What is an Employer of Record?

In the current landscape of modern business, finding and retaining top talent is crucial for success. Yet, the traditional hiring process can be extremely complex and time-consuming for companies, often leading to challenges in securing the right people.

Enter the Employer of Record (EOR).

Q. So, what's an EOR?

A. An EOR is a third-party entity (like Horizons - shameless plug!) that handles the administrative tasks of employing someone in a foreign country. This usually happens when an employer wants to bring a person on board but doesn't have an office/presence (legal entity) in the region where the employee lives.

The EOR will deal with the payroll, tax, and compliance for the employer, while the actual work is still performed by their new overseas employee.

If you work in Human Resources/Talent Acquisition you'll have noticed EORs gaining in popularity, especially since the pandemic & the change in our working patterns since the digital transformation revolution.

With people wanting a choice to work from anywhere these days it means companies using an EOR can confidently look for top talent and broaden their search internationally.

Q. What are the benefits

For Employers:

1. Access to Top Talent: As mentioned above partnering with an EOR opens doors to a broader pool of skilled professionals. Employ anyone anywhere.
2. Compliance and Risk Management: Navigating employment laws and regulations can be daunting, especially in other countries. EORs assume responsibility for compliance with local labour laws, tax regulations, and employment standards, mitigating legal risks for the hiring company. (*For example, if your company is headquartered in France and you want to employ someone amazing from South Africa but you don't have a clue how to do it, your EOR provider will deal with all the tricky HR & payroll etc so you don't have to.)
3. Flexibility and Scalability: Whether a company is expanding into new markets or experiencing fluctuating staffing needs, EORs offer flexibility and scalability. You can easily & quickly onboard people knowing all administrative tasks are dealt with, allowing your company to focus on other core operations.
4. Cost Efficiency: Using an EOR eliminates the need for establishing legal entities in different jurisdictions, saving time and resources.

For Employees:

1. Quick and Hassle-Free Onboarding: EORs streamline the onboarding process, ensuring a smooth transition for employees. From contract management to payroll setup, employees experience minimal delays, enabling them to focus on their roles from day one... i.e. they get paid as normal.
2. Access to Comprehensive Benefits: EORs provide comprehensive benefits packages, including healthcare, retirement plans, and other perks. This level of support enhances the overall employment experience and contributes to employee satisfaction and retention.
3. Career Mobility: Working with an EOR can offer employees opportunities for career mobility. As EORs operate in multiple locations and industries, employees may have the chance to explore diverse roles and environments, advancing their careers with greater flexibility. Thanks also to Zoom, Slack and Teams calls!
4. Peace of Mind: Employees can enjoy peace of mind knowing their employment status is secure and compliant with local regulations. EORs handle administrative tasks, such as tax withholdings and compliance reporting, relieving employees of administrative burdens.

Employer of Record (EOR) services handle both onboarding and offboarding processes for employees on behalf of client companies. Here's how they typically manage each:

Onboarding:

Documentation and Compliance - EORs ensure the necessary paperwork, including tax forms, employment contracts, and other legal documents is completed accurately and compliant with local regulations.

Orientation and Training: They may facilitate orientation sessions to familiarize new hires with company policies, culture, and job responsibilities. Training programs may also be organized to help employees quickly become productive in their roles

Benefits Enrollment: EORs often manage benefits administration, assisting employees in enrolling in health insurance, retirement plans, and other employee benefits offered by the client company.

Payroll Setup: EORs set up employees in their payroll systems, ensuring that accurate payment information is collected and processed for each individual.

Offboarding:

Exit Procedures - EORs manage the administrative tasks associated with an employee leaving the company. This includes collecting company property, deactivating access to systems and facilities, and conducting exit interviews if required.

Payments -They ensure that all final payments, including wages, accrued vacation time, and any other benefits owed, are processed accurately and in compliance with employment laws.

EORs act as intermediaries between the client company and its employees, ensuring smooth transitions while adhering to legal requirements and best practices in human resources management.

A few tips when looking for the right EOR partner:

• Look at G2 references - they're independent and can give buyers confidence before purchasing.
• Look at Glassdoor - like most firms in the SAAS space, Glassdoor allows people to review company cultures. Look at what employees think of the places they work at.
• Coverage - Some companies have more global coverage than others. It's not a deal breaker btw but it does demonstrate an EOR firm's long-term intentions. Some offer cover in 180+ countries.
• Price - Let's be honest, when it comes to decisions you're going to have to share the costs with your CFO/CEO. However, don't always go for just a low price. Remember, it's a person's Employment Contract you're handling too so make sure you pick an EOR provider with good prices and great service. The latter is more important TBH.
• Service - Don't be fooled by "we can onboard in 24 hours". Yes, there are certain locations where this can be achieved but if a Python Developer lives in the outer realms of Earth chances are it might take a little longer for contracts to get signed... just saying! ;-)
• People - They always say people buy from people, well, in this space that's so true so try to work with a company that puts simplistic communications first.

Conclusion:

Using an Employer of Record brings loads of benefits to the company and the employee. From simplifying hiring and ensuring compliance to providing access to top talent and comprehensive benefits, EORs now play a pivotal role in driving organizational success and enhancing the employment experience for all parties involved.

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