Introduction to Legal Global Employer of Record
Managing the assignments of your business is a responsibility that comes with the territory of diving into the world of enterprise and industry. However, there has never been any set rule that you have to do everything yourself.
Employers of Record (EOR) are third-party organizations that are strategically built from the ground up to help businesses like yours saddle the weight of numerous business-oriented tasks that are part of your day-to-day operations.
While the implementation of an EOR service is not an instant solution to all of your administrative struggles, the relationship your business can build alongside one will help facilitate a streamlined environment unlike any other.
In this report, we will break down the intricate details of an EOR service and the kind of tasks they perform, while also taking a deep dive into how EOR assistance can help your business to hire employees and lock in the best kind of talent, whether they are international employees or local workers.
What is an Employer of Record?
A legal employer of record refers to a third-party company that assumes the role of the official and legal employer for a client company's workforce.
This means that the employer of record takes on the legal and financial responsibilities associated with employment, such as compliance with employment laws, payroll processing, tax filing, benefits administration, and managing employment contracts.
By utilizing the Employer of Record platform, companies can ensure compliance with legal employment regulations and alleviate the complexities and risks of employing workers from different countries or jurisdictions.
It is a solution that allows companies to focus on their core business while leaving the employment-related tasks to the employer of record.
Before you take any big steps into locking in an EOR Platform, it would best suit you and your business interests to take a look into the detailed services they offer, as like with any savvy business maneuver, research never hurts.
Here is a structured breakdown of what an EOR can offer to you.
Contracting
An EOR enters into formal employment contracts with workers on behalf of the client company, as an EOR functions as the legal hiring entity. These contracts cover terms and conditions of employment, including wages, working hours, and benefits.
Payroll and Administration
EORs handle payroll processing, including salary payments, tax withholdings, and benefits administration. A major factor in making sure this all goes smoothly is that EOR service solutions always operate within the jurisdiction of local regulations.
Compliance
EORs handle compliance with labor laws, local employment laws, local regulations, and key economic policies within the jurisdiction where you want to hire from. The best way to ensure this all goes smoothly is by staying up-to-date with changes in employment laws on an international level.
Work Authorization
For international employees, an EOR can assist with visa and work permit processing, helping workers legally reside and work in the host country.
Human Resources Support
EORs often provide HR support, including onboarding, performance management, and employee relations. In the event of employee termination, an EOR may assist the employer to remain compliant throughout this process.
Benefits
EORs offer benefits packages to employees in certain cases, which may include health insurance, retirement plans, and other bonuses, all done by local regulations.
Risk Management
EORs assume certain legal and financial risks associated with employment, such as compliance issues or employment disputes. This functions as a safeguard for employers as the EOR takes on the bulk of the surrounding responsibilities.
Administration
EORs manage administrative tasks that correlate to employees, such as the maintenance of records, record keeping, and addressing HR responsibilities.
Global Support
EORs are an asset for organizations looking to expand internationally. They can help businesses navigate complex employment regulations in foreign countries without the need to establish a local legal entity, as the EOR functions as that entity already.
Flexibility
EOR offers flexibility for businesses to scale their workforce up or down in response to changing needs or market conditions.
Efficiency
Engaging an EOR can be cost-effective compared to setting up and maintaining a legal entity in a foreign country, which involves significant administrative and operational expenses.
Global Reach
Many EORs have a global presence and can assist with hiring and employment services in multiple countries, making them ideal partners for businesses with international operations.
It is important to keep in mind that every business’s relationship with an Employer of Record will be different, and the benefits that are provided will coincide directly with the needs of your business.
Whether you require all of the above-listed duties of an EOR, or just a few, Employers of Record are always prepared to operate parallel to your administrative needs. While all of the mentioned components are crucial to the inner workings of an Employer of Record, there are a few heavier hitters that require a bit more detail.
Compliance
It’s likely the one word you’ll hear get thrown around the most when researching Employer of Record benefits is ‘compliance.’ Compliance is the basic function of having a dedicated team on deck tasked with researching and keeping up-to-date with international laws and regulations.
The process is quite simple, say you’re looking to hire a new batch of employees from a country with its own set of local labor laws and employer/employee regulations. What an EOR does is manage the details of these policies and ensure they align with the needs of your business.
An EOR may manage basic hiring administration like onboarding and payroll, but other larger-scale management duties take many shapes. These can include managing overtime payments based on an employee's national region, contractual obligations and even employee termination, just to name a few.
Global Employers of Record not only manage the compliance needs of regulations in your business’s country of origin but also, any country you may take on an exciting batch of employees from.
Administration
Employers of Record perform some of the more complex administrative duties when it comes to facilitating employee hiring and retention. While you may be a little hesitant to pass along some of the key functions of your business to a third party, the benefits of an Employers of Record looking after basic admin duties are worth the hesitation.
Here are a few of the ways an Employer of Record can manage your administrative needs.
Onboarding and Offboarding
An EOR service can handle the administrative aspects of onboarding new employees. They also manage offboarding processes, including exit interviews and the return of company assets.
Employment Contracts
Other administrative duties an EOR offers include the drafting of employment contracts on behalf of client companies.
