, are huge devourers of valuable time. It is worth considering that they can be delegated. Working with an Employer of Record means putting the company's affairs in the hands of professionals who will do their best to take care of things in the best possible way. This allows the business owner to focus only on what actually needs his attention and presence. The resource of time is something that is particularly lacking in many companies, so by handing over some of the responsibilities to another entity, one can devote oneself with appropriate attention to improving the company's offerings, establishing relationships with customers and clients or creating strategies for further business development. In a nutshell, the use of EOR services is a great time-saver, so you can significantly support the functioning of the company and in the long run this results in accelerating the pace of its development. Is saving time possible with EOR
Is it necessary to have a high financial capacity to use the EOR service?
In order to start a company in a foreign market without the help of the Employer of Record, it is necessary to register a new business entity and create office space. This involves very high costs, which not all companies can afford. Larger companies sometimes decide to take this step, but unfortunately, for small and medium-sized companies it is simply unattainable. New, growing companies pay special attention to all cost-generating factors, and the expenses associated with the equipment and subsequent maintenance of the office would undoubtedly be felt in the overall financial situation of the business. In addition, one would have to add the costs associated with hiring employees, creating a completely new team and also involving necessary experts in legal or financial matters in the company's operations. The EOR service makes it possible to significantly reduce these costs, as the service provider takes over both the hiring of employees and the provision of appropriate working conditions for them. Employer of Record operates especially in consideration of those companies that cannot afford to function on their own at the moment, but nevertheless wish to grow. EOR and financial capacity
Can the Employer of Record ensure compliance with locally applicable laws?
When expanding your business to other countries, it is important to remember that each jurisdiction has its own laws. In some cases, certain regulations may be very similar but there is also no shortage of legislation that is incomprehensible and non-obvious to those outside a given territory. Having any doubts about the law to be followed, it is quite easy to make a mistake. Deciding to hire employees from different countries will not bypass the need to provide them with the wages, work permits or conditions of employment required by local regulations. Acting inconsistently with applicable rules can even result in consequences such as a hefty fine for the company. Business owners are usually aware of the possibility of such situations and thus choose not to expand their companies. The solution to this delicate problem is to use the EOR service. One of the main tasks of an Employer of Record is to ensure that the company it works with is in proper compliance with local laws. EOR service providers have on their staff a team of experienced, comprehensively qualified specialists who oversee the client company's compliance with local and international laws. By taking up cooperation with the Employer of Record, we do not have to be afraid that at some point in our activity we will make a mistake and act illegally, because we will have at our disposal helpful people who will take care of this issue. EOR and laws in different jurisdictions
When using Employer of Record services, is it still necessary to register a separate business entity?
Not so long ago, entering a new foreign market was inseparable from the simultaneous establishment of a new business entity, which made it possible to perform the activity. Even today, some companies make such a decision and open a foreign subsidiary, but this is no longer as frequent a practice. This action is slowly being abandoned because it is associated with very high costs and requires the dedication of a huge amount of time, while hardly any company has both of these resources in abundance. Also, it is very often the case that throwing oneself into the deep end right away does not make sense, since it is difficult to predict whether entering a foreign market will bring the expected profits. A company opening a new entity in another country must devote its attention to completing the formalities instead of focusing on developing the business. The process of setting up a new business entity can last from several months to several years and in the end there is still a possibility that the efforts will be in vain because the whole venture will be a failure. During this time, the company may lose not only money and time, but also valuable customers. Cooperation with the Employer of Record is a convenient alternative to registering a new entity. By using the EOR service, we can easily, cheaply and quickly hire new employees without having to commit so many resources. This frees the company from the obligation to set up a new business entity, as the employees formally report to the Employer of Record company. This solution allows companies to focus on their business, without incurring huge losses. If a company decides that in the long run setting up its own business entity in a particular state is something it is keen on, it can also pursue this after the Employer of Record relationship ends. This is not something that is inevitable, as it is possible to use EOR's services on a long-term basis as well, but one of the main advantages of Employer of Record is the great flexibility with which companies are free to make the best decisions for themselves. Is cooperation with EOR easy
When using Employer of Record services, is it still necessary to obtain the necessary permits to do business in certain countries?
Entering foreign markets is often a great opportunity for a company, which if used well can result in accelerated growth and increased profits. In some countries, the necessary permits must be obtained in advance in order to start doing business. Without them, it would be illegal to undertake any entrepreneurial activities. Establishing a company in some jurisdictions can be very complicated, which might come as a shock to entrepreneurs operating only in European countries, where the business registration process is extremely easy and fast. When planning to enter the markets of countries located in Asia or South America, patience is required. In many cases, it is necessary to apply for a business license, and the wait can last up to several months. Once it is obtained, there is still a huge amount of paperwork to deal with. As we can see, it's very time-consuming and also stressful, because we can't be sure that the approval will be granted to us by the embassy. We have to reckon with the fact that our application may be rejected, which will further waste the time that was spent waiting. Using the EOR service, there is no need to apply for any permits. Employer of Record already has registered business entities in selected countries that have already complied with all obligations in this regard. Instead of putting the company on hold for several months and waiting idly, we can go straight into action and hire employees. Is applying for permits necessary with EOR
Is the Employer of Record able to ensure compliance with emigration regulations?
When hiring employees from a country other than the one in which the company is located, it is necessary to take into account the locally applicable immigration laws. In order to act in accordance with them, it is essential to constantly update the knowledge in this area, as they change regularly. The situation is similar for the issuance of visas and work permits. When expanding into numerous foreign markets, it is very easy to get lost and make mistakes. Keeping up with changes in foreign law is one of the biggest challenges facing companies operating internationally. Making even the smallest mistake can carry extremely serious consequences that can significantly affect not only the operation of the company and its future, but can also be felt from the position of employees. The company must be aware of its responsibility and the seriousness of the situation. The desire to avoid risk in relation to immigration law is one of the main reasons companies choose to work with Employer of Record. It is the responsibility of the EOR service provider to ensure compliance with all regulations, so that both the client company and its employees are protected. Employer of Record draws on the knowledge and experience of local professionals to see issues related to work permits and visa applications. Controlling immigration matters is their bread-and-butter, so they know exactly how to carry out the various operations quickly and without complications. EOR and ability of ensuring compliance
How does the EOR service work in terms of running payroll?
Payroll requirements vary from country to country. A company with employees from all over the world in its workforce must make sure that these requirements are known and understood. Adhering to current regulations is necessary to run a business in full compliance with the law. Companies sometimes assume that an easy solution to this problem will be to transfer payroll between countries where these guidelines are a bit more relaxed, however, this type of action is most often prohibited and carries the risk of fines. Occasionally, this is allowed if it is a one-time assignment, but when hiring employees on a long-term basis, this type of operation is not an option. There is a good reason for this, since contributions to such benefits as pensions, health insurance and taxes must also be paid on the salary paid to the employee. State authorities pay close attention to whether companies operating internationally are trying to circumvent this obligation. Establishing a partnership with Employer of Record relieves the company of the burden of maintaining payroll. It's the Employer of Record that makes sure it's done in accordance with local laws and that all contributions to various types of benefits are made. Maintaining payroll with EOR
Does the Employer of Record also handle benefit contributions?
