What is an Employer of Record?
Companies around the world opt for Employer of Record services whenever they want to enter a new market. However, many corporations don’t take advantage of this solution to improve their results. This is mainly because they don’t have enough knowledge about what an EOR does and which services does it offer.
In this article, you’re going to learn the Employer of record definition as well as the benefits of using this kind of service. In addition, you can gain more insight into how a service provider can boost your operations. Let’s observe:
- What is an Employer of Record?
- What is the definition of Employer of Record?
- Which kind of activities does an EOR do?
- Why should a company use an EOR?
- What benefits can you get with an EOR?
- Are there any limitations of using an EOR?
- How can you choose the best EOR for your business?
- What is the difference between an EOR and other service providers?
- How can EOR Middle East help you with EOR services?
What is an Employer of Record?
Entering a new market or setting up an entity in a new country can be daunting for companies. This is because they need to focus on complying with local employment and tax law, as well as with any other additional regulation regarding businesses.
In this regard, having a local partner that could help you navigate the complexities of establishing a company in a new place and managing your workforce can be of great help.
For this reason, many corporations decide to look for external help and they choose an Employer of Record, also known as EOR.
Nevertheless, delegating some or all of your business tasks to a third party may also be overwhelming for organizations that aren’t used to this kind of arrangement.
So, the best thing you can do is research about an EOR and how it can improve your results in this new destination for your business.
What is the definition of Employer of Record?
An Employer of Record is a service provider that focuses on handling several tasks on behalf of its client. Some of the most relevant functions is hiring and paying the company’s workforce as well as taking the employer’s responsibility.
In other words, the EOR becomes the employer of the client’s employees, and handles all the formal employment tasks. Many corporations opt for partnering with an EOR when they’re planning entering a new market, whether a new country or a new state.
This is because the EOR can efficiently engage with the workers providing local knowledge and expertise. In addition, when the company opts for EOR services, it doesn’t have to set up a local entity, so it’s a great way for testing the market before making a huge move.
Here we have some other terms that companies use to refer to an Employer of Record:
- Local partner
- Local employer
- International PEO
Whenever you hear these terms, you know that they’re referring to the Employer of record definition.
Which kind of activities does an EOR do?
Since the Employer of Record is the intermediary between an employer and its employees, it’s crucial to know how what does it do. The employer-employee relationship may be complicated, but fortunately, an EOR can prevent and solve any issue that may arise.
The EOR basically carries out administrative tasks such as dealing with requirements of immigration, processing the payroll, and managing employment.
However, it’s important to point out that an EOR doesn’t participate in operational activities or day-to-day tasks. So, as a client, you remain total operational control of your workforce while the EOR handles the administrative load.
Therefore, the EOR will be the registered and legal employer for your employees, but they won’t supervise or manage their tasks and responsibilities. It’s essential to point out this because many companies tend to confuse and think that the EOR will handle your business entirely.
What tasks does an EOR do?
As the original employer, you can make all the decisions for your business, while the EOR carries out administrative tasks and legal functions on your behalf.
Some of the main tasks of an EOR are the following:
- Immigration: the EOR handles and gathers all the necessary documentation for processing the visas and work permits for your employees.
- Payroll: with the EOR you get a local registered entity that can process you payroll compliantly.
- Compliance: the EOR focuses on complying with local labor laws and tax laws
- Hiring and recruitment: the EOR searches, finds and manages the workforce for the client
- Additional services: the EOR can carry out services such as advising on notice periods, HR management, and more.
Why should a company use an Employer of Record?
There are many reasons why a company can benefit from an EOR. Here we have some of the best motives to partner with an EOR:
- Overcome regulatory hassles
- Get a cost-effective solution for hiring
- Process the work permits and visas quickly and easily in accordance with local rules
- Get access to more HR resources
- To make foreign employment simpler
- To decrease the risk of non-compliance with local tax, labor and employment rules
An EOR is a solution that’s easily available for companies. Here in EOR Middle East we can provide the best service for your business so you can focus on your core activities.
What benefits can you get with an EOR?
Using Employer of Record services can help you boost your operations in your new location. You can receive several benefits that can make a big difference when it comes to entering a new market.
