Employer of Record: Everything you need to know

Introduction

Are you expanding your international workforce? Are you facing challenges of how to hire, compensate and retain your global talent with 100% compliance? 

Employer of Record is here for your help.

According to a study by the US Department of Labor around 30 percent of all employers misclassify their global employees.

US Treasury Department was tasked with generating 9 billion dollars more in federal income and employment tax revenue due over the next 10 years from misclassification mistakes.

The companies with international workforce are much more likely to get audited by the US labor authorities.

Will you be next?

What if you could hire globally without exposing yourself to the miss classification risks of having to create your own legal entities or build up expensive infrastructures?

The Employer of Record (EOR) solution helps you employ your foreign workforce of both locals and ex-pats all over the world with 100% compliance and no bureaucratic red tape.

Many businesses have managed to expand worldwide or engage talent with unique skills using EOR solutions. 

In addition to their salaries, a smooth onboarding process provides benefits to the client’s foreign workforce and their dependents.

An Employer of Record is a company that employs workers on behalf of another company.

This arrangement is often used when a company hires worker in a jurisdiction where it does not have a physical presence.

The Employer of Record may also provide other services to the company, such as benefits administration, workers’ compensation, and compliance with employment laws. In some cases, the employer of record may also be responsible for recruiting and hiring workers.

If you are thinking of using an Employer of Record, it is important to understand the basics of this arrangement. This will help you determine if it is the right solution for your company.

Also read: What services do Employer of Record offer?

Also read: How to find the best Employer of Record?

What is an Employer of Record?

An employer of record (EOR) is a company that is contracted by another company to serve as the primary employer for a specific employee or group of employees

The EOR handles all payroll, benefits, and tax-related matters for the employee.

In this case, the EOR contract allows the employee to remain on the payroll of their home company, while also complying with the laws and regulations of the host country.

EOR arrangement can be used by companies that do not have the internal resources to handle payroll benefits and administration.

In this case, the company contracts out these functions to an EOR.

Keep reading to learn everything you need to know about the employer of record arrangement – including when it is used, the benefits and drawbacks, and how to find the right EOR for your company.

The benefits of working with an Employer of Record.

When you work with an employer of record, you gain several advantages.

1. Employer of Record conserves time, money, and resources

Outsourcing the entire process of payroll, employee benefits, and compliance with employment laws. This can save you a great deal of time and money, as you will no longer need to handle these aspects of your business yourself.

This will reduce the cost of setting up offices in other countries dramatically.

This option will also provide you to focus your attention on other ventures to increase your revenue.

2. Employer of Record focuses on Growth and expansion by removing global entry barriers

Another benefit of working with an employer of record is that you can use their services to hire employees in other countries.

can be a great way to expand your business into new markets without having to set up your own payroll and benefits systems in those countries.

EOR helps you in establishing yourself in an unknown territory in no time as your business doesn’t need to be set up physically and omnipresence is possible.

3. EOR helps in achieving diversity and Innovation

You can work with talented individuals in your workforce from diverse back ground which will enhance the innovation due to different ideas generated by them.

4. EOR handles local legal matters and mitigate risks

Finally, working with an EOR can help you protect your business from liability.

If an employee sues you, the EOR will be the one who is held responsible, not your company. This can provide peace of mind and help you avoid costly legal battles.

Thus by appointing an EOR, the business owner doesn’t have to worry about the consequences of tax documentation delay, negligence of any law, etc.