The payment of contributions for employee benefits looks very different from country to country. The biggest difference is their amount and how their exact rate is calculated. What doesn't make it any easier is the fact that regulations on pension contributions or health insurance are among the most complicated legal issues. All these factors combined result in companies often having numerous doubts about how to properly pay contributions in a given country. It is also important to remember that regulations are not fixed and are constantly changing. It is not enough to become familiar with the law once and be able to operate that way for the entire period of the company's existence, but one must constantly update their knowledge and keep up with the changes. This is very time-consuming and difficult, especially when hiring employees from multiple countries. One of the biggest benefits of working with an Employer of Record is that it takes over the responsibilities for all employee benefits. They are in the best possible hands, as they are handled by a staff of experts who have a wealth of experience and practical knowledge. Complicated tax issues are a torment to many entrepreneurs and thanks to the use of the EOR service, it doesn't have to be that way. The Employer of Record will not only take over these obligations, but also the complete responsibility in case of any errors and shortcomings, so that the client company is completely protected from possible legal consequences. Are there any benefit contributions with EOR
When entering into a partnership with Employer of Record, is it possible to receive competitive benefits packages?
The availability of benefit packages usually varies greatly among companies. As can be seen, it is often the most developed companies that already have a stable position in the market that can count on choosing among the most favorable packages. Small, start-up companies are unlikely to have comparable availability. Their choices are significantly limited versus companies that have been in operation for many years. The EOR service is able to make up this difference. Small businesses have a chance to take advantage of a very cost-effective benefits package. It doesn't matter how long they have been in business, how many employees they have, or how many countries they operate in. Start-up companies often choose to work with Employer of Record for this reason as well. Is it possible to receive benefit packages with EOR
How does the EOR service facilitate the hiring of employees?
One of the main concerns faced by companies wishing to work with people from around the world is hiring them as their official employees. The main reason why this matter raises worries is insufficient knowledge of local regulations regarding the registration of employees in a particular jurisdiction. Companies often have no idea how they can register their employees legally and correctly. Some companies try to circumvent this issue in a certain way by suggesting, instead of hiring them, to work together on a different basis. A very common practice can be encountered when a company may try to get a job candidate to act as an independent contractor, but perform work only for the company and related to a specific position. On the surface, this may seem like a safe option, but it carries enormous risks. State authorities are aware that such a turn of events is possible, so they make every effort to detect this type of conduct. This is considered an attempt to evade taxes and a deliberate attempt to circumvent the law. This type of behavior can even be considered a crime if it is proven to the company that the nature of the work performed by the person in question does not really coincide with their role as an independent contractor, and they should be employed under a contract of employment in accordance with the law. The consequences are very serious, as in the best case the company can be fined very heavily, and in some cases the company's management can also be imprisoned. If a company is suspected of such an action, is proven guilty of it and pays the adjudged fine, this activity will still affect the company's continued operation because it will be under special surveillance by state authorities and even its smallest stumble will be quickly detected. Cooperation with the Employer of Record prevents such a turn of events. The EOR service provider pays special attention to ensure that cooperation with employees is carried out on terms that comply with local law. How does hiring with EOR in companies work
Can the Employer of Record also handle generating reports?
Preparing reports related to company operations is a very time-consuming duty. It is necessary to prepare them at least once in a while. This activity cannot be bypassed in any way, however, it can be delegated. The time that was previously spent on tedious work on reports can then be allocated to something else. One way to delegate report generation is to use the EOR service. Employer of Record takes on this duty, so that the company does not have to engage in this monotonous process periodically. The prepared documents will, of course, be prepared on behalf of the client company and every effort will be made to include the latest data. The generation of the reports will be handled by specialists so you don't have to worry about their compliance, however, if for any reason the client company wishes to check their accuracy, there is of course the possibility to do so. Can EOR provider handle report generation
How does the use of the EOR service affect the search for job candidates?
When a company begins to expand into foreign labor markets, it also has access to more attractive job candidates. It is definitely easier to find someone with all the necessary qualifications, talent and enthusiasm for the job than when operating only in the home country market. Expanding business to other countries is much easier with the EOR service. It allows you to hire employees from different places around the globe, who can bring a completely new point of view to your existing team and offer original, revolutionary ideas for business development. An international workforce is key to a company's success, as major companies are well aware. Foreign employees also mean a greater opportunity to reach previously unreachable customers. By having staff who speak a variety of foreign languages, we can easily serve an international client. Unfortunately, hiring employees from different countries is often quite challenging for small, emerging companies. What most often considerably limits them from taking action is a limited budget. This results in small companies unfortunately being forced to search for employees only in their immediate area, which unfortunately rejects a huge portion of very attractive job candidates in advance. Fortunately, the EOR service is for every company, regardless of its size and seniority. It enables the hiring of employees located thousands of kilometers from the company's headquarters, without incurring huge costs. Does EOR affect expanding business
Does the Employer of Record adequately protect the data of hired employees?
Processing of employee data by the Employer of Record is a daily occurrence. The Employer of Record is the one who is seen as the official employer and, because of this, the Employer of Record has to perform various types of operations in which information on employees is used. Ensuring security during data processing is crucial, which is why a Data Processing Agreement (DPA) is concluded. This agreement is an obligation that is required by data protection authorities. The Employer of Record, as the formal employer of the client company's designated employees, is required to make every effort to ensure that sensitive information on employees is under the highest level of protection and that it does not fall into the wrong hands. To this end, Employer of Record takes measures such as ensuring compliance with the General Data Protection Regulation (GDPR), backing up data and ensuring secure network communications. Proactive security protocols are also increasingly being used. The function of these protocols is to monitor whether any disruptions are occurring or are likely to occur in the future. Many EOR service providers also offer the additional service of conducting regular training sessions for employees to educate on data security and privacy. A professional Employer of Record will do everything possible to prevent sensitive data on hired employees from ever being misused. How does EOR protect employee data
What is the issue of asserting the company's rights when using the EOR service?
When entering into a relationship with an EOR service provider, certain agreements are required, between both the Employer of Record and the client company and between the Employer of Record and the employee hired. Officially, the client company using the EOR service is not the employer of the subject employee, so all matters related to the handling of any claims are handled by the Employer of Record. Since the client company does not have its own business entity in the country from which the employee is hired, it has no ability to take action of this nature. When drawing up the contract between the Employer of Record and the client company, do not forget to include here that the client company agrees to allow the EOR service provider to take steps to ensure compliance during the employee registration process. Thus, the client company delegates to the Employer of Record another responsibility, which is to assert rights against the employee. This involves a great deal of responsibility on the part of the Employer of Record, so it makes sense to opt for someone you can rely on. Concluding agreements with EOR
How does the Employer of Record care about the work environment?
Entering into cooperation with the Employer of Record comes with many benefits. These are primarily experienced by the client company, but also by the employees who are hired in this manner. The origin of the employee should not be irrelevant in the context of employment. When recruiting candidates coming from a country other than the one where the company is located, it is highly likely that they speak a different language on a daily basis and are familiar with a completely different culture. The Employer of Record, having many years of experience working with an international workforce, knows exactly how to meet the expectations and needs of people from particular locations around the world. As a result, it is able to provide the employee with the most comfortable working environment. The work culture of individual nations is a subject that is treated somewhat superficially and companies sometimes do not give it proper attention, but it is worth taking special care. Work culture is inextricably linked to the effectiveness of employees, which is why it is so important to get to know job candidates from this perspective as much as possible. By showing a little willingness and flexibility, you can provide employees with the best working conditions, tailored specifically to them, making them even more productive. Using the same template of operations towards all hired employees simply doesn't work, and it is unfortunately still quite common for companies that try to hire people from different countries on their own. This is usually not due to bad will, but just ignorance of the differences in work cultures. Part of the Employer of Record's responsibility is to make sure that each employee is provided with the best conditions. Does EOR influence working environment
Does the Employer of Record solution provide employees with more freedom?
