Everything you need to know about an Employer of Record

What is an Employer of Record?

An employer of record (EOR) is a global employment entity that helps businesses of all sizes to hire people in other countries legally. An EOR handles global payroll, benefits administration, onboarding of new employees, and compliance with local laws, enabling organizations to focus on other core business activities.

With an EOR, you can easily manage and pay international employees and contractors without opening entities or setting up subsidiaries, which usually takes time and is expensive. The EOR service becomes the legal employer for your international employees in different countries. Partnering with an EOR is a much simpler way for your organization to expand into new markets and hire and pay employees quickly and at an affordable cost. 

What does an employer of record (EOR) do?

An employer of record hires employees in other countries on behalf of your organization. It takes care of every challenge you might face while hiring, onboarding, paying, and managing international employees. 

For instance, if your business is based in Spain and you wish to hire an employee from the United Kingdom, you can easily do so by partnering with an EOR platform. Some of the functions of an employer of record are;

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• Hiring employees from other countries on behalf of your company
• Run and manage payroll for employees
• Drafting and maintaining locally compliant employment contracts
• Tax filing and compliance with tax regulations
• Offering and administering comprehensive benefits packages for your global employees
• Ensuring compliance with the local employment laws of different countries.

What are the benefits of an Employer of Record?

An Employer of Record platform offers numerous benefits to organizations. Primarily, an employer of record is a hassle-free solution for global companies to hire the perfect talent and manage their globally-distributed teams without worrying about compliance with complex employment laws. Businesses can spend time growing while an EOR takes care of the rest.

Other benefits of an employer of record include

• Ensuring accurate and fast payments to employees anywhere in the world.
• Enabling a seamless and compliant hiring process
• Managing employees’ compensation and other benefits
• Helps organizations onboard talent quickly
• Save cost compared to setting up a local entity or a subsidiary

While dealing with multi-country payroll and administering benefits is a strenuous task, an Employer of record solves this for businesses by enabling a seamless payroll management process and handling every other employment-related task seamlessly. 

Do I need an Employer of Record?

You need an employer of record if you have yet to establish an established subsidiary or a local entity in any new market you plan to enter. An EOR ensures that you fully comply with the local employment laws and regulations in any country of employment. 

Here are other reasons why you may need an Employer of Record

Tap new markets

Entering new markets is expensive, especially when setting up subsidiaries or partnering with a local entity. However, if you wish to explore and tap new markets hassle-free, partnering with an EOR is the way to go. 

An EOR allows you to compliantly test out a new market without the commitment of entity establishment. Through an EOR, you can tap new markets compliantly without renting an office space or hiring an HR team. You can run business operations, hire talent, generate new revenue streams, and reach new customers seamlessly. You can get familiar with different emerging markets and the countries we cover in our Global Country Guide.

Avoid misclassification risk

Other than hiring employees, engaging independent contractors is an efficient and cost-effective alternative for employers. However, when hiring contractors, complying with clauses, schedules, and deliverables are essential to creating an equitable work environment. 

The bigger an organization gets, the chances of misclassifying contractors as employees increase. Therefore, it is crucial to avoid misclassification as it potentially results in expensive fines, penalties, and even lawsuits. An EOR is an efficient way to hire contractors without worrying about misclassification risk. 

What are the things to look out for in an Employer of Record (EOR) platform?

To protect your organization, here are some considerations to keep in mind when looking out for an EOR platform. 

• Transparency in the EOR platform’s pricing
• The countries the EOR platform covers
• Customer support and responsiveness
• Years of experience and third-party reviews
• The service offerings of the EOR service provider.

Go global with an Employer of Record

When expanding globally, you will likely face unique challenges and complexities that require professional and experienced support. With Skuad as your employer of record partner, you will save time and money while enjoying high-level support for your global workforce. 

Skuad enables organizations to hire full-time employees and contractors in over 160 countries without setting up subsidiaries or legal entities. Skuad’s platform also helps organizations onboard talent, manage payroll, and ensure compliance with country-specific employment laws and tax regulations. 

In addition, we handle your entire employment lifecycle so that you can scale your business operations compliantly, with reduced efforts and a top-notch HR administration.

To know more about Skuad, book a demo today.

FAQs

What does EOR mean?

EOR is an abbreviation for Employer of Record. It is usually used interchangeably with an employer of record.

Is an EOR the same as a PEO?

The short answer is no. The primary difference between an EOR and a Professional Employer Organization (PEO) is that an EOR acts as the legal employer on behalf of organizations. At the same time, a PEO enters a co-employment agreement with the organization.

The EOR handles all HR-related activities, such as onboarding, payroll management, hiring, and compliance for the organization, while the PEO simply provides HR services the organization requires.

You can read more about the differences between an EOR and a PEO here.

How much does an EOR cost?

It is common practice for EOR platforms to have multiple pricing models. Some EOR providers use percentage pricing, while others use a flat fee structure.

Skuad provides a flat fee structure that starts at $199 per month for full-time employees. There are no hidden charges or extra fees. Check out our pricing page to learn more about Skuad’s affordable pricing and the multiple payment plans.

Is it legal to hire employees with an EOR?

Yes, it is legal to hire employees through an employer of record. However, ensuring that the EOR platform has sufficient experience and owns local entities in different countries is essential.