The fastest way to expand and hire internationally is by using an Employer of Record company (EOR). With a global EOR, you don’t have to set up a subsidiary or branch office, hire local accountants and lawyers, and worry about staying compliant with local labor laws. Using an EOR allows companies to hire employees around the world even if they don’t have an entity in place.
But not every Employer of Record company is the same, and some of these core differences could take away from the benefits you hoped to gain by working with an EOR. What do you need to know?
Two Types of Employer of Record Companies
There are two types of Employer of Record companies: companies using a consolidator, or aggregator model, and companies using a wholly owned infrastructure model.
- Aggregator model: one company serves as the umbrella organization and sub-contracts employment to providers in each country. These (usually small) providers are not built to scale, and there is a high risk of them not having the legal, tax, and HR know-how required for a public multinational company that is outsourcing its global legal infrastructure to a third party.
- Wholly owned infrastructure model: one company owns the entire infrastructure in each country and employs professionals on their own entities for their customers.
The structure of each model is different, but what does that mean for you? Ask yourself these three questions before deciding between Employer of Record companies:
Do You Value Speed When Getting Started?
You’ve done your part: you have identified a great candidate somewhere in the world. But you don’t know any experts that can help you navigate local laws and provide a locally compliant contract to your candidate.
If you work with an aggregator Employer of Record company, putting together an employment contract and fully onboarding your candidate may be a lengthy and cumbersome process involving your company, your candidate, the local provider, and the aggregator EOR in the middle.
If you work with an EOR that owns the infrastructure, communication is streamlined and quick. They are not a middleman slowing the process down.
What About Support for Your International Team?
You always want to ensure your global team members have the best experience possible. That means whenever they have a question related to payroll or benefits, they’re met with a prompt, timely answer.
With an aggregator EOR, your employee may have to face multiple points of contact (the in-country provider, the consolidator EOR, and you) before getting a reply for a day-to-day issue.
With an Employer of Record company that has their own in-country experts that have the most up-to-date information for your employee, there are no inconsistencies in messaging. Your EOR is an extension of your team, and you can trust them to relay accurate information, in their time zone, right away. And happy, supported employees are always good for your company.
What About Your Company’s Intellectual Property?
You know that intellectual property is one of the most valued assets to any business. It flows from the employee to the company through the employment contract. It’s vital to make sure your global IP is protected.
With an aggregator EOR, employment contracts go through three parties before they get to your company: from your employees to the third party, to your EOR, then to your company. However, any legal breakdowns in these contracts put your IP at risk.
With an EOR that owns the entire infrastructure, IP flows either directly to your company, or via your EOR to your company, whichever is most enforceable by law. With Globalization Partners, you can rest assured that our employment contract templates and intellectual property assignment documents have been structured to meet world-class standards.
Want to Learn More?
Download The Guide to Choosing an Employer of Record Model and find out more about scaling your company globally with the right EOR on your side.