Many of us have never even heard of an EOR, let alone used one's services. So, what exactly is an EOR, and why should you use one?
Employer of Record (EOR) refers to a third-party company that acts as the legal employer of personnel on behalf of another company. The EOR is responsible for ensuring that the individual is compliant with local employment rules and regulations as the individual's legal employer, generally in a foreign nation. The EOR is not responsible for the employee's day-to-day responsibilities and is not engaged in decisions about remuneration, project involvement, or position.
EOR services include assuring locally compliant payroll, establishing employment contracts in accordance with country employment regulations, addressing any visa or immigration procedures, and advising the company (their customer) on employee termination issues.
There are a variety of reasons why a company should consider hiring an EOR. Due to complicated employment laws, it can be difficult for businesses to hire employees in locations where they do not already have a presence. Companies run the danger of breaching local labour rules, which can have serious (and costly) ramifications. EORs can help organisations avoid potential issues while also saving time and stress for HR departments because they are specialists in the location's employment laws and regulations.
Many businesses continue to prioritise foreign expansion in their long-term goals. Setting up operations in a new area, on the other hand, could be a time-consuming, costly, and risky procedure. The EOR can assist in making the process go more smoothly. By using an EOR to hire people in a new location, the company can avoid having to establish up their own legal entity in the new site and HR can avoid having to learn about local employment rules. New employees can be onboarded quickly, allowing the company to focus on establishing itself at the new location.
Using an EOR also allows the company to get to know the new location and market without having to make the large commitments that come with building a new office - if it doesn't work out, the EOR can handle the job termination procedure. If, on the other hand, things go well in the new site and the company decides to stay, some EOR services can help with the move and provide advice to keep the company compliant.
As a result of the COVID-19 pandemic, several organisations were obliged to introduce blanket remote working policies, and a considerable number of companies are still allowing current employees to work remotely. As a result, several people returned to their home countries while continuing to work for their existing employers all around the world. If these workers continue to work from the new site for an extended period of time, this could result in tax liabilities for them. Companies who find themselves in this predicament can hire an EOR to take on these sporadic employees and ensure that they are paying the correct tax in the correct jurisdiction without having to establish up an entity or find an outsourced payroll company.
Many companies are implementing permanent changes to how their employees work, indicating that remote working is here to stay. As a result, businesses are no longer limited to discovering the greatest talent in their immediate area and may cast a broader net when seeking the perfect fit for their staff. Although this appears to be the perfect circumstance, challenges with contracting and recruiting a superstar applicant can develop late in the hiring process. Imagine finding your unicorn candidate, the individual who has the potential to transform your company, only to be stymied at the last minute by tax and Mandatory Provident Funds requirements. At the very least, this can cause delays in the employee joining your company, and at the worst, you may completely miss out on them and they join a competitor. All of this may be prevented if you recruit your new superstar through an EOR.
Many businesses are attracted to hire overseas workers as independent contractors and have them invoice them for their services on a monthly basis. Although this may be a viable alternative if you only need this person's services for a short period of time, it might be quite unsafe depending on the contractor's location. Many countries are tightening down on this, enacting regulations that define who counts as a contractor extremely narrowly. Wrongly identifying an induvial as a contractor can have serious financial ramifications for organisations, leaving them accountable for unpaid taxes, benefits, and yearly leave to workers who should have been permanent employees. If you wish to recruit someone long-term, you can escape all of the difficulties of contractor employment rules by hiring your overseas workers through an EOR.
Through our worldwide employer of record partners, Alchemy Global Expansion assists businesses in simplifying international expansion. Our partners make it possible for businesses to easily grow into new nations without the need to establish branch offices or subsidiaries.
Alchemy assists you in locating people, while our partners assist you in putting them on a locally compliant payroll. Alchemy, in collaboration with our partners, handles all the details for you, allowing you to employ anywhere, swiftly and easily.
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