In the context of contemporary international management, the concept of managing people across countries is quite complex. Every nation has its own policies and regulations regarding employment of employees, which can be many and quite puzzling. This is where an EOR steps in as the perfect companion for organizations with international expansion goals.
An EOR can be defined as a third-party entity that acts on behalf of another company by hiring employees legally. However, you may wonder as to why a company would engage an EOR? The answer is to save time, save costs, and remain within the law.
The EOR (Employer of Record) takes care of all employment matters such as the payment of wages, taxes, and others as per the laws of the country. This structure allows organizations to expand to new markets in a way that is easier than having to start a subsidiary in that country. Now, let us explain in detail how an EOR operates and the benefits that come with them when a firm is opening up to a new market.
What does an Employer of Record do?
In general, engaging an EOR service is quite uncomplicated yet highly purposeful. Here’s what to expect:
a. Agreement
Your company signs a contract with an EOR provider to get your business started in a particular country.
b. Employment
The EOR recruits and deploys workers lawfully within the locales you prefer. They attend to all legal related documents ranging from contracts to labor laws of the region.
c. Payroll and Benefits
The EOR is responsible for processing wages and paying the salaries of the employees. They also administer any form of remuneration such as medical care, maternity benefits and any other emoluments in compliance with the country’s regulations.
d. Ongoing Compliance
Everything is managed to ensure compliance with the laws on employment, and the EOR is always on the lookout for any changes that may occur.
Advantages of an Employer of Record
a. Speed
A major benefit of engaging an EOR is that companies can establish a new business in foreign locations faster, because they are not required to form a subsidiary.
b. Compliance
Employers mitigate the risk of noncompliance with local laws and regulations since EORs have extensive knowledge of the prevailing labor laws.
c. Cost-effective
In most cases, the use of an EOR is more economical than opening a new business entity in another country.
d. Focus on Core Business
Companies can spend much of their time on aspects that are central to their business instead of struggling with comprehensive administrative work.
Conclusion
The Employer of Record is a very helpful service for any company that is willing to employ workers in a foreign country yet wishes to avoid all the difficulties connected with the difference of legal systems. Employment outsourcing to an EOR is particularly ideal since it helps employers avoid legal pitfalls while they concentrate on core business activities. Regardless of whether you are a small developing company or a big international corporation, it would make sense to think about using an EOR for your overseas expansion strategy.