Getting the most competent and talented candidates for a job is only the beginning of success. The company should make every effort to retain valuable employees for as long as possible. In order to do this, a company should take into account the requirements and needs raised by employees and try to satisfy them. Among the expectations that are typically mentioned by staff members, freedom at work is becoming increasingly common. Events related to the pandemic have significantly affected employees' perceptions of the possibility of working remotely. More and more people have begun to appreciate mobility or working from the comfort of their home. This gives a lot of freedom, so that the employee is not tied to one location. Companies that offer job candidates the opportunity to work remotely are much more popular compared to job offers that only involve stationary work. Retaining the company's most valuable employees brings a number of long-term benefits to the business. By avoiding constant contract terminations and recruiting anew, the turnover rate decreases, which consequently has a positive effect on strengthening the brand's position in the market. In turn, job seekers are much more likely to participate in the recruitment of a company that is widely regarded as stable. As a result, more competent candidates are seeking on their own the opportunity to start working for the company. Meeting the needs of employees in the context of increased freedom is not always an easy task, but with the help of Employer of Record you no longer have to worry about it. The EOR service provider not only gives the opportunity to work remotely, but also ensures that all matters related to the employee's possible relocation are taken care of. Can EOR provide employee freedom
How can an EOR service help with the change in status from freelancer to employee?
Companies that decide to expand their operations to other countries of the world are very often engaging with freelancers. Some may consider this as a substitute for hiring employees on a contract basis. It might seem that working with a freelancer would not differ much from simply hiring employees or even that it is a more favorable solution for the employer, but nothing could be further from the truth. The vast majority of companies, after comparing how working together with a freelancer looks compared to hiring an employee, come to the conclusion that it is definitely more convenient to hire on the basis of an employment contract. A big disadvantage of working with a freelancer is said to be the lack of sufficient control over the work performed by the freelancer. A freelancer can perform their duties at any hours and at any place, and there is usually no specific time set for how long they should work. Another issue that discourages companies from working with a freelancer is the fact that by hiring a permanent employee, a company can contribute to a lower turnover rate, which will benefit the company's continued business. What is considered the most significant issue related to working with a freelancer is the possibility of misclassification. This carries a huge risk for the company, because if government authorities detect such an irregularity and manage to prove that the independent contractor should actually work as a contracted employee, the company will face very heavy penalties. These are the reasons why some companies choose to offer the freelancer permanent employment. Completing all the paperwork for this process is much easier and faster with the help of the Employer of Record. The EOR service provider will take care of the issue of compliance with the laws of the country concerned and make sure that the contract concluded between the client company and the freelancer who is about to be converted into an employee is as favorable as possible for both parties. Using an EOR, the person who has been operating previously as a freelancer will continue to enjoy much of the freedom they had before, while the client company will obtain the desired employee. How to change freelancer status with EOR
How can international workers be hired without using the EOR?
Employer of Record assistance in hiring international workers simplifies a lot, but is not essential. If a company is undecided about using the EOR service, it still has two choices - it can work with independent contractors or register a new business entity in the country. Before making a final decision, it is worth studying the pros and cons of all solutions. The most common choice besides using an EOR service is to create a new company to handle the foreign market. This activity not only carries a huge financial cost, but also requires the sacrifice of a very large amount of time. Let's also not forget the enormous responsibility associated with running a business. Managing a business abroad, in a country that has different laws, is not the easiest task. The company must comply with regulations and fulfill its obligations. To ensure compliance with local legislation, some companies decide to go a step further and hire specialists to deal with benefits administration, payroll and others. This generates further costs. It cannot be denied that under certain circumstances, the establishment of a new business entity is perfectly justifiable. If a company ties its future to a particular country and is confident that it will do business there for at least the next few years, such an option is worth considering. In practice, few companies are confident enough about the foreign market to decide to take this risk. Most cautious entrepreneurs initially try to discern the conditions in a given labor market before entering it full force. Working with an Employer of Record is a good way to get an idea of exactly what opportunities our company has to grow in a particular country. We can hire a few dozen employees first and see if operating this way is up to expectations. After some time, we can decide to set up a separate business entity or to continue working with the Employer of Record. The second alternative to the EOR service is to work with freelancers instead of hiring permanent employees on a contract basis. As detailed earlier, this solution extremely exposes the company to recognition by government authorities of contractor misclassification, which can weigh on the company's future. With Employer of Record, we can easily convert a freelancer into a full-time employee, allowing them to retain a tremendous amount of freedom. Hiring international workers without EOR
What to look for when choosing an Employer of Record
Is it important that the Employer of Record own business entities in multiple countries?
One of the most important things that should be checked before officially working with an Employer of Record is whether it has business units in the countries from which we intend to hire employees in the future. This issue should be indisputable and we should not make any compromises. When deciding to use an EOR service, companies most often want to avoid having to register another entity in another jurisdiction. When we undertake cooperation with an Employer of Record, we expect that this is the organization that will legally employ the candidates we select. If the EOR service provider we are interested in does not have business units in a particular country, it may be a warning signal to us that any hiring issues may be transferred by Employer of Record to an unknown third party. Handing over sensitive information about both your company and employees to an unknown organization over which you have no control is putting yourself at risk and may carry unpleasant consequences. Undertaking cooperation should only be considered if the Employer of Record has branches of its company in the countries of interest. Do not let yourself be deceived by any assurances or attractive offers, as the security of the company is the most important thing and should be protected at all costs. If the service provider has a company in the jurisdiction and has been operating there for many years, we can rest assured that the services they offer will meet our expectations. EOR and its business units abroad
Is the experience of the Employer of Record important?
Employer of Record is a service frequently chosen by both fledgling and highly developed companies for one very important reason - the EOR service provider has a great deal of knowledge about the rules, laws and regulations of each foreign market. It would be exceedingly time-consuming to familiarize oneself with this information regarding all the countries in which international companies choose to operate. Hardly, even if one could acquire this kind of knowledge, theory alone is not enough to function in full compliance with the law, it is also necessary to have experience. Employer of Record expertise is incredibly important. It should be one of the main factors to consider before choosing a service provider to work with. As can be inferred, the more experience the Employer of Record has in operating in the business environment of interest, the more trustworthy it can possibly be. It is also worth noting what industry a given EOR service provider specializes in. Employer of Record, thanks to its flexibility and wide range of services that can be customized, is able to provide assistance to companies in any niche. Nevertheless, if we have the opportunity to cooperate with Employer of Record, whose clients also represent the same industry as our company, then it's worth opting for it. This way we can rest assured that the Employer of Record will know perfectly how to behave in any possible situation that may arise. How much important is expertise of EOR
When choosing an Employer of Record, is it important to pay attention to their reputation?
