Global employer of record (EOR) services

1. What is a Global Employer of Record (EOR)?

A Global Employer of Record (EOR) is a third-party company that acts as the legal employer for your international employees. This means the EOR handles all the administrative and legal responsibilities associated with employing staff abroad, such as payroll, taxes, benefits, and contracts. You, the client company, maintain managerial control over your employees’ day-to-day work and tasks.

2. What are the benefits of using a Global EOR service?

There are many advantages to using a Global EOR service, including:

• Reduced costs and complexity: Avoid the time and expense of setting up and managing local subsidiaries in each country you operate in.
• Faster market entry: Quickly and easily hire and onboard talent in new international markets without the delays associated with establishing a legal entity.
• Improved compliance: The EOR ensures you comply with all relevant local labor laws, tax regulations, and social security contributions, minimizing legal risks.
• Peace of mind: Focus on your core business activities and core competencies while the EOR handles the complexities of international employment.
• Access to a wider talent pool: Recruit top talent from around the world without geographical limitations.

3. What types of companies use global employer of record services?

Companies of all sizes can benefit from using a Global EOR service. However, it’s particularly advantageous for:

• Startups and small businesses: They can expand their global reach without the initial investment and complexities of setting up foreign entities.
• Companies with a remote workforce: Easily manage and comply with regulations for geographically dispersed employees.
• Businesses entering new markets: Simplify and expedite international expansion efforts.
• Organizations with limited HR resources: Gain access to expertise in international employment law and compliance.

4. Are there any drawbacks to using a Global EOR?

While EOR services offer significant benefits, there are a few potential drawbacks to consider:

• Loss of employer branding: Employees might be less familiar with your company since the EOR acts as the legal employer.
• Less control over certain HR processes: The EOR handles some HR functions, so you may have less direct control over these aspects.
• Cost considerations: EOR services typically have fees associated with them. However, these can often be offset by the cost savings from not setting up foreign entities.

5. How does a Global EOR ensure compliance with local labor laws?

Global EOR providers stay up-to-date on complex and constantly evolving international employment regulations. They leverage their expertise and established presence in various countries to ensure your international workforce adheres to local labor laws. Here’s how they achieve compliance:

• Understanding local regulations: The EOR has a deep understanding of employment laws, tax regulations, and social security requirements in each country they operate in.
• Contractual agreements: They establish clear contractual agreements outlining employee rights and responsibilities, adhering to local legal frameworks.
• Payroll and tax management: The EOR accurately calculates and withholds taxes and social security contributions as mandated by local regulations.
• Ongoing monitoring: They stay informed about changes in employment laws and implement necessary adjustments to maintain compliance.

6. What are the risks of non-compliance with international employment laws?

Failing to comply with international employment laws can lead to severe consequences, including:

• Financial penalties: Significant fines and back taxes can be imposed by local authorities.
• Legal issues: Lawsuits from employees or government entities can be costly and time-consuming.
• Reputational damage: Negative publicity and a damaged employer brand can harm your ability to attract and retain talent.
• Operational disruptions: Non-compliance may lead to work stoppages or permit revocations, impacting your business operations.
• Visa and work permit issues: Failure to comply can jeopardize your international employees’ work authorization.

7. Who is liable for legal issues when using a Global EOR?

The extent of legal liability in an EOR arrangement can vary depending on the specific contract and local regulations. However, generally:

• The EOR assumes legal responsibility for administrative tasks: The EOR is responsible for ensuring compliance with payroll taxes, social security contributions, and employment contracts they manage.
• The client company retains liability for core employment practices: You remain responsible for managerial decisions, workplace safety, and employee relations.

It’s crucial to carefully review the EOR service agreement to understand the specific allocation of liabilities for various situations.

8. How does a Global EOR handle tax and social security contributions?

Global EOR providers manage tax and social security contributions for your international employees efficiently and accurately. Here’s what they typically do:

• Tax registration: The EOR registers your company for payroll taxes in each country where you have employees.
• Tax withholding and remittance: They withhold taxes from your employees’ salaries and remit them to the relevant tax authorities.
• Social security contributions: They calculate and pay social security contributions as required by local regulations.
• Tax reporting: The EOR handles tax reporting to ensure you meet all filing deadlines and requirements.

9. What services are typically included in a Global EOR solution?

The exact services offered by a Global EOR provider can vary depending on the company, but most comprehensive solutions will include:

• Employment contract management: The EOR drafts, negotiates, and manages employment contracts for your international employees, ensuring compliance with local regulations.
• Payroll processing: The EOR handles payroll processing for your international employees, including calculating salaries, withholding taxes and social security contributions, and making timely payments in the local currency directly to their bank accounts.
• Tax and social security compliance: The EOR ensures you comply with all relevant tax and social security requirements in each country where you have employees.
• Benefits administration: Some EOR providers may offer assistance with setting up and managing employee benefits plans, such as health insurance or retirement savings.
• Ongoing legal and compliance support: The EOR provides ongoing support to ensure your international employment practices remain compliant with evolving local laws and regulations.

10. Does a Global EOR offer support with employment contracts and terminations?

Yes, employment contract management is a core service offered by most Global EOR providers. They can draft compliant contracts, handle negotiations, and ensure proper termination procedures are followed according to local regulations. This helps minimize legal risks associated with international employment.