Hiring through Employer of Record
An employer of record (EOR) is a company that takes on the role of the official employer for foreign employees hired by their clients. The EOR serves as an intermediary, shouldering all legal obligations related to employment, including contracts, salaries, benefits, and taxes. Their primary objective is to enable their clients to recruit individuals from various countries while ensuring strict adherence to local labor laws.
Utilizing the services of an employer of record allows businesses to employ full-time staff overseas without the need to establish their own legal entity in the foreign country. This is typically a time-consuming and costly process that can take several months. By hiring through an EOR, companies can achieve significant cost savings and navigate the complex regulatory requirements associated with international employment more efficiently.
The process of hiring through an employer of record involves several key steps:
- The employer of record (EOR) either collaborates with subcontractors or establishes its own local entities in various countries worldwide.
- The EOR forms partnerships with companies specializing in providing employee benefits and perks across various domains, such as health insurance, pension plans, learning and development allowances, and more.
- Companies that choose to work with an EOR gain the ability to recruit employees from countries where the EOR has a presence.
- The EOR takes responsibility for various aspects of employee management on behalf of their clients. This includes handling tasks such as creating employment contracts, conducting background checks, managing payroll, handling tax matters, ensuring statutory rights and benefits are provided, managing terminations, and more.
- While the day-to-day responsibilities and scheduling of the global workforce are managed by the client company, the EOR monitors their working hours to calculate wages accurately.
Benefits of hiring through EOR
There are numerous benefits to hiring through an employer of record, which can greatly assist in international expansion efforts. By opting for this approach, you can:
- Efficiently save time and financial resources when recruiting international employees.
- Prevent employee misclassification and the associated penalties and fines for non-compliance.
- Gain broader access to the best candidates available in the global talent pool.
- Reduce the burden on your Human Resources department by automating repetitive, time-consuming tasks.
- Enhance the security of employee data through a trustworthy partner.
- Improve the overall employee experience by offering diverse, location-specific benefits.
- Adapt to evolving trends in the workforce and hiring practices.
- Streamline the integration of talent following mergers or acquisitions.