Payroll Processing
EORs manage payroll administration, including calculating wages, tax withholding, and deductions. They ensure that employees are paid the appropriate amount on time.
Benefits Administration
Employers of Record also distribute employee benefits while operating within the compliance standards of the country of operation.
Record Keeping
EORs maintain organized and up-to-date records of employment contracts, timesheets, attendance, and other HR-related documentation.
Regulatory Reporting
Global Employers of Record schedule and present the required regulatory reports and filings to local agencies, labour departments, and other governing bodies. This ensures that both client employers and their employees meet all reporting obligations, as dictated by international compliance standards.
Documentation
EORs also handle the issuance and maintenance of employment-related documents, such as offer letters, termination notices, and employment verification letters, for full-time employees and contractors alike.
Audits
EORs conduct regular audits and compliance assessments to identify any potential gaps or issues. If any are revealed, corrective actions are taken to ensure ongoing compliance with both international and local employment laws.
Hours Worked
EORs often assist with timesheet management and reporting, this ensures that hours worked are accurately reported and employees are compensated appropriately for their work hours.
Employee Data Security
EORs prioritize the security and confidentiality of employee data, ensuring that sensitive information is protected following data privacy regulations.
HR Support
Global Employers of Record can provide HR support services, including outlining employment policies for staff, performance management, and conflict resolution strategies.
Communication and Reporting
Global Employers of Record also maintain open lines of communication with client companies, ensuring consistent updates on administrative duties.
How to Hire With an EOR
Now that we have covered some of the more detailed operations of how a global Employer of Record works for you, we can dive into the necessary steps to hire new staff using a global EOR provider.
To make sure you are set up for success when first engaging with an Employer of Record, we have supplied a step-by-step process to point you in the right direction below.
- Engage: Make sure your Employer of Record matches your needs and operates in the countries or regions where you intend to hire employees. This can be done through research or by booking a demo request.
- Manage Needs: Lay out your hiring requirements, including the number of employees you’re looking for, specific roles, and the countries or regions where they will work. Consider factors like employment contracts, working hours, and benefits.
- Negotiate: Work alongside your EOR of choice and determine the needs of your agreement. This agreement should outline the scope of services, responsibilities, pricing, and any specific terms or conditions of employment.
- Identify Candidates: Kick off your recruitment process by identifying suitable candidates for the positions you wish to fill. Communicate to your Employer of Record how you want to conduct posting job advertisements, reviewing resumes, interviewing candidates, as well as conducting background checks.
- Offer of Employment: Extend job offers to selected candidates. In many cases, the EOR will assist with creating and delivering employment offers or contracts to candidates or may contact them on your behalf.
- Collect Required Documents: Ensure that selected candidates provide all necessary documentation, including identification, tax-related documents, and any other required information.
- EOR Employment Contract: Your chosen Employer of Record will create and execute employment contracts with the selected candidates on behalf of your company, all while ensuring they operate within compliance standards.
- Payroll Setup: The EOR will set up payroll for the newly hired employees, calculating wages, tax withholdings, and any other deductions required by local laws. Payroll may be processed on a regular schedule, such as monthly or biweekly.
- Enrollment: Depending on your initial setup, your EOR of choice will assist employees with benefits enrollment. This can include, but is not limited to, health insurance, retirement, and other forms of coverage.
- Work Authorization: For international hires, the EOR will assist employees in obtaining the necessary visas and work permits, if required. This includes managing the visa application process.
- Orientation: Your EOR of choice provides onboarding support, which can include both orientation and training. This is accomplished by the EOR operating alongside the training standards your organization holds.
Maintaining Communication
Once the hiring process is complete and you have your desired employees, the next crucial step is to maintain an open line of communication with your chosen Employer of Record, as even though you have gone through every step of logistics with your EOR partner, a relationship with a global Employer of Record is constantly evolving and sudden changes can occur.
If you hire a batch of staff that consists of employees from different countries, you are going to need to ask questions about compliance laws in these regions, holidays and adjustments in wage policy.
Think of an Employer of Record not as a substitute for certain business needs, but more so, as an extension of your business itself.
If you are ever put in a position where you are curious about the administrative duties of your EOR partner and have questions, never be afraid to ask.
Borderless and You
When it comes to EOR partners who operate at the highest standards of compliance, administrative due diligence and efficiency, there is no better option than Borderless.
Borderless can help your organization manage the needs of your dynamic workforce, while also assisting with HR requirements, payroll, onboarding and complex compliance needs.
With Borderless, there are certain advantages provided that will help your business excel in the international market. There are no upfront costs, which can help you focus on your business needs. Additionally, our rapid payroll solutions ensure that any new members of your team, whether full-time or contracted, get paid in a matter of minutes.
If you are still uncertain about whether an EOR service is the right step for you and your business, contact us today. We’ll give you a detailed breakdown of the services we offer and how they can work parallel to your growing enterprise.
Global Employers of Record provides a streamlined, structured and speedy solution to help you and your business focus on the bigger picture, while we look after the needs of the people who make that bigger picture happen.
