Globalization Partners

Is an Employer of Record Right for You?

by Globalization Partners
July 2020
Reading Time: 3 minutes

 

Are you looking for a faster way to expand and hire in new international markets? You know why global growth will benefit your business, but you may not know how to execute swiftly and compliantly. For many companies in your position, turning to a global Employer of Record is the best way to kickstart a go-to-market strategy or international hiring plan.

What is an EOR?

An Employer of Record (EOR) allows companies to hire professionals by serving as the legal employer in countries where your company does not have a legal entity established. The EOR has already completed the lengthy, costly process of setting up entities around the world, so it has the infrastructure necessary to run international payroll in a fully compliant manner.

Your company can hire international candidates through an EOR. The EOR handles payroll and takes responsibility for compliance with local laws, but the employee works for and is managed directly by your company. An EOR is a strategy commonly used by companies that want to maximize their speed to market and quickly hire the best international candidate, without waiting for entity setup (which can take six to 12 months in some countries.)

What Does an EOR Do?

  • Provides Employment Contracts: Protects your company’s interests by providing compliant local employment contracts.
  • Offers Complete Benefits Packages: Gives your company the ability to provide competitive local benefits to attract the best talent.
  • Runs International Payroll: Takes care of paying your team members in their local currency.
  • Handles all Tax and Compliance Matters: Is responsible for all payroll deductions and filings with the local authorities.

Evaluating Your Needs

Answer the following questions to determine if an EOR is a good fit for your company’s current position.

How many professionals do you wish to hire?

If you’re looking to hire many individuals in a single market, setting up a legal entity might be your best option, given that the effort would make sense from a benefit-cost ratio standpoint. On the other hand, if you’re looking to hire a small number of employees in different markets, setting up entities in various markets could be an expensive and risky bet. An EOR will allow you to hire professionals across the world, without the costs and logistics needed to set up an entity.

Which positions are you hiring for?

Depending on the operational needs of your business, you may be looking to hire several positions, such as salespeople or other revenue-generating positions. Some international hiring options such as Payroll Only Registration (POR) can help you make individual registration with local authorities in places like Europe with the primary goal of allowing your company to issue payroll.

However, POR will not allow you to employ revenue-generating roles or to scale beyond a small number of employees. These limitations would become an obstacle to long-term expansion plans.

Are you willing to commit fully to a new market?

Dipping your toes in new markets could result in a rather costly venture if you don’t have a perfect understanding of the local laws, regulations, and overall culture. In this case, looking for contractors could result more beneficial for short-term projects; however, if you want to access all the potential of a full-time employee, then an EOR could allow you to reap all the benefits without the exposure.

Do you have a plan for creating an exceptional international employee experience?

By looking outside your home country, you access a much larger talent pool of skilled workers. Regardless of the method you hire, building an inclusive, seamless onboarding employee experience is vital to retaining top talent. If you’re only hiring one or two workers in many different countries, the time and resources investment may tax your internal team. Using an EOR with a proven history acting as an extension of your team can help support the employee experience and ensure all new team members are supported.

What’s the Next Step?

Choosing the right partner to work with you on expanding internationally is critical. Download the eBook “20 Questions to Ask Before Choosing a Global PEO” to guide you through the process.

Globalization Partners

Globalization Partners