The distributed work model has created opportunities for talent around the world. Given the growing attractiveness of global remote teams, more organizations now adopt a flexible work model. The main advantage being that distributed work enables companies to access more qualified talent from anywhere in the world.
But how do you actually grow your team around the world if you only have a business entity established in your home country? There are many logistical challenges that come with hiring global talent, but they can be easily overcome by working with an Employer of Record (EOR) to grow your team across multiple countries.
What is an Employer of Record (EOR)?
An Employer of Record (EOR) helps companies expand internationally by hiring and paying employees on behalf of their company. EORs assume the responsibility of formal employment tasks, including onboarding processes and compliance documentation. Simply put, working with an EOR allows companies to legally and efficiently engage with workers in other countries without having to set up a local entity or risk violating local employment laws. EORs can help you customize the employment contract to reflect important considerations for you and your business — for example, you can ensure your intellectual property is fully protected through robust IP protections in your employment contract and pay all your global employees in one go.
When working with an EOR, the employer is still in charge of the employee's day-to-day operations (such as daily tasks, meetings, performance reviews, and termination decisions), while the EOR handles the administrative burden of managing a foreign workforce. This model has become more popular with the rise of remote work. These are some services your EOR may provide: Onboarding, Payroll Management, International Benefits, Legal Compliance, Equipment Provisioning.
Who Can Use the Services of an Employer of Record (EOR)?
Before finding the right Employer of Record (EOR), you should make sure that an EOR is what your business needs in the first place. Here are some scenarios that may help you decide which one is right for you:
• Your company already operates in multiple locations with different tax laws, but it can be difficult to stay up to date on HR requirements in each country. You might benefit from outsourcing your HR functions to a PEO, to streamline operations in states/countries where they have a legal entity.
• If you want to employ workers in countries where your company is not yet established, and EOR is your best bet. They can provide the infrastructure needed to start hiring people in other countries, acting as the employer in that location until you are ready to establish a legal entity there.
• You're a small, but growing company and want a cost-effective way to offer employee benefits in your home country. A PEO will help small and medium-sized businesses provide the same attractive employee benefits packages offered by larger companies.
• If you are a start-up or a gig economy company with global freelance workers and/or international contractors, you might want to consider an EOR solution. This way, you can quickly add or remove employees from the payroll without having to go through the long term contract process of working with a PEO.
Benefits of Scaling with an Employer of Record (EOR)
Once you’re ready to scale your business with the help of an EOR, you’ll see many benefits aside from the ability to expand your team globally. Some of these include:
• Reduced administrative costs: Working with an Employer of Record (EOR) means that they will deal with foreign employment and tax laws and regulations on your behalf. This means you don’t have to spend hours figuring out how each European country’s employment laws differ from yours — just sit back and let them handle all the legal and tax paperwork in each country.
• Flexibility: An EOR also enables your business to create short-term teams when testing foreign markets. You won’t need to open separate companies or subsidiaries, and can always choose to easily exit a market if you’re not seeing results.
• Reduced risk: How do you make sure that every employee in every different country has the correct taxes taken out of their payroll and that they are all classified correctly based on local laws? With an EOR, you don’t have to worry about any risks with this since this is their area of expertise and they will take care of it for you.
• Low cost of hiring new employees: When working with tight budget, it can become challenging to hire skilled employees in new countries where you don’t have a presence — onboarding, payroll systems, etc, can get expensive quickly. An EOR would already have access to most foreign markets, so you could simply add your new hire to your existing EOR platform.
• Taking advantage of distributed workforces: Many business leaders are now experimenting with distributed workforces, and your team would be at the forefront of this movement. Employees working in a distributed capacity tend to be more productive, especially when working with EORs who show them how to work effectively across distributed time zones.
How to Scale Your Company with an Employer of Record (EOR)
An EOR would typically hire workers in a foreign country for you. For instance, American companies can use EOR services to employ skilled workers based in India.
So, how do you do it?
The Employer of Record (EOR) you choose will make it feel as though you have a dedicated HR, legal, and tax team in the foreign countries where you hire employees. They will perform various duties related to local labor laws compliance, local tax compliance, global payroll distribution (in foreign currencies), and more. The following are some of the responsibilities that you would subcontract to an EOR:
• Legally hiring and onboarding global workers as full-time employees or contractors.
• Handling the administration of benefits to a global workforce.
• Creating and managing payroll systems to manage distributed global workers.
Simply put, using an Employer of Record (EOR) will allow you to legally and efficiently engage with workers in other countries without having to set up multiple entities or risk violating any local employment laws. EORs will help you customize the employment contract to reflect important considerations for you and your business — for example, you can ensure your intellectual property is fully protected through IP protections in your employment contract.
Talk to the Experts
With the rise of global remote work, there are many opportunities to hire talent from all over the world. Whether you want to hire regionally or globally, an employer of record allows your organization to become more agile and scale effortlessly.
If you are ready to start growing a globally distributed team in more than 180 countries, RemoFirst offers a comprehensive EOR service starting at $199 per employee per month (and $0 for contractors). We offer the best price on the market — if you find a better price, we will match it! If you’d like to know more, you can request a demo with RemoFirst today and start hiring tomorrow.