The main task of any Employer of Record is, of course, to hire employees on behalf of the company and perform human resources duties. However, it should also be borne in mind that in addition to this, the Employer of Record with whom a company chooses to cooperate somewhat represents it. The EOR service provider, besides properly performing its functions, must also properly match the image maintained by its clients. It should care about presenting them from the best possible side. The reputation that an Employer of Record has is of great importance. In order to assess what kind of reputation a selected Employer of Record has, three main factors are taken into account - compliance, uptime and also customer base. Acting in accordance with applicable laws is an absolute cornerstone in the Employer of Record business. Without this, there is no way to have at least an acceptable reputation. This factor is also of paramount importance in the context of cooperation, as a service provider that neglects compliance will not only be a very poor representation of the company, but will also come with complications in hiring employees. A solid EOR service provider is well aware that compliance with local regulations is something absolutely fundamental, non-negotiable. Another issue affecting a company's reputation is its seniority, meaning how long it has been in business in a given country. It's a common phenomenon, regardless of location, that as a rule, companies with many years of tradition and history are the most respected. The third aspect affecting the reputation of the Employer of Record is often overlooked, and that is cooperation with other companies. A service provider that boasts of working hand in hand with the largest, most well-known companies is much more respected. Is reputation of EOR provider important
How significant is it to check the EOR service provider's offerings?
Every company that considers working with an Employer of Record has a specific motivation. Most often, the reason is to improve the company's operations, to secure additional legal protection, to gain access to qualified specialists - there are many examples. Only a given company knows specifically what it particularly seeks to obtain. Being on the lookout for the best Employer of Record, having a look at what the service provider's offerings and what it can offer its clients is a must. The services offered should be juxtaposed with the company's needs, so that it can be ascertained whether the institution will be able to fully satisfy them. Before starting any search, it is advisable to first deal with a detailed and clear definition of what expectations a potential Employer of Record must meet. Thanks to this preparation, it will be much easier later on to immediately reject those offers of cooperation that will not comply with the previously established guidelines. We will not have to waste the time of both the company and the EOR service provider. Such a plan is crucial not only at the very beginning, but also comes in handy during the course of the cooperation. It allows the Employer of Record to consider what specific functions it must perform to fully satisfy the company. Is checking offerings of EOR important
Should it be verified before cooperating whether the Employer of Record is reliable?
The function performed by the Employer of Record entails great responsibility. It performs the tasks of an official employer, and therefore fulfills all the duties associated with hiring employees and managing their sensitive data. Besides, it also holds confidential information about the client company with which it undertakes cooperation. Every business tries to make sure that this type of data is especially protected and not shared further, in order to prevent its spread and use. For this reason, making sure that a particular Employer of Record is a reliable entity is absolutely necessary. As in any other industry, we may have to deal with scammers among EOR service providers, who will only be interested in acquiring valuable confidential data and then using it in illegal ways. So how can you protect both your company and its employees from this threat? By doing some general research on the Employer of Record you're interested in. The Internet is a huge source of knowledge, also on the subject of companies. You can easily and quickly check whether the Employer of Record and its subordinate units have a website, or whether information about it is included in official state databases of business entities. You can also check if the Employer of Record has a history of cooperation with other companies. A little information about an EOR service provider should be like a warning sign. You should exercise extreme caution and, if possible, screen the Employer of Record even more thoroughly. One must not judge all EOR service providers alike - some are entities with impeccable reputations, operating in foreign markets for many years despite little online information. Nevertheless, it is better to be safe than sorry. It will be more secure to decide to work together with an Employer of Record that is widely recognized and its credibility can be confirmed by a circle of satisfied customers. Reliability of EOR provider
Does every Employer of Record use the same tools?
One of the main topics that is quite often overlooked during initial interviews with a potential EOR service provider is what technology it uses in performing its duties. It' s highly critical, because a competent Employer of Record is up to date with all the novelties introduced on the market and is not afraid to use modern, innovative solutions that can potentially improve the operations not only of its but also of the client company. Special attention should be paid to the tools with which the EOR service provider manages the payroll of employees and stores their records. The use of large-scale oriented technologies is a testament to the professionalism and experience of Employer of Record, which can be confirmed by numerous companies that have a history of this type of cooperation. An EOR service provider that uses SME-oriented software in its operations comes out weaker in this comparison. It's not the worst possible solution, but it certainly won't meet the requirements of demanding customers. Companies should be wary of taking on an Employer of Record which handles employee records completely manually. Not only is this definitely more time-consuming, but it also exposes the company to making huge mistakes related to calculations or compliance. The use of automated systems is definitely safer and allows integration with the client company's tools, so much more control can be exercised. What technology does EOR provider use
How significant is the communication between the company and the Employer of Record?
Clear, two-way communication is an absolute must have for any cooperation between two companies. The Employer of Record may be the most highly regarded company of its kind in a given region, but if there is no thread of understanding between it and the client company, joint operation will be burdensome for both parties. Professional EOR service provider is assumed to be able to find a common language with almost any client, which distinguishes it from inferior competitors. A competent Employer of Record will do everything possible to ensure that communication with the client's company is at the highest level and that all expectations are met. The most common forms of communication between the Employer of Record and the client company are cooperation through a designated consultant, the use of tools designed for task management and various types of communicators. It is impossible to say unequivocally which of these solutions is the best, as this is an individual issue and concerns the preferences of particular companies. When looking for the most suitable Employer of Record, one should pay attention to whether the offered method of communication will be convenient enough. Is communication with EOR significant
Should the Employer of Record be expected to have expertise?
The main problem for companies that operate internationally or those that intend to expand their business in numerous foreign markets is insufficient knowledge. With the EOR service, however, there is no need to worry about this, as the company's responsibilities are placed in the hands of multiple professionals with knowledge and experience in tax, finance and law. Any business operations carried out on behalf of the client company will be in compliance with the locally applicable regulations. Even if there are any complications these will be quickly resolved. Having expertise is one of the main and absolutely essential qualities that a good Employer of Record possesses. For reliable evaluation of Employer of Record regarding this aspect, it should be noted whether it already has experience in hiring employees in the country from which the employees come or where they are located. If it has a history of managing personnel in a given jurisdiction then we can rest assured about the well-being of our employees. An Employer of Record who does not have a trusted pool of experts in various fields and does not have experience with a particular foreign market may simply not meet expectations. Should EOR provider have expertise
Should the Employer of Record provide security for intellectual property?
Sharing a client company's intellectual property with the Employer of Record is an integral part of the cooperation. As every company is aware, protecting intellectual property is a matter of grave concern. A careless selection of an EOR service provider can have the lamentable result of unnecessarily exposing the client company to numerous dangers. During initial discussions with the Employer of Record, the topic of intellectual property protection protocols should be raised. If the EOR service provider has them defined, this is a good sign. The client company should be absolutely uncompromising on this subject because the security of intellectual property is at stake. When setting the terms and conditions of the contract, ensure that it also includes any arrangements for carrying out procedures related to ensuring adequate security of the client company's intellectual property value. Overlooking this extremely important issue is not an option, and under no circumstances should a contract be signed. The arrangements should be drawn up in a clear and unambiguous manner, so that neither party has any doubts about their implementation in reality. A practice that can particularly put a company's intellectual value at risk is the Employer of Record's outsourcing of duties to other subcontractors. By entering into cooperation with such an EOR service provider, we give access to confidential information not only to it, but also to numerous third parties about whom we have no information and cannot control in any way. This type of action is fortunately not common among professional Employers of Record, as they are well aware of the seriousness of the situation and the possible consequences. An experienced EOR service provider, in addition to duly protecting the acquired intellectual value, also takes care of backups in case of unforeseen situations. This ensures that if an event occurs, as a result of which important data could be lost if there were no copies, it will not happen in the end. Providing security for the intellectual property stored by the Employer of Record is incredibly important. Failure to do so can have lamentable consequences for the client company. Does EOR provide security for intellectual property
What questions should the Employer of Record be asked before making a final decision on cooperation?
