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EORs are especially noteworthy because hiring international talent is more common than it has ever been.

With the support of an EOR, companies can have quick access to new markets with minimal overhead.

This way, they make global hiring as simple as hiring in their home country.

How Does an Employer of Record Work?

An EOR essentially becomes the legal employer for your international employees.

It allows companies to employ workers in foreign markets without setting up a physical or legal presence there.

This legal arrangement allows companies to scale up quickly without being forced to deal with each countrys legal requirements.

What Services Does an EOR Provide?

An Employer of Record provides a suite of essential services designed to simplify and legally support international hiring.

Below is a closer look at 6 key services an EOR typically offers.

Payroll Management

An EOR handles the entire payroll process for your international employees.

It manages paying their salaries, tax deductions and even benefits processing.

An EOR helps your business comply with local employment laws.

Employee Contracts

Drafting and executing employee contracts that meet local legal standards is another key function of an EOR.

This protects the employee and safeguards your business from contract-related legal risks.

Onboarding and Offboarding

An EOR manages all aspects of onboarding and offboarding employees.

It takes care of the necessary paperwork, legal documentation, and initial training on company policies.

An EOR sets up and manages these benefits.

It makes sure that employees have access to the packages expected in their country.

What Are the Types of Employer of Record?

Lets discuss these two options in detail.

Fully owned EORs, from the perspective of a business owner, are still a third party.

This setup allows for more consistent control over employee experience and ensure predictable costs.

This drastically decreases the need to share data outside their system and simplifies compliance across borders.

When Should You Use an EOR?

Here well present 3 key situations when an EOR will be particularly useful to your business.

With an EOR, companies can legally employ local talent without the need to set up a formal entity.

This drives down costs and speeds up market entry.

Theyd avoid the administrative complexities of German employment laws and allow the firm to remain focused on client projects.

Consider a software development company in Canada wanting to tap into the tech talent pool in Poland.

With an EOR, they can bring on a team for a specific project timeline.

This helps the business grow quickly based on projects without having to pay for a permanent location.

What Are the Pros and Cons of Using an EOR?

Like any business solution, an EOR comes with its own set of advantages and drawbacks.

This promise of compliance is particularly advantageous in nations with stringent labor laws, such as France or Sweden.

But, with an EOR, businesses can bypass these substantial startup costs.

Long-Term Costs:Although EORs can save money upfront, their fees can accumulate over time.

Then again, this is the accumulated premium companies are paying for setting up shop quickly.

Data Security Risks:Handling sensitive employee information across bordersand across organizationsintroduces inevitable data security risks.

EORs manage payroll, personal details, and compliance documentation, which can be vulnerable to breaches or mishandling.

This is very important in industries that have tight rules on information security, like healthcare or finance.

How Much Does an EOR Typically Cost?

EORs typically charge companies by employee.

So the starting comparison point ishow much an EOR service chargesper each employee.

Up-and-coming players start at $200 per employee, monthly.

Their more advanced plans, which include features such as additional currencies, are slightly pricier.

Many EOR service providers offer custom pricing options.

But EORs are so in-demand that most offerings are seemingly very transparent.

Whats the Difference Between EOR and Staffing Agency?

Each serves unique functions and does things in its own way.

This includes processing payroll, handling the benefits, and keeping compliance with local labor laws.

The staffing agency typically holds on to the employment relationship with the workers.

This means they handle any and all matters related to the employees, including payroll and HR procedures.

The agency usually carries out their recruitment process even before doing business with their client company.

The EOR secures that all legal obligations are met, reducing the risk of non-compliance for the company.

This is really helpful for businesses that operate in different countries with different rules.

It makes it easier to work through a complicated legal system.

While staffing agencies do handle some HR functions, their level of responsibility for legal compliance may vary.

Companies using staffing agencies may need to be sure that the agency complies with legal requirements.

Thus, this arrangement is perfect for companies aiming for long-term growth and stability in a new region.

Staffing agencies are a sourcing ally because they usually have ready-to-work employee on hold in their team.

How Does an EOR Compare to a PEO?

An EOR serves as the legal employer for international employeesit assumes all employment-related responsibilities.

This includes handling everything, like payroll, benefits, and compliance with local labor laws.

This arrangement is particularly common in domestic operations.

PEOs manage local compliance, but do so with a shared responsibility model.

While they help clients stay compliant with employment laws, the ultimate responsibility still rests with the client company.

It provides support in managing employee compensation and benefits within a single country.

Expansion

For companies looking to expand globally, EORs are the optimal choice.

PEOs are better suited for companies that want to manage local employees within their existing market.

They provide support in handling HR functions but are not designed for businesses seeking to grow their footprint internationally.

What Are the Alternatives to an EOR?

For businesses considering alternatives to an EOR, the below are 3 options.

PEOs offer a full-scale human resources outsourcing.

The process can be time-consuming and requires a significant investment in legal and administrative resources.

One viable scenario in which a company can start their local entity is after running with an EOR.

The EOR might have, for example, proved fundamental to winning a bidding and tendering project.

In this case, the local entity and EOR are not alternatives that push each other out.

Rather than that, theyre just two different steps in the same path of cross-border development.

This approach provides flexibility and access to specialized talent, and it has become very common in remote-friendly businesses.

Yet, keep in mind that compliance with local laws regarding contractors still is the responsibility of the company.

Conclusion: An EOR Helps Companies Hire Globally

Hiring globally is complex.