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Frequently Asked Questions

Employer of record, or EOR for short, describes the company that is legally responsible for employing and paying employees.

To put it simply, an employer of record handles all the legal and regulatory details involved in employing people from an overseas entity. HR, Payroll, Benefits, taxes, stock options, and compliance are all handled by an Employer of Record.

Daily tasks and duties of the employee are not managed by an EOR. Instead, these will continue to be managed by your company; the EOR worker will report, be managed and assessed in the same way as any directly employed member of your team.

Employing workers in foreign nations via an Employer of Record is permitted by law in most countries, but not all.

However, not all EORs are created equal when it comes to compliance. Make sure the EOR you’re considering either has a local presence or works with reputable partners where required.

Find out more here.

When venturing into new territory, using a Employer of Record can be a prudent choice. The Employer of Record will handle your payroll, taxes, and visa requirements in the foreign country. A company that acts as the Employer of Record can aid salary benchmarking, benefits management, and the hiring of international workers.

There can be significant advantages of an Employer of Record, especially for a small or medium sized employers, including:

  • Companies can expand operations more quickly than by forming a foreign entity in the country and avoid the risks associated with doing so .
  • The use of a Global Employer of Record  is especially attractive to smaller businesses, or those without the necessary corporate infrastructure to handle local payroll, tax, and visa issues.
  • Companies can save valuable management and admin time by outsourcing payroll and HR issues to an Employer of Record.
  • Companies can often save money by outsourcing payroll and human resources management to an Employer of Record.
  • Payment for the Employer of Record service is via a simple monthly management fee.

When dealing with payroll processing and employment legal issues for employees across the world, having a Employer of Record handle such details on your behalf can be extremely helpful. Without the Employer of Record, you would have to keep up with ever changing legislative requirements in other territories to ensure your compliance.

International Employment Law is complex, varies from country to country, and the penalties for errors could inflict serious financial and reputational damage on your company. So (assuming you don’t have time to study for a master’s degree) an Employer of Record is the ideal way to ensure you’re 100% compliant in all the countries you employ people in.

Employer of Record services are unique, specialized and complex. It takes a significant amount of time to learn the rules and local employment norms, set up the necessary infrastructure, and identify trustworthy local partners. Multi-country payroll providers or generalist HR consultancies cannot match the expertise of a specialist Employer of Record.

When a company wants to expand internationally but doesn’t want to establish a physical presence there, it will commonly employ an Employer of Record to do business there.

Setting up an entity in a new jurisdiction can be time-consuming and costly. A new initiative or commercial venture may require you to act quickly. Sometimes a temporary workaround is all you need.

In cases like these, using a global Employer of Record as an alternative to employment in the country can be beneficial. Legal entities will be established in the Employer of Record’s operating regions to handle payroll, human resources, and immigration. Your remote workers will see the Employer of Record as their official employer in the host country.

A professional Employer of Record will assist the client in terminating the employment contract in a way that is respectful to both parties. This includes providing guidance on the legal requirements in the relevant jurisdiction and ensuring that the employee is treated fairly throughout the process.

Employees in most countries now have the right to a transparent and fair process before their employment is terminated, even if “fire at will” practices are still accepted in some countries.

That’s why it’s crucial for a business to have input from its Employer of Record and their local representatives before terminating someone’s employment. Many countries have employment tribunals, and if a business is found to have mis-handled the termination process they may be forced to pay punitive damages.

The issue is complex, as there are multiple factors to consider and each international jurisdiction has its own rules. But tax authorities around the world are taking an increasingly hard line on the contractor model, especially if the contractor in question is working exclusively for your business, represents your organization or is being managed by someone in your team.

Get it wrong, and the penalties can be punitive both for your company and the contractor.

To find out more about this topic, click here.