Some of the best benefits you get with an EOR are the following:
No need to set up a local entity
Setting up an entity in the new location can be a decision that you want to make but perhaps isn’t a smart one. If you still don’t know how the audience is going to receive your products or services, or if you don’t have enough resources to afford a costly incorporation process, it’s best to opt for an EOR.
With an EOR you don’t need to waste time on paperwork and formalities, since the service provider will take care of everything.
Therefore, using an EOR can benefit you in terms of helping you save money by not incorporating a local company.
Compliance with immigration rules
Handling with immigration procedures can be challenging, particularly when it comes to a new country that has different rules than from your home country. In addition, you also have to take into account that regulations are constantly changing. So, if you don’t have enough legal experts to keep up with this, you’re going to face challenges.
For this reason, it’s best to count on with an EOR. Some of the best benefits you can get are the following:
- No need to worry about local rules and immigration laws
- You don’t need to gather, translate and attest documents for your employees since the EOR will do it.
- There’s no non-compliance risk
- Get your staff working legally in the new location without troubles
- Handle work permits and visas without complications
Assistance with the local payroll
The EOR can run your local payroll efficiently and with complete accuracy. Keep in mind that once you have an international workforce you must make the payments regarding the local rules. In addition, taxes play a huge role in your payroll and you don’t want to make any mistakes in this matter.
So, one of the benefits you get with an EOR is that you won’t have to waste time on calculations, deductions, benefits and more. The EOR will handle everything on your behalf ensuring a timely deliverance and accurate payments.
Are there any limitations of using an EOR?
There are other aspects that companies should consider before partnering with an EOR. There could be some limitations when working with a service provider, but this depends on each company’s particular needs. With an outstanding third-party like EOR Middle East you won’t have to worry about these.
- Larger workforce: when a company has more than 10 employees in a location, or is planning a major expansion, maybe it will prefer establishing its own entity. In this case, the EOR can be the local partner in terms on handling hiring and payroll, or any other additional task.
- Payroll outsourcing: delegating the payroll administration may be difficult for some companies. This is because outsourcing may be new concept for them. However, it’s important to note that the EOR only carries out administrative processes.
How can you choose the best Employer of Record for your business?
One of the most important aspects of working with an Employer of Record is knowing how to choose the best partner. You need to ask several questions to the service provider and evaluate if it could be the perfect partner for your business.
Some of the best tips for selecting an EOR are the following:
- Does the EOR has local offices in your host country?
- Will the EOR provide an employment contract to candidates that align with your best interests?
- Does the EOR has any experience working with similar companies in your industry?
- Does the EOR has the capability to assess and understand your requirements?
- What is the EOR’s trajectory and experience?
- Does the company provide the EOR service as a main or as a sideline service?
- Can the EOR customize its service to adapt it to your needs?
- What are its prices and fees? Are there any hidden fees?
- Which resources does the EOR offer?
By learning more about the EOR and its record history you can make a wise decision.
What is the difference between an EOR and other service providers?
Many companies tend to confuse the EOR with other service providers. Here we have the following two of the most common third-parties that get confused as EORs:
- EOR vs. GEO: a GEO is a Global Employer of Record. It’s a service provider that has many EORs in several countries to employ locally. A GEO is best for multinational businesses that want to set up a presence in several places, however, it could be difficult since you won’t be dealing with the EOR directly, but with the GEO.
- EOR vs. PEO: a PEO is a Professional Employment Organization. It’s a company that offers a similar service but is most commonly used for companies that already have a local presence and need assistance with their administrative tasks only. This is because the PEO doesn’t assume liabilities and doesn’t take full legal employment tasks.
As you can see, there are some cases in which you may need an EOR, and in which a PEO can be better. For this reason, it’s better to understand your needs and requirements before you decide to partner with a service provider. Here in EOR Middle East we can help you solve your inquiries regarding which provider can be the best for you.
How can EOR Middle East help you with EOR services?
Here in EOR Middle East we want to provide you with the best and most efficient business service to solve your particular needs. Our wide network of companies can offer you unrivaled expertise on several areas to boost your business.
If you’re looking for an EOR to improve your operations in the UAE or in the Middle East, you can contact us. We will provide a tailored solution aimed to help you achieve your business goals and relieve your administrative workload.
Would you like to contact us to know more about Employer of Record Services? Call us at 0097143316688 or send an email to [email protected] and you’ll talk to one of our representatives that will gladly answer all of your questions.