What is an employer of record (EOR)?
An employer of record (EOR) is an organization that hires and compensates one or more full-time employees on behalf of another company. EORs enable companies to legally work with employees in a foreign country without setting up a legal entity in that country. An EOR helps you legally and painlessly hire anyone anywhere in the world.
Keep in mind that EOR services are not needed if you hire independent contractors.
What does an EOR do?
The employer of record employs the worker on behalf of the client company, ensures compliance according to the local laws and labor regulations, and runs payroll and other HR or administrative tasks.
EOR services do not include talent searches or vetting but come into play only when the right candidate is selected.
When to use an EOR and why?
It would be best if you considered using an employer of record when:
- Your company is expanding to a global market and wants to hire people on the ground
- You want to ensure compliance with the labor laws and regulations in a foreign country
- You want to reduce compliance and misclassification risks of hiring independent contractors
- You can't perform the research and operations in-house
- You want to hire full-time employees without opening a subsidiary
By using an employer of record, you will:
- save substantial resources for your core business
- reduce compliance risks
- ensure a good onboarding process for each new employee
You can find more on when and why you should use an EOR on our blog.