What is an EOR? And how they help organisations.

  • Why should a company use an EOR?

    7 Apr 2022

    An EOR allows organisations to legally employ full-time workers in different countries / legislative regions. The EOR takes on the burden of local legal requirements to ensure the organisation can employ workers in other legislative areas.

    Without an EOR, organisations cannot employ workers outside the region where they are headquartered, with a few exceptions.

    Larger enterprises may choose to open their own local legal entities to employ workers in different places, but this process can be expensive and time-consuming, especially when dealing with multiple countries.

    Therefore, the barriers of cost mean that all but the most resourced organisations are restricted from hiring global workforces.

    Employers of record provide access to global talent to companies of all sizes.

    So what is an EOR?

    An Employer of Record is a third-party company that you can contract to take responsibility for employees not within your country/state. This includes dealing with wages/payroll, taxes, visas, benefits and insurance.

    If you want to hire someone in a place where you do not own a legal entity. and you don’t want to go through the considerable hassle of creating a legal entity within that jurisdiction, you need an EOR.

    Why should a company use an EOR?

    Imagine finding the perfect engineer for your business. Sadly, that engineer lives in Poland, and you’re based in London

    You want to make it work, so you look into your options. You could take on the person as a contractor, but your candidate may not want to work without the security and benefits of full-time employment. So, you look into opening a legal entity to hire your first Polish employee, thinking you may hire a few more Polish engineers and workers.

    Without a dedicated international expansion team and significant resources, you quickly run into issues. International employment law is super complicated, especially if you want to employ people from multiple countries.

    You may have to fly to Poland, not once but several times, to complete all the documentation. It could easily take several months, several thousand pounds, and multiple flights to open your Polish entity.

    Alternatively, you can use an EOR, who help employers hire workers in a variety of countries around the world.

    Do your employees work for you or for the EOR?

    On paper, your employees work for your EOR in their local region. In all meaningful sense, they work for you.

    Essentially your EOR provides outsourced HR services for employees outside your home region. Instead of hiring your own lawyers, accountants, payroll providers, and other professionals, you depend on your EOR to handle these areas on your behalf.

    Your international and out-of-state employees receive their salaries from the EOR, but they work within your company, the same as your domestic employees do.

    When selecting an EOR, you shouldn't limit your considerations to payroll and benefits management, although those factors are important. Consider the experience of your employees as well. The right EOR will ensure that your distributed team members do not feel like second-class citizens but like valued members of your cohesive team.

    Remember to ask about the protection of your IP and invention rights, too. EORs without sufficiently robust partner networks in their covered regions may not have the legal expertise to protect the intellectual property created by your employees. 

    How to get started with an EOR

    If you are reading this you may already be looking to hire an employee in a new country. 

    An EOR, can help you onboard your workers in just a few days.


    Wikipedia: https://en.wikipedia.org/wiki/Professional_employer_organization 


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