- Is the EOR service the core business of the entity?
- What experience does Employer of Record have in providing this service?
- Does the Employer of Record have any experience working with well-known companies?
- Does the Employer of Record have its own registered entities in foreign markets of interest?
- Does Employer of Record outsource the hiring of employees of client companies to third parties?
- Does the Employer of Record have numerous tax, business and legal specialists on its staff?
- What technologies and tools are used in providing the EOR service?
- Is it possible to integrate the tools used by the client company with those used by the Employer of Record?
- How does the Employer of Record protect intellectual property and invention rights?
- Does the Employer of Record share sensitive employee data with any third parties?
- How are employee records stored?
- How does the Employer of Record communicate with the client company?
- Can regional account managers be relied upon for support?
- What is the minimum period for entering into a cooperation agreement with the Employer of Record?
- How long is the notice period?
- How are the rates for EOR services determined?
- What is the time cycle for the Employer of Record to issue invoices and make payments?
Difference between EOR and other similar services
What is the difference between EOR and PEO?
PEO stands for Professional Employment Organization. It's a type of service provided by an external entity, which is very often confused with EOR or even used interchangeably. Admittedly, the two are similar in some aspects, but there is no doubt that there are also significant differences between them. PEO is not as widely known as EOR. It is most popular in the United States, and it is only there that its formal definition can be found. The introduction of the PEO service was a response to the legal differences that exist from state to state regarding the employment of personnel. For companies that want to expand their operations throughout the United States, it is extremely cumbersome and difficult to meet all the requirements on their own and not get lost along the way. Hardly any company has enough budget to be able to hire local experts in each state to watch over regulatory compliance. For this reason, a very high percentage of businesses choose to use the PEO service. The key function of an EOR is to formally employ the employees of the client company, so that the client does not have to create separate business entities. In the case of a PEO, it looks a little different, because the PEO service provider does not employ the employees, but only assumes obligations arising from their employment similar to those that an EOR also performs, for example managing payroll or just controlling business operations for compliance with local laws. This is by far the most important difference that exists between the two services - the roles performed by these service providers are very similar, however the Employer of Record simultaneously becomes the official employer of the employees while the PEO service provider requires the client company to hire selected candidates and only then assumes its employment responsibilities. You may notice that some PEO service providers call themselves "international PEOs." However, this should not fool anyone, because even then the offer of this type of company is aimed only at potential clients who are nevertheless ready to set up their own business units in certain jurisdictions or already have them. A PEO only provides assistance in fulfilling the duties of an employer, not hiring employees. Although the scope of the PEO service is much narrower than the EOR, both are very popular and frequently used by companies. Businesses with multiple entities, subsidiaries and branches that are only concerned with delegating some of the necessary HR, payroll administration and benefits tasks are more likely to use the PEO service. This is an option for more developed companies that already have a stable position in the market. Small businesses just beginning their international expansion should turn their attention to EOR. It is also the best solution for those companies that do not plan to set up more business units in numerous countries in the near future, but nevertheless wish to have employees from abroad. How does the use of PEO and EOR services look from a formal point of view? Well, the PEO service provider performs activities for the client company in the context of HR, becoming a collaborator. However, it has either zero or very limited legal liability. The situation with an Employer of Record is quite different, as all the responsibility related to hiring employees falls on the Employer of Record. The client company is relieved of all responsibility for personnel matters and in case of any complications the EOR service provider will be held accountable. This issue also translates into the way entities operate, as the Employer of Record is generally more accurate and pays more attention to compliance than a PEO. This is due to the fact that it is aware of the liability it bears and is keen to ensure that all business operations are carried out in accordance with local regulations. The experience of companies that have had the opportunity to use both EOR and PEO services indicates that EOR shows much greater commitment in many fields. The Employer of Record places a much higher priority on regularly updating its legal, business and tax knowledge. Priority is given to learning about any changes that are made. This gives customers peace of mind about aligning the company's operations with the latest regulations. Another no less important thing to consider when comparing EOR and PEO offerings is insurance policies. Taking a joint operation with a PEO provider involves paying for both the company's policy and the PEO's policy. This obviously involves increased costs. The matter is completely different if one chooses to work with an Employer of Record, because then it is the Employer of Record who provides the policies to both itself and the employees who are hired through it. Many PEOs also place requirements on the number of employees they can take under their coverage. A PEO service provider will rarely take on a client company unless it manages at least 5 employees. This is quite unprofitable for it therefore it is set for larger numbers of employees. Such limits are generally not present in the case of Employer of Record. Companies can undertake cooperation with an EOR service provider regardless of whether they plan to hire one or ten employees in this manner. EOR and PEO differences
What is the difference between EOR and GEO?
Global Employment Organization, or GEO for short, is the delivery of the EOR service on a large scale covering dozens of countries. GEO's structure consists of multiple business entities located in many locations around the world, so that the EOR service covers major foreign markets. To put this a little more easily and figuratively, we can say that one large GEO is made up of many small EORs. When looking for a suitable service provider, the client company interviews, sets the terms and conditions and enters into a contract with the GEO, while the GEO then delegates all guidelines and responsibilities to its EOR in a specific country. It can be said that GEO is a kind of intermediary between the individual EOR and the client company, however it should be remembered that EOR and GEO are one entity. The EOR is by no means a third, independent party, but is part of the GEO and is subordinate to it. Another important task that GEO performs is the supervisory function, i.e. carefully checking the activities performed by the EOR and controlling their compliance in legal and business terms. Cooperation with a single EOR doesn't differ much from cooperation with a GEO. In both cases, the service provider can perform the same staffing functions. The only major difference is the additional possibility when working with GEO to perform recruiting. Not every GEO company does this, but you can find some providers that will also do the work of discovering the most attractive and talented job candidates from around the world. If the client company already has selected employees, Employer of Record services will be quite sufficient. EOR and GEO differences
What is the difference between EOR and a recruitment agency?
The difference between an Employer of Record and a recruitment agency is fundamental. To begin with, it is useful to explain what a recruitment agency does. The primary activity of a recruitment agency is to search for the most suitable candidates for a position that happens to be vacant in the client company. Another term that aptly describes the nature of their work and is commonly used is "headhunters." A recruitment agency acts as a kind of liaison between the client company and job candidates. It carries out the recruitment, conducting interviews and selecting the best qualified individuals. The role of Employer of Record is the exact opposite of what a recruitment agency does. Employer of Record is the entity that hires the employees selected by the client company and manages their employment. It does not recruit new people and only records those previously selected by the employer. In the same way, a recruitment agency only deals with the acquisition of new employees, but that is where its role ends. It does not take any responsibility for their further employment and fate in the company. There are few issues that connect Employer of Record with a recruitment agency. Entities providing this type of service in both cases may deal, for example, with checking an employee's professional history or filling out his documents, but other than that, these are completely different. EOR and recruitment agency differences
What is the difference between EOR and independent contractors?
