Globalization Partners

Top 3 Myths About an Employer of Record

by Globalization Partners
September 2020
Reading Time: 3 minutes



An Employer of Record (EOR) will allow you to start your international expansion quickly. However, many companies do not realize the full scope of the benefits an EOR could provide, or they may believe one of many common myths about this global hiring model. If you are unfamiliar with how an EOR works, it is important to get the facts.


First Things First: What Is an Employer of Record?

Through an Employer of Record, you can hire international employees without the need to set up a global entity. You find candidates, and the EOR adds them to their worldwide compliant infrastructure. You maintain control over the hiring, and management of your employees, while the EOR serves as the legal employer, handling payroll, taxes, benefits, and HR-related issues.

Partnering with the right Employer of Record will help unlock the full international potential of your company. But do not fall into the trap of believing any of the following myths about how an EOR works. Otherwise, you may miss out on harnessing all of its potential benefits.

Partnering with the right Employer of Record will help unlock the full international potential of your company. Click To Tweet

Myth #1: It Is the Same as Outsourcing

Fact: Hiring through an Employer of Record is not outsourcing. While the EOR serves as the legal employer, your company makes all hiring and termination decisions and maintains full day-to-day control over the employee’s activities.  

Outsourcing involves the farming of job functions through a third party. The outsourcing model has developed a bad name because it can sometimes be hard for professionals to know who is employing them, and essential instructions could be lost in translation.

Also, outsourcing is commonly associated with the reduction of quality control and security risks, as delicate intellectual property or consumer data could be mishandled by freelancers or contractors.

Due to the sometimes-murky employment terms and the lack of security and comprehensive benefits that come with full-time employment, highly skilled professionals may try to stay away from outsourcing employment models.

In comparison to outsourcing, an EOR offers several benefits:

  • Control: With an EOR, you find the candidates, hire them, and then the EOR adds them to a legally compliant payroll. You maintain management, and you are the only one that can choose when to onboard them and, if necessary, terminate them.
  • Transparency: When you partner with a reputable EOR, you and your employees will have a clear understanding of the terms of employment, as well as of the overall relationship between employer, employee, and EOR, all laid out in a compliant employment contract.
  • Access to Talent: Highly skilled professionals are looking for competitive offers that include benefits. Through an EOR, you can offer employees competitive benefits packages that will help you attract top-tier talent.
  • Intellectual Property: Can you trust your company’s intellectual property to an outsourcing agency? The answer is no. When you hire through an EOR, you can make sure that the intellectual property of your company is fully protected by compliant employment contracts.


Myth #2: An Employer of Record Is Just Like a Staffing or Temp Agency

Fact: An Employer of Record is best utilized for hiring long-term employees.

A staffing agency provides companies with candidates to fill mostly temporary positions. Temp agencies in particular focus on specific industries that have a high demand for seasonal workers.

The Employer of Record model focuses on allowing companies to hire permanent full-time positions globally and across all industries.


Myth #3: You Cannot Use an Employer of Record for Hiring Executive Roles

Fact: You can use an Employer of Record to hire for all roles and positions in your company.

Many businesses are validating that working remotely permanently not only works and can increase productivity, but it can also open the opportunity of capturing talent without regard to country borders or immigration policies.

An Employer of Record allows you to offer your employees an attractive benefits package, which gives you access to top international talent. Being able to provide a competitive offer lets professionals know your company is serious about long-term engagement.


Smooth the Path to Success

International expansion could hold significant benefits for your company if you go down the right path. If you want to know what you need to look out for, we invite you to read our eBook “10 International Mistakes to Avoid”.

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