The rapid transition to remote work has made it easier than ever to hire remote workers from anywhere in the world. But whether you’re hiring a global team or expanding into new markets, your employment contracts must be fully compliant with local labor laws — or you could face hefty fines and even jail time.
Enter Employers of Record (EORs) — organizations that assist companies with global hiring processes — which handle everything from payroll processing to employee benefits. Put simply, EORs take the hassle out of hiring global talent.
With so many EORs to choose from, how do you pick the best one to partner with for your company? We’ll walk you through seven things to look for when selecting a remote EOR.
How Do Remote EOR Business Models Work?
When you work with a remote EOR business, the EOR becomes the legal employer for your international staff. This differentiates the remote EOR model from that of a Professional Employer Organization (PEO). Let’s go over exactly what that means for your business in a legal sense, as well as the benefits of working with an EOR versus setting up local entities in the countries where your company is operating.
Do Your Employees Work for You or for the EOR?
In an everyday sense, your employees work for you when you use an EOR. But from a legal standpoint your employees work for the EOR. This is a beneficial arrangement for your company since the remote EOR is the one with legal liability in each country where you hire, rather than your business. That puts you in a lower-risk situation versus working with a PEO, where you share risk as the PEO acts as a co-employer, not the sole employer.
Some common legal responsibilities a remote EOR takes on include:
- Payroll administration
- Compliance with local labor laws
- Work permits and visas
- Tax withholding and reporting
- Managing employee relations
- Onboarding and offboarding
- Relevant insurance requirements
- Documentation
For example, say you want to hire an employee in Japan. A remote EOR can help you navigate Japan’s cultural norms of lifetime employment, and summer and winter bonuses. Your EOR can also ensure you are complying with legal requirements for wages, paid leave, sick leave, parental leave, taxation, and termination.
Why Should You Use an EOR Instead of Setting up a Local Entity?
Setting up a local entity in another country requires creating a subsidiary, branch office, or representative office. While setting up local entities can spare your business the fees you would pay for a remote EOR, each local entity requires significant time, expense, and work to create. You must be an expert in the laws of every region where you want to set up a new entity, and you assume full liability in each country.
By contrast, an EOR removes the burden of incorporation in each country, assumes legal liability, and operates with full expertise in the laws of each region. Ultimately, a remote EOR model can offer significant cost savings compared to setting up local entities, more than offsetting the fees. It can also help you expand your business more rapidly.
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Top 7 Considerations When Choosing a Remote EOR
1. They Offer the Remote Services Your Business Needs
One of the first things you need to decide is whether you need an EOR or a PEO. A PEO acts as a co-employer and handles human resources on your behalf, whereas an EOR acts as the legal employer for your employees in their countries of residence.
The most significant difference between them is that a PEO requires you to have a legal entity in the country where you’re hiring, and an EOR doesn’t. So if you don’t have a local entity and don’t plan on setting one up, an EOR service provider will probably be the fastest and most affordable option.
Additionally, if you partner with a PEO you’ll be fully responsible for ensuring legal compliance, whereas a remote EOR takes care of compliance issues on your behalf.
When comparing EOR services, ask yourself the following questions:
- Does the EOR provide accurate reporting measures?
- Are there reporting dashboards that detail the number, type, and level of employees in each country?
- How does the platform manage benefits?
- Does it offer health insurance?
- How efficient is its record keeping of employee data?
Related Post: Questions to Ask Before Choosing a Remote EOR
2. They Ensure Global Coverage and Compliance
The whole point of global employment is that it’s, well, global. It doesn’t matter where a candidate lives — if they’re the best person for the job, you’ll want to hire them regardless.
Perhaps today you’re contracting a software engineer from Cameroon — but who knows where your next hire will come from. That’s why it’s best to look for an EOR with extensive global coverage that can help you hire the best talent.
Additionally, you’ll need to make sure your remote EOR is fully compliant with local employment laws in every country of operation to minimize any compliance risks or liabilities. Worker misclassification can come with costly penalties, so look for an EOR with a team of legal experts who have in-depth knowledge of local laws and stay on top of changing regulations.
3. They Provide Reliable Customer Service
When managing a global workforce, you’ll want a customer support service that’s available when you need them and can provide answers in a timely manner.
RemoFirst provides clients with a dedicated account manager and offers 24-hour customer service support so you can receive the help you need, when you need it. For example, say an overseas employee has an urgent payroll discrepancy to resolve, and it is 2 a.m. in your location. A remote EOR that offers round-the-clock support can handle this for you immediately.
4. They Prioritize Transparency
When hiring multiple employees across different countries, the costs can quickly add up, so it’s important to know what your options are to make your new hires as cost-effective as possible.
With some EORs, you might encounter hidden costs that are not clearly outlined on their pricing pages. This could include management fees, payroll processing fees, tax withholding and reporting fees, employee benefits administration costs, legal and compliance advisory fees, onboarding and offboarding charges, currency conversion fees, technology platform access fees, insurance premiums (if applicable), or custom service and support charges. Needless to say, being hit with any of these unexpected charges can be a nasty surprise that can upend your budget.
Choosing an EOR that provides clear and transparent pricing, billing, and reporting structures can help you more effectively track and monitor your costs and expenses.
5. They Have Robust Security and Compliant Data Protection Policies
Every country sets its own individual regulations for data protection. It’s easy to imagine what a challenge it would be to navigate dozens of regulatory agencies and their corresponding data protection laws if you plan to hire in dozens of countries. Your remote EOR can ensure that your data protection policies are up to the regulatory compliance standards set by each regulatory agency in every country.
When choosing a remote EOR, be sure to select an organization with Service Organization Control Type 2 (SOC 2) compliance. This ensures that the EOR will securely manage your data to protect the interests of your organization. You’ll also want to check to see if the EOR undergoes penetration testing on a yearly basis to ensure its security systems are robust.
6. They Offer Flexible and Scalable Solutions
Your business is always changing and growing, so you’ll need an EOR that offers flexible solutions that can support your global expansion and scale with your business.
For instance, you might need to hire new employees right now, but in the future, you might want to work with independent contractors. Look for a remote EOR that offers options that cover both.
7. Their Pricing Fits Your Budget
Last but certainly not least, you’ll need to think about your bottom line and choose the most cost-effective EOR. Shop around and compare pricing and services to find the solution that best fits your needs and budget.
RemoFirst has pricing options that work for budgets of all sizes. Unlike alternatives such as Oyster (which starts at $499 per month) and Deel (which start at $599 per month), RemoFirst’s remote EOR offers a comprehensive suite of services — including global payroll management, compliance expertise, and personalized support — starting at just $199/per month, per employee. That’s less than half the cost you’d pay elsewhere.
When to Start Looking for a Remote EOR
If your company is thinking about making the leap into international hiring, the time to start exploring a remote EOR solution is now — before you make your first global hire.
Venturing into the international talent pool opens up a world of opportunity, allowing you to access diverse skills and perspectives. However, it also introduces complexities related to compliance, payroll, and benefits that vary by country.
Partnering with a remote EOR such as RemoFirst streamlines the hiring process by taking on the complex legal responsibilities associated with international employment. This frees you up to concentrate on onboarding your new team members and growing your business.
Make Your Global Dream Team a Reality with RemoFirst
If you’re looking for a fast, reliable, and cost-effective EOR solution to help you hire international employees, book a demo with RemoFirst.
With same-day employee onboarding in over 180 countries starting from $199 per person per month, we can help you hire top talent anywhere in the world.
Editor's note: article updated on April 3, 2024.