Independent contractors are often considered by companies planning international expansion as an alternative to Employer of Record. A question that is often asked is which of these two options will be more beneficial. Independent contractors are usually considered when companies only need certain services on a short-term basis or only require assistance with single activities. A person without sufficient knowledge may even conclude that working with an independent contractor will be better, more convenient and more cost-effective than working with an Employer of Record, but this is not true. Working with a foreign contractor requires knowledge of the local laws of the country in which it operates. Most companies expanding in numerous foreign markets do not have enough resources to ensure legal compliance on their own, so operating together with an independent contractor is highly risky. Without specialized knowledge, it can be very easy for a client's business to be misused by a contractor and the client company is unable to verify that legal mistakes have not been made during the contractor's business operations. In extreme cases, this can affect the future of the company's business. Using the EOR service does not require the client company to know the law, as the EOR service provider has specialists responsible for compliance issues. The Employer of Record bears full legal responsibility for the fulfillment of the obligations related to the hiring of employees, which is why all efforts are made to ensure that everything is organized as it should be. Another thing to be aware of is the independent contractor's level of commitment, skills and experience. The international market is abundant with outstanding professionals, however there are even more people who are just trying to get finances with the least amount of work possible. Finding an independent contractor who is characterized by qualities such as diligence, punctuality, boasts a wealth of experience and has a lot of skills is precious. Here again, a very important issue is the level of accountability. Employer of Record is a guarantee of reliability and maintaining the highest level of customer service. Even if we end up contacting a great candidate for a contractor, not in every country will this type of cooperation be acceptable to state authorities. As mentioned earlier, in some countries, acting jointly with an independent contractor may be treated as an attempt to circumvent the obligation to register the worker and thus pay the proper contributions. The longer an independent contractor provides services to a company, the more the risk increases. This may be considered a misdemeanor or a felony by state authorities. The solution to this problem is to use the EOR service and officially register the workers, so that all the paperwork is in good hands. EOR and independent contractors differences
What is the difference between EOR and FSaaS?
Another service that is wrongly confused with EOR is FSaaS. File System as Service, or FSaaS for short, focuses its core business on ensuring that its customers are fully compliant with locally applicable laws. It also deals with risk management issues. By using FSaaS, companies save a lot of time which they can then manage in other ways, such as focusing on developing business strategy and actual operations. It's also a great solution for companies that have limited budgets and hiring numerous compliance and risk management experts would generate excessive costs. Other companies reach out for help from FSaaS because of their desire to make a name for themselves and strengthen their position in the market, so these are companies just starting out. The company can devote all its attention to development while the FSaaS service provider takes care of making sure that all business operations are carried out correctly. Experienced experts are responsible for controlling compliance. Not surprisingly, the EOR service is confused with FSaaS - the main activity of FSaaS falls under the numerous functions of EOR. The EOR service is much more comprehensive, as it covers all the responsibilities of hiring an employee and ensuring compliance is only a small part of it. EOR and FSaaS differences
What is the difference between EOR and ASO?
Administrative Services Organization is a service that originated from outsourcing. An ASO handles the management of a variety of administrative matters and HR responsibilities. An ASO service provider often takes on such responsibilities of a client company as processing international payroll or managing employee benefits. The services performed by an ASO are much narrower than those of an EOR. Some of their duties actually overlap, but there are also significant differences that make the two services not equal. The most important is the fact that the ASO service provider in no way assumes responsibility to even a comparable degree as it does for EOR. This means that even though the ASO service provider performs duties that fall to the client company, the client company will still be held liable if any mistakes are made. The ASO also does not perform the basic function performed by the EOR, which is to formally hire employees. Only companies that already have numerous business entities in the countries of interest can opt to use the ASO service. EOR and ASO differences
What is the difference between EOR and BPO?
Process Outsourcing is about taking control of the business operations that are carried out in a client company. BPO is another example of a service that is frequently confused with EOR. The tasks carried out by a BPO service provider are mainly the handling of human resources, accounting and payroll. However, it should be borne in mind that when entering into cooperation with a BPO, it can often happen that the BPO service provider does not perform the commissioned duties personally, but only outsources them to external providers. This is quite a risky situation for the company because its duties are performed by an unknown third party, which cannot be verified in any way in terms of compliance nor can you exercise any control over it. When using a BPO service, one can only hope that the service provider will fulfill the obligations on its side and make sure that the contractor actually performs the delegated tasks reliably and everything is done in accordance with the applicable regulations. Some BPO service providers also have other human capital management services on offer and can provide tools to help with effective hiring for vacant positions. The BPO service is especially popular among companies that need expert help in managing money and resources. Internationally oriented companies are particularly interested in this type of service, since doing business in numerous jurisdictions requires knowledge of local accounting regulations which can often be very complicated. In order to ensure that they operate in accordance with these regulations, they look for professionals who can relieve the company of these duties and ensure compliance. The biggest differences between this service and EOR are that the BPO service provider cannot hire employees and does not take responsibility for any errors that may occur. EOR and BPO differences
What is the difference between EOR and outsourcing?
By far the most commonly reproduced myth about Employer of Record is that it is a variation of outsourcing. This is very far from the truth. Employer of Record deals with the formal employment of employees of the company it works with. This means that on any official documents and in databases it becomes the official employer of the designated employees. Despite this fact, in practice it is the client company that decides fully on all issues related to the positions taken by the employees, such as their responsibilities and scope of work. The client company makes the key decisions regarding an employee's employment, such as promotions, raises or layoffs. Although the Employer of Record is recognized under the law as a formal employer, in reality it has very little control over employees and deals mainly with formal issues related to their employment. Employees continue to perform work solely for the EOR service provider's client company. Outsourcing is about something completely different - its essence is the delegation of employee management and employment responsibilities to a third party. Outsourcing is a solution that is slowly being abandoned because companies do not have a very good experience with it. The main disadvantage of outsourcing is that employees very often do not even know who their employer is. According to the experience of companies using the outsourcing service, the first complications arise already at the stage of communication, as the tasks and directives transferred are very often confused, misunderstood and passed on with errors. This is especially often the case when the person passing on the information speaks a different language from his interlocutor. Using an outsourcing service also means that the company loses some of its control, because unfortunately it has no way of verifying the duties performed by the employee. The client company also loses the ability to analyze potential risks. Another danger you may face when deciding to use an outsourcing service is that the independent entities responsible for carrying out the company's duties will not be able to adequately safeguard the company's intellectual property and will not provide sufficient data protection. There is no denying that outsourcing has many drawbacks. It used to be a popular service, but since the introduction of competing services such as EOR it has been noticed that cooperation can be undertaken much more securely and efficiently. Nowadays, few companies choose to use outsourcing, because it involves too much danger and often the terms of cooperation are ambiguous. The EOR service has a number of advantages that make it a much more common choice for companies today and provides a far better reputation than outsourcing. One of the biggest benefits of EOR over outsourcing is that by entering into a partnership with Employer of Record, the client company retains practically all control over its employees. The client company recruits for the selected positions, identifies the most talented and best-qualified candidates and decides whom to ultimately hire. The Employer of Record's role begins when the employees designated by the client company are formally registered and added to the payroll. It is the client company that has total control over what responsibilities are associated with the position and makes the most important hiring decisions. Another advantage of EOR that enables it to fare better than outsourcing is the transparency of contract terms. By entering into cooperation with an Employer of Record with a superb reputation, we can be sure that the terms of cooperation will be completely clear and transparent. A properly drafted cooperation agreement will leave no doubt as to the obligations of each party contained therein. It should include all issues relating to the EOR's relationship with the client company as well as the EOR's relationship with the employees it hires. Employer of Record also pays special attention to ensure adequate protection of intellectual property. Unfortunately, this is not the domain of outsourcing. Employer of Record goes to great lengths to ensure that any sensitive data it holds is always secure, both during storage and transmission. The similarity between the EOR service and outsourcing is only apparent. After analyzing the functioning of the two services, one can see significant differences, especially in the quality of the services provided. EOR and outsourcing differences
What is the difference between EOR and a temporary employment agency?
