Expanding a global presence is a natural and savvy move for any growing business. Hiring international talent is a great approach to tap into new overseas markets, and a Global Employer of Record (EoR) can help you along this trajectory. This guide explains the role of an Employer of Record, how to use an EoR, and the benefits of partnering with a global EoR to achieve your goals. global expansion goals.
Official employer Meaning
An Employer of Record (EoR) is a third-party organization that becomes the full legal employer of your workforce and assumes all employer-related responsibilities and duties on behalf of your business. An EoR takes on a company’s human resource responsibilities and onboards, pays, and manages your supported employees while you maintain and control day-to-day operations.
What is an Official Global Employer?
A global employer of record allows companies to legally engage with employees across international borders without having to create a local entity or risk violating country or state employment laws. Think of a global EoR as your global HR team that understands the complex labor laws and salary regulations of the different markets your staff are in.
What does an employer of record do?
Ultimately, an Employer of Record allows companies to legally and effectively engage with talent in a new country or state without having to create a local entity or risk violating local employment laws.
Global EoR executes legal and regulatory immigration, employment, payroll and benefits requirements for your distributed workforce. Although the Global EoR is the supported employee’s legal, registered employer, you retain control over day-to-day management tasks, such as compensation, job duties, projects, and performance management.
Some of the services provided by a global EoR:
- Drafts and maintains employment contracts that comply with local standards
- Manages all payroll and tax deductions
- Pay supported employees on time
- Offers comprehensive and legal benefits
- Ensure compliance with terminations and offboarding
- Provides ongoing support on local labor laws and regulations
Benefits of an employer of record
A global EoR partner offers companies many advantages. Since most companies don’t have the resources or in-depth knowledge to compliantly hire in international markets, an EoR allows you to hire top talent from anywhere and support them based on their local needs. A global EoR also helps you:
- Quickly onboard talent
- Save cost over entity setup
- Retain talent and provide comprehensive benefits
- Maintain compliance with employment contracts and evolving labor laws
- Benefit from ongoing HR support
When to use an employer of record
An employer of record is a valuable partner when it comes to balancing a distributed workforce and navigating global markets. A global EoR allows companies to:
Explore new markets
If you want to explore a new market but your company does not intend to establish an entity, an EoR allows you to compliantly test a new country without the commitment of establishing an entity. With an EoR, you can quickly hire a team in new global markets, generate new revenue streams, and reach new customers.
Attract and retain top talent
The ability to work from anywhere is a highly desirable advantage in today’s job market. The competition to attract top talent is fiercer than ever and more companies are turning to remote options for their workforce. Plus, hiring without geographic boundaries opens up the talent pool and lets you focus on a workforce with the exact skills you’re looking for.
A global EoR helps companies hire from anywhere and attract top talent. Additionally, when employees want or need to be relocated, a global EoR helps you retain your top talent without the need to create an entity.
Hire employees during entity setup
Although creating an entity allows you to hire local talent and expand into a new international market, it takes a lot of time, money, and expertise in the local laws of the country. An EoR can serve as an interim solution, offering hiring support and entity creation insight while you finalize the requirements.
Avoid contractor misclassifications
An alternative to hiring international employees or establishing an entity in another country is hire contractors instead. Many companies use outsourcers as a cheaper option to hire international remote talent. However, once a business becomes large enough, it faces substantial risk of misclassify entrepreneurs as employees. A comprehensive EoR provides an effective way to hire contractors as employees to avoid compliance risks.
How to select a partner official employer
There are several important considerations to take into account when selection of an EoR partner:
- Transparent pricing. Find an employer of record with clear pricing, with no fees or unexpected charges, making it easy to stick to your distributed workforce budget.
- Accurate calculations of the employer’s charge. Look for an informed supplier and accurate on employer burden costs. When calculating payroll taxes, an employer must also take into account other social contributions, such as health insurance, social security and paid holidays. These employer charges differ from market to market and your EoR partner is responsible for providing you with accurate quotes on these requirements.
- Global coverage in the markets you need. Make sure your partner has deep expertise and knowledge of the markets you are hiring talent from. Working with an inexperienced partner costs you unnecessary time and money, and puts you at risk of non-compliance with local labor regulations.
- Responsiveness and support. Choose a caring partner who will quickly respond to your needs and those of your team. Your EoR partner is there to regularly engage with your existing workforce and new talent on your behalf. Make sure your EoR partner provides an assigned customer account manager who responds quickly to questions from your team, onboards new supported employees, and adapts to local time zones and languages.
- Validation by an independent third party. Consider a partner who has been identified as an industry leader by relevant and credible third-party sources. Unbiased industry analyst validation reports are based on extensive research and customer insights. Reviewing these reports helps you quickly identify verified EoR leaders who offer the best solutions to grow and support your global workforce.
Official Employer vs PEO: What’s the Difference?
The main difference between an EoR and a professional employers’ organization (PEO) is that an EoR is the legal employer of a company’s distributed workforce, and a PEO acts as a co-employer of the company.
While an EoR handles all HR tasks, such as onboarding, payroll compliance, payroll, taxes, and benefits, a PEO partners with small and medium-sized businesses to provide HR services.
Official employer vs employment agency: what is the difference?
An employment agency is different from an EoR because it recruits candidates to meet temporary labor needs. A staffing agency or company recruits workers and matches them with companies to fill worker absences, skill needs, or special projects.
Hire talent anywhere with an employer of record
When tapping into new international markets, each expansion comes with its own unique mix of complexities that require an experienced team. Like your Global Employer of Record partner, Velocity Global ensures the highest level of support for you and your distributed workforce. Our global capabilities in 185+ countries, unparalleled expertise and dedicated service allow you to hire the best talent quickly and in full compliance. We offer a full suite of global workforce solutions that manage all risk mitigations, local workforce requirements and compliance while you focus on growing your business .
Reach to us today.