How Does an Employer of Record Work?
An Employer of Record (EOR) is a third-party hired by a client company to handle the employer’s basic compliance tasks as defined by law. We’ll discuss what an Employer of Record is and how it can help businesses in this article.
An Employer of Record (EOR) simplifies international employment by becoming the legal employer of the workforce. They handle payroll, benefits, compliance, and HR administration, allowing companies to focus on their core business. The EOR takes on the legal and administrative responsibilities, ensuring compliance with local labor laws and mitigating risks for the company.
More flexible working options increase employee morale, according to 90% of employees.
- A third-party corporation acts as the legal employer for a client company’s workforce in an Employer of Record (EOR) solution.
- Global Professional Employer Organizations Global eor frequently offer Employer of Record solutions as a means of worldwide expansion.
- Employer of Record solutions are usually a more cost-effective and compliant way to expand internationally than forming a separate business or subsidiary.
History : Employer of Record Solutions
Businesses have delegated responsibilities to third parties. For example, it has long been standard practice for corporations to hire a third-party provider to clean their office space.
With the concept of the employer arose a set of functions and responsibilities that were consistent. In general, employers are:
- Recruited and hired workers
- Negotiated working terms with employees or unions
- Directed workers’ day-to-day activities
- Employed a payroll system that ensured worker health and safety.
Is a PEO and an Employer of Record the Same Thing?
No. A more appropriate description would be that an Employer of Record is a specific solution provided by a PEO. A PEO typically provides recruitment, payroll outsourcing, global mobility, HR strategy, and company incorporation services in addition to EOR solutions.
|Temporary staffing||An umbrella company|
|1. While this phrase is occasionally used interchangeably with PEO, it is normally thought of as a separate type of HR solution.||1. Self-employed employees can receive compliant payment solutions from an umbrella company.|
|2. The third party staffing company employs a workforce which it leases out to clients on a temporary basis.||2. An umbrella company pays workers, but those workers are not on the umbrella company’s payroll|
Note: It is expected that the worldwide market for EOR services will grow to more than $1 billion by 2024 as the need for flexible and legal HR and payroll business models grows.
Global EOR Services: A Case Study Discussion
During the course of the firm split up, one of our clients from global EOR services – a corporate wireless communication and broadcast technology company – realized the need to help 15 employees functioning throughout the globe in five separate locations. These employees were formerly employed by the company, but were scheduled to transfer to the new one. The current corporate infrastructure, on the other hand, was to be retained by the other half of the soon-to-be-divided company.
Use an Employer of Record for International Hiring.
Using an Employer of Record solution ensures that all withholding and tax rules are met in terms of payroll and employment. Compared to forming a local corporation or subsidiary, it is less expensive and allows for a faster recruiting process.
Contact PayrollBangladesh Global Partners to learn more about how our Employer of Record solution may help you hire and train your international employees in as little as 48 hours.