Employer of Record Services
Employer of Record Services
A company that provides employer of record services essentially places a client’s employees on that company’s payroll. The client company still instructs the work of the employees and the employees are still considered workers for the originally hiring company.
However, the employer of record company would be responsible for payroll, benefits, taxes, and a variety of other human resources and compliance functions. The company effectively becomes the employees’ primary employer, but just on paper and for tax purposes.
In the U.S., a wide variety of businesses use companies that provide employer of record services to assist with payroll, benefits, and other back-office human resource needs.
There are major advantages for small- and medium-sized businesses to use companies that provide these services – as they can help the primary employer stay in compliance with a variety of rules, laws, and regulations which the primary employer may not have the expertise, staff, or bandwidth to support.
Alternatively, a company that does not outsource these tasks would have to manage all human resource services in-house. This includes:
- Data compliance
- And a variety of other human resource functions
Benefits of Employer of Record Services
There are myriad benefits that come with working with a company that provides employer of record services, including:
- Time savings. Companies often utilize this model to save themselves from the strain of having to support back-office HR services on their own.
- Compliance. Companies that do not have specific expertise in human resource, tax, and data compliance can run into problems when they try to handle this on their own. Employer of record services takes on that burden and allows the compliant company to avoid the significant burden — financial penalties or other business sanctions — that comes with being non-compliant.
- Risk avoidance. As mentioned, the risk tends to fall (almost) entirely on the company providing employer of record services.
This model is as effective in the U.S. as it is when applied to employment around the world.
In fact, the Global PEO and employer of record model is extremely effective because it is rare that companies have the experience necessary to comply with all laws in each country.
In addition, working with an employer of record often means that the company has its own entities in a variety of countries. This means that a company does not need to establish its own business entity in-country, especially if that company only wants to test a market with a few employees.
International employees benefit from a company providing these services because they have the assurance that they’ll be paid on time, that their taxes are being withheld appropriately, and that their employer are operating within compliance of all local laws and standards.
Globalization Partners’ Employer of Record Services
Globalization Partners is a Global PEO, providing services for international employees of U.S.-headquartered companies.
This is how our model works:
- We have entities all around the world. When a company has employees ready in any of our 170+ countries, Globalization Partners can onboard those employees usually in a couple weeks. We have locally compliant employment contracts ready and are familiar with the laws and cultures in each territory.
- We put our clients’ employees on our payroll; we ask for a deposit up front to ensure we meet a client’s payroll needs every time.
- Through our proprietary software platform, GoGlobal, employers can easily manage payroll, benefits, and other perks for their global teams wherever they are working. Employees have access to this system as well. GoGlobal has user-friendly dashboards customized for employers as well as employees. The system ensures both are kept on track and in the loop on all human resources-related activities. GoGlobal is also fully compliant in all countries Globalization Partners serves.
Globalization Partners is the only Global PEO that can boast a full end-to-end solution when it comes to these services. We have the top experience in the field — our front office is staffed with attorneys with specific experience in international labor law. GoGlobal is the only such software platform in the Global PEO market. Also, Globalization Partners has customized, locally appropriate benefits packages, which help maximize employee retention.
Frequently Asked Questions
1. Does this mean you manage and have oversight of my employees now?
No. In fact, the whole point is that we would take care of your employees’ payroll, global benefits, taxes, and other back-office human resources issues, thus freeing you to manage the work of your employees.
2. How do you manage this across multiple countries around the globe?
We are experts in the local laws, regulations, culture, and customs in over 170 countries around the world. In addition, we have legal business entities in a very high percentage of those countries. So, placing your global employees on our payroll is easy. Where we don’t have an entity set up, we have long-established relationships with reliable local partners who are equipped to handle your back-office HR needs.
3. Once established, how do we ensure our employees are being paid on time and receiving their benefits? How do we track their PTO and bonuses?
Through GoGlobal, our brand new proprietary software platform. The platform is designed to fully comply with U.S. and local laws, and its dashboards are user-friendly. The system significantly cuts down on emails (to us, from us, to your employees, etc.), and will keep everyone (you, us, your employees) in the loop.