The primary activity carried out by temporary employment agencies is to handle the search for the best qualified candidates for specific company positions for a limited, short period of time. Temporary employment agencies tend to focus only on selected industries, especially those looking for seasonal workers. As you can see, the activities of Employer of Record are extremely different from what a temporary employment agency has to offer. Employer of Record is not involved in recruiting employees - its role begins when suitable candidates are already selected and need to be formally registered. In addition, an Employer of Record is able to work with a company in any industry, even the most niche, as the services it offers are very flexible. EOR serves as a tool through which you can hire employees for any period of time, whether short or long. It is possible to hire seasonal workers through EOR, but there are also no contraindications to hiring permanently in this way. EOR and temporary agency differences
History of the creation of the EOR service
What is the origin of the EOR service?
The root of the EOR service is outsourcing. Today the two services are far apart, but the Employer of Record as we know it today evolved from outsourcing. Outsourcing goes back many centuries and was used as early as several hundred years ago. The first entrepreneurs in history realized rather quickly that running a business on their own or hiring more employees only to perform single tasks was sometimes highly inefficient and unprofitable. For this reason, the practice began to take up cooperation with external providers who would take over some of the company's responsibilities on favorable terms. Interestingly, one of the first services that were very popular among outsourcing businesses was office cleaning at the company's headquarters. In their time, the most prosperous outsourcing companies were cleaning companies - which, by the way, are also very popular today. The passage of time and the increasing development of globalization have made outsourcing a practice used in most highly developed countries around the world. Of course, the biggest leap in popularity of outsourcing services was recorded at the turn of the 20th century. Outsourcing contributed significantly to the rapid economic development that took place during that period. With the help of outsourcing services, many companies had the chance to spread their wings fully and reach their potential. EOR’s origins
When was the employer function as we know it today created?
It is estimated that the role of employer that we are familiar with today appeared around the mid-19th century. It was during this period that the first references to the subject were recorded. The organization of labor before the emergence of the employer role was quite chaotic and often unfavorable to the worker. Workers could not count on the support of a person who would be their supervisor because such a function did not exist. They operated in a similar way to today's freelancers since they performed their duties independently and no one directed their work, but they did not have a contract that bound both parties and defined the rights of both the employee and the principal. It was commonplace to work in inappropriate conditions, because at the time there were no regulations that defined specific requirements. This form of work was very uncomfortable and unsatisfactory on the part of the employees, which contributed to the creation of the employer's function. Another issue that necessitated the creation of this type of role was the increasing prevalence of mass labor movements. It became clear to everyone that it was necessary to impose some top-down control to look after the workers. Basic duties of the employer were established, which are still in place today. These include: What are the duties of present-day employer
When did the outsourcing of the employer role begin?
The forerunner of the outsourcing of the employer role is considered to be the British firm Gabbitas & Thring which began offering outsourcing services in 1873, relieving businesses of some of their responsibilities. The company was formerly a recruitment agency and its core business was to find the most suitable candidates for positions nominated by client companies. Private schools were a particularly important clientele for Gabbitas & Thring, for which they frequently recruited teachers. Typically, they were looking for teachers not for permanent positions but only for replacements or a specific, short-term period. This is why this company was very much described as a contract worker agency or temporary worker agency. The first business that implemented the EOR service as we know it today was Automatic Payrolls Inc. This company was founded in 1949 and its main business was payroll outsourcing. Its offerings included services related to taking over the responsibilities of hiring employees, mainly payroll and check issues. What's interesting is that Automatic Payrolls Inc. is still operating today and continues to grow. It is focused on continuously expanding its operations and its priority is to automate as much as possible of the tasks associated with the role of employer. The company is highly regarded and respected and can be found among others on the popular Fortune 500 "Automated Data Processing" list. Employer’s role origins
When did the EOR service come into existence?
The EOR service began to grow significantly in popularity in the 1980s in the United States. This is where the greatest demand for it emerged among local entrepreneurs who were looking for a solution through which they could safely delegate some of their duties and responsibilities to good hands. Unfortunately, it is impossible to give the exact year in which this type of trend was noticed because at that time activities of this type were not subject to any regulation and therefore not much documentation remained. However, before these events took place it was earlier in the 1960s that the employee leasing service developed rapidly. Numerous business entities were formed which main activity was "renting" employees to clients' companies. Depending on the needs of a given client, this service could be provided on both a short-term and long-term basis. Labor leasing was the first response to the problem of employers with obligations related to the employment of employees, especially related to the issue of paying the relevant contributions. These very developments caused the EOR service to emerge and develop more and more over time. What are beginnings of EOR
How has the EOR service evolved over time?
Over the following years, the EOR service underwent numerous changes and modifications, which was directly caused by the development of global mobility programs. The second factor that influenced the evolution of the EOR service was the change in the rules for delegating workers. In its heyday, the posting of workers could be a long-term solution and last for up to several years. Over time, this has changed and now worker secondments are much shorter. The changes that have occurred have created greater demand for alternative services to the traditional hiring of an employee by an employer. Companies planning their expansion in many foreign markets realized that setting up more business entities was definitely not profitable. It was necessary to find a way out by which to avoid this obligation and hire employees from abroad. Admittedly, it was still possible to cooperate with local business partners, use payroll outsourcing or hire immigration lawyers, but this was quite inconvenient because it involved taking on many small collaborations. It is definitely more comfortable for any company to undertake a joint operation with one large company that will comprehensively handle all issues related to the company's operations. The answer to this need became the EOR service which is now widely used by numerous businesses around the world. EOR evolution over the years
EOR service in different countries
What does the EOR service look like in the U.S.?
