Your complete guide to expanding globally without the complexity of setting up legal entities. Learn how EOR services can help you hire internationally, save up to 90% on expansion costs, and access global talent in weeks, not months.
Everything you need to know about Employer of Records
To pursue untapped opportunities, companies have an increasing ambition to expand their operations globally
Until recently, the only route popularly taken by companies was to set up legal entities in each country they wish to operate. This meant hours in registration time, humongous cost of incorporating and managing operations, and increased risk.
Many organizations are now turning to Employer of Records (EOR), which takes up the burden of managing all employer related obligations, making the process of global expansion much less complex.
But EOR still remains a confusing topic. Having a clear picture of how this arrangement works will help organizations make confident decisions. Here in this guide, we will help you understand the EOR arrangement.
Instead of spending months and hundreds of thousands setting up a company in every new country, an EOR becomes the legal employer of your overseas staff handling payroll, taxes, compliance, visas, and more. You focus on business growth, not bureaucracy.
Understanding the relationship between Home Company, EOR, and Overseas Employees
EOR onboards employees and serves as the legal Employer of Record through its local entity in countries where you don't have presence.
Provides comprehensive support including insurance, housing, cultural training, and settling-in assistance for your expatriate employees.
Manages all employer obligations including country-compliant payroll, social security contributions, tax withholdings, and statutory benefits.
Companies engage EOR partners in countries where they don't have a local entity
An employer of record is a professional organization which steps in and onboards your employees through its local entity, in countries where you don't have a local entity.
Companies wish to avoid months and sometimes even longer duration for setting up their own legal entities. Especially for businesses experimenting with a new market, making such huge investment might be unnecessary.
Say you want to hire in multiple Asian countries, but only have an entity presence in France. Instead of setting up an entity in each country, you simply share the details of who and where to hire along with remuneration details with the EOR.
An EOR essentially becomes the legal employer of the employees that your company intends to deploy
Onboards employees on your behalf, issues employment contracts and offer letters in compliance with local laws.
Unless restricted by local regulations, sponsors visas and handles immigration, work permits, and registrations.
Runs country-compliant payrolls and manages required social security contributions and statutory benefits.
Some EOR providers also help with settling-in support like cultural training, language classes, and housing assistance.
Comprehensive support for your international expansion
While employees work for you, the EOR service provider is the legal employer, taking responsibility for sponsoring visa applications.
Agreements between EOR, employees, and organization must be carefully drafted to ensure compliance with local authorities.
Your EOR partner might be able to support you with required office space and technical infrastructure.
More than 50% of expatriate employees leave mid-term because of settling-in challenges, resulting in huge cost leakages.
We at Expat Orbit, with our experienced team of global mobility professionals and labor law experts, can assist you with:
A slight loophole in the agreement can cost you millions of dollars. We want to help you avoid any such situation with our comprehensive legal and compliance expertise.
Two common scenarios where EOR makes perfect business sense
Your product is already doing well in the home country. Now you want to access demand and test the product in new geographies.
You want access to a wider pool of talent for different functions at your organization.
See how much you can save by choosing EOR over traditional entity setup
Everything you need to know about Employer of Records
Yes, EOR groups are legal unless there are local restrictions in the country of overseas employment.
Certain countries, such as Singapore, Nigeria, and Egypt, issue quotas on to employers when it comes to hiring foreigners. In such a situation, the EOR partner must possess the required quota in order to hire your home personnel.
Similarly, in the United Kingdom, EOR cannot sponsor work visas, therefore EOR's employment scope would be limited to local recruits.
Apart from such local constraints, engaging an EOR is completely legal. Being a core business function, EORs deploy dedicated legal, payroll, and compliance teams. Hence, hiring through an EOR eliminates a large amount of legal and regulatory concerns when compared to hiring independently.
A well-structured EOR arrangement, supported by robust documentation, may help in reducing the PE risk in the host country. However, there are other parameters that would need to be considered, and hence PE risk cannot be completely mitigated with just an EOR arrangement.
Working with an Employer of Record certainly offers a balanced solution to fulfil your global employment and expansion goals when establishing an entity in a foreign nation is time consuming and expensive.
To prevent co-employment concerns, an EOR steps in as a legal employer and assumes all employer related obligations in accordance with local regulations. By using this employment solution, you can expand into new geographies and hire foreign workers while lowering the chance of having problems with permanent establishment.
In addition to EOR, businesses can also explore smart outsourcing options by engaging an international team with global experience. Expat Orbit's Virtual Employee (VE) support caters to such an area.
Client entity outsources specific tasks, jobs, and functions to Expat Orbit (EO). Being a contract for service, EO handles the execution and recruits employees with the relevant competence, exposure, and experience in close collaboration with the client entity.
Operating remotely, Virtual Employees work exclusively for the client entity and support the execution of assigned activities.
A Professional Employer Organization, or PEO, is a service provider that handles payroll, tax withholding/PAYE, human resources, and other compliance for businesses who prefer to outsource these operations to an external organization.
PEO supports both employees and employers and ensures improved management and higher compliance quality. An Employer of Records (EOR) also provides the aforementioned services to organizations, but an EOR also serves as the legal employer of the employees in those geographies where the home company does not have a local entity or presence.
Perfect balance between expertise, technology and extensive understanding of expatriate sensibilities
Dedicated relationship manager to address any queries
Highly competent consultants to deal with complex compliance challenges
Host of add-on services to eliminate the need of multiple vendors
Minimized internal team effort and assured quality
Presence across all major geographies in Asia, Africa, America, and Europe
Get in touch with our experts to discuss your EOR needs and start your international expansion journey today
