Employer of Record – Myths and Misconceptions….

Employer of record misconceptions can prevent companies from making informed choices about global hiring. In this article, we clear up the most common employer of record misconceptions, so you can decide if EOR is right for your organization.

1. An Employer of Record (EOR) isn’t viable for just one or two employees – On the contrary, EOR is ideal for really small employee numbers, as the solution provides all the necessary infrastructure and expertise for a lower cost than setting up to employ directly. It is true that some other EOR companies may not want your business if you don’t have five or more employees, but the solution itself is ideal for just one employee, and “per person” pricing means it is still cost-effective.
2. My employee won’t like being employed via an Employer of Record – It is true that not everyone knows what EOR is, and the initial unfamiliarity may mean your employee has a fear of the unknown. But once the solution is properly explained, there is nothing not to like. The employment solution is the same as being employed by any other compliant route, offering the candidate all the protections that come with being properly employed. A good EOR will allow you to tailor a package of supplementary benefits so that your employee is at least as well off as if you employed them directly.
3. If I use an Employer of Record, it takes away my flexibility – An EOR wants to keep you compliant, so they might not let you be “flexible”, if that means a potential breach of employment law. Other than that, there is no reason an EOR will give you any less flexibility than if you employ directly. Where legally permissible, an EOR can offer fixed-term employment contracts. You determine the salary and benefits, and you agree on working patterns with your employee. A good EOR will offer a range of supplementary benefits and will be open to discussions of commercial considerations versus employment risk.
4. My employee won’t feel like they represent my business if I employ them via an Employer of Record – This is true and an area where sensitive handling is important. But, if you select an EOR who can articulate their role in this employment mechanism, your employee should understand that the EOR is only there to facilitate compliant employment. You handle the day-to-day leadership and management for your employees, instil your company values, and include EOR employees in company events, just the same as the people you employ directly. The employees will also represent your company externally, for example, in their email signatures or on LinkedIn.
5. There is a danger that the Employer of Record will poach my employee and place them with a different client – An EOR is not the same as a recruitment agency. They don’t maintain a pool of staff; their sole purpose is to provide a compliant way to engage an international employee. Since most EORs now charge on a fixed-fee basis, they have no incentive to move your candidate, even if another role offered a higher salary. A good EOR will place value on creating a long-term relationship with your business.

For a step-by-step EOR overview, explore our EOR solutions page.