The EOR service originated specifically in the United States. Its history goes back to the 1960s. The United States, as the name suggests, is a country made up of many smaller states which have their own separate laws. Companies that are planning to expand into other states to do business would need to familiarize themselves in detail with the regulations in each successive state, even if they only have one employee at a given location. This task is almost impossible but if any business took up the challenge and wanted to meet it, it would take a lot of time and money to hire the right experts. The problem with different laws within the country was the main reason why the roots of the EOR service are in the United States. American entrepreneurs realized fairly quickly that the ideal solution would be to partner with another company that would take over some of the responsibilities of hiring employees in other states, ensure proper compliance with regulations and assume some of the responsibility if a possible mistake occurred. At the same time, the client company should retain all control over the employees and manage all issues related to their employment. This would allow the company to significantly save resources and focus on its core business. This is how the first units offering EOR service were established. Employer of Record not only performs the aforementioned functions, but also handles the filing of annual tax returns for each state in which the client company employs an employee and where they have tax residency. This solution has huge benefits, of which American companies are well aware, and therefore EOR services are in high demand in the United States. The truth is that most American companies in operation today would not be so successful if it were not for cooperation with the Employer of Record. Most companies would simply get lost in the maze of all the paperwork from multiple states and make numerous mistakes regarding regulatory compliance. Due to the fact that the EOR service emerged in the United States earliest in terms of large scale, it is understandable that this is where it is also the most developed. The American Employer of Record is famous for its use of state-of-the-art tools and technology in employment management. It is also becoming standard for Employer of Record to offer proprietary software for client companies that are specifically designed to ensure the best possible compliance with federal and state regulations applicable in the country. The dashboards of these programs are distinguished by the ability to control payroll transactions, account statements, manage the administration of benefits and employee claims. They also often include an option through which it is possible to receive and send messages to the Employer of Record about activities carried out related to personnel and payroll matters. When considering doing business with an American Employer of Record, it should be borne in mind that in this country applies a rather specific principle such as "employment at will". It consists in the fact that termination of employment can occur at any time and the reason can be anything. There is also no requirement for prior notice of the decision to terminate the contract. The exception occurs when the reason given to justify the dismissal is deemed to be unfounded. This rule applies both ways and so not only the employer can suddenly dismiss the employee, but also the employee can resign at any time without first notifying the employer of their intentions. A reason may or may not be given to terminate the employment relationship and this right is very often used in practice. Both employers and employees very rarely explain why such a decision was made and this is the norm in the US market. The "employment-at-will" rule is quite difficult for foreign investors looking to expand their business in the United States. They are not entirely sure what obligations the employer has in connection with the rule. There are also many doubts about the provisions in the contract, the appropriate terms and conditions of employment that meet the applicable standards or the termination clause. In order to reduce the risk caused by the higher probability of error, it is very common for companies to use the EOR service when expanding into the United States. It can be said that the American Employer of Record is as popular with native companies as it is with foreign companies entering the US market. EOR in US
What is the EOR service like in Singapore?
The Singapore market is becoming increasingly popular year after year among foreign investors. A growing number of companies are deciding to expand their operations to Singapore, encouraged especially by the possible access to high-caliber job candidates. This small Asian country, which at first may seem rather inconspicuous, every year is climbing all the country rankings in categories such as business, trade and finance, usually placing in the top. Singapore's strengths are primarily its strategic geographic location, stable political climate and business-friendly environment. There is no doubt that Singapore has every predisposition to become the center of world business in the future. Despite the countless advantages, doing business in Singapore also involves some more difficult issues. The biggest challenge for companies that decide to enter the Singaporean market is to face the local laws. Singapore's regulations can be quite complicated and incomprehensible to foreign entrepreneurs who only have experience running a company in Europe or North America. The fastest, cheapest and least complicated way to remedy this issue is to work with an Employer of Record. The EOR service provider will ensure compliance with local laws in every area of the company's operations. By using an EOR service, companies entering the Singapore market are much less likely to make any mistakes as a result of misunderstanding regulations. The availability of EOR service in Singapore is very high because a significant number of foreign businesses are interested in partnering with an Employer of Record. It is relatively easy to find and select such a service provider that will meet all the company's needs and expectations. There may be doubts as to whether using an EOR service will indeed be the most beneficial solution, or whether setting up a new entity would be a better option. The answer to this is directly dependent on the long-term strategy of the company in question. In certain cases, establishing a new entity may indeed be a better idea. A company that is confident that it intends to remain present in the Singapore market for longer than 5 years should seriously consider establishing a new company in the country. Similarly, if the company has plans to employ dozens or even hundreds of employees over the next few years. Specialized knowledge of Singaporean law or access to a range of experts is also not insignificant. The most crucial factor in establishing a new business entity, however, will be the budget the company has at its disposal. Setting up and maintaining a company in Singapore is quite expensive, which is why so many businesses nevertheless choose to use the EOR service. Cooperation with Employer of Record is associated with relatively low costs and additionally has many more advantages, such as the service provider taking over the responsibility for the hired employees and managing all employment-related duties. There is no need to worry about matters related to payroll management or employee benefits administration because they are under the control of experienced professionals. EOR in Singapore
What is the EOR service like in Indonesia?
Indonesia is a rather unobvious business destination, yet an increasing number of companies are choosing to expand their operations here. Companies hiring Indonesian employees in the vast majority of cases do so with the help of Employer of Record. The establishment of a separate legal entity in Indonesia by foreign companies is not a very common practice because the convenience of the EOR service allows them to operate freely in the Indonesian market. The process of registering a company in Indonesia itself is very complicated and requires a great deal of time. This is not insignificant for companies that want to start operating immediately and this type of waiting could effectively derail their plans. Employer of Record allows you to start hiring Indonesian employees almost immediately. They are introduced to the company very efficiently and trained so that they can start performing their labor duties as soon as possible. The Employer of Record will take on the responsibilities of checking the compliance of the business operations carried out and will also take care of such formalities as obtaining work permits for foreign workers in Indonesia, preparing the relevant documents and managing the payroll. The EOR service is most popular among companies that wish to hire employees only on a short-term basis. Companies also turn to Employer of Record for help when they do not have adequate knowledge of Indonesian law. Engaging with an Employer of Record is a much better and safer option than taking the risk of making a mistake and going against the law. The EOR service provides access to experienced and widely qualified experts who will accompany you at every stage of your business. Taking advantage of the EOR service is also a very easy way to effectively reduce the cost of doing business in Indonesia. According to statistics, companies that chose to work with Employer of Record incurred 60% less costs associated with operating in the Indonesian market than companies that chose to establish a new business entity in the country. EOR in Indonesia
What does the EOR service look like in Poland?
Poland is a country located in central Europe and is one of the leaders in all kinds of services with its roots in outsourcing. Foreign companies are increasingly choosing to hire Polish employees due to their high level of skills going hand in hand with relatively low acquisition costs. In addition, Polish employees are distinguished by their diligence, loyalty and set ambitious goals for themselves, thus significantly supporting the development of the companies for which they work. If a company wishes to recruit a Polish employee and at the same time is recruiting for a job whose duties can be performed remotely, then nothing lies in the way of this intention. Unfortunately, to be able to hire a Polish employee it is necessary to face the local law. It is very complicated and strict, which discourages many foreign employers from entering the Polish labor market. The best way to ensure the highest level of compliance with Polish law is simply to work with the Employer of Record which has numerous experienced experts in this field. In order to hire a Polish employee it is also necessary to have a business entity in Poland, but this obligation can also be bypassed by the company if it decides to use the EOR service. When deciding to hire a Polish job candidate, one should bear in mind that the issue of their employment is regulated by such documents as the Polish Constitution (matters related to the principle of freedom of labor and social rights), the Polish Labor Code, international agreements (labor law issues) and acts or statutes on the duties and rights of both employees and employers. The amount of information you need to be familiar with and the rules you need to follow is overwhelming. They apply to employees coming from Poland and if you are dealing with an employee coming from another EU country or a European Economic Area (GEO) country then things get even more complicated. In addition to complying with all the documents mentioned above, you must also ensure that the employee obtains a work permit and an entry visa. This is necessary for the employee to legally stay and work in Poland. Employers of Record can take over much of the responsibility and support the client company at every stage of hiring an employee, making it much easier to obtain employees from Poland. EOR in Poland