What Do Global EORs Do?
A global EOR takes care of all HR and personnel functions for employees hired in different countries. As the legal in-country employer, they manage all the administrative and logistical requirements to oversee employment compliance and ensure the employees receive their salaries as contractually agreed.
- Employ people legally in other countries
- Oversee payroll management
- Provide Human resources services
- Provide workforce management software
- Manage compliance (business and employee)
- Handle benefits administration
- Support full-time employees and contractors
- Manage and distribute stock options
- Simplify admin and other essential processes
3.1. Benefits: Using an EOR vs. doing it alone
Expanding a company’s workforce beyond its borders can be a tricky, expensive, and time-consuming process, especially without the necessary contacts and expertise to start.
There are many steps to complete before hiring the right candidates, and it can take quite some time before a company can hire its first international employee—which might result in missing out on the best talent.
Without the necessary in-country expertise, companies run the risk of violating local labor laws and employee misclassification which can result in expensive penalties.
To employ international workers without an EOR, a company will need to either:
- Establish a local entity (which costs tens or hundreds of thousands of dollars), or
- Hire employees as contractors, which could impact employee retention and inadvertently lead to employee misclassification, depending on the country’s laws.
Before hiring abroad, employers must consider:
- Local employment laws
- Local payment laws
- Local labor laws
- Local tax laws
- National and/or state minimum wage laws
- Employee classification
- Background checks and referrals
Using an EOR mitigates risk and shares the legal responsibility to ensure employment is above the bar and that employees are taken care of.
Benefits of using a global EOR:
- Saves time: companies can hire in days
- Saves money: Costs tens or hundreds of thousands of dollars less than entity establishment
- Reduces risk: avoids employee misclassification and mistakes with local labor laws
- Delivers in-country expertise: navigates cultural nuances and market must-knows
- Manages employee contracts
- Removes barriers to enter the global market
- Complies with local labor laws
- Ensures on-time salary and wages payouts
- Registers and files taxes on company’s behalf
3.2. Why use a global EOR?
A global EOR is the solution to hiring the right talent regardless of their location(s). If a company is considering expanding globally, partnering with a global EOR is the most efficient and cost-effective way to build a global team.
Employing international talent is a resource-intensive process, and not every company has the expertise and workforce to make it work—and mistakes impart immense financial and operational risk.
It’s important to ensure that everything is in place before hiring the first employee, and that can take some time; it can take up to six months to become compliant and set up an entity. And setting up an entity for employing only a few employees doesn’t justify the cost.
EORs supply all the necessary resources, expertise, and established local entities to help companies employ and onboard international talent at a lower cost and at a quicker rate. This means less downtime while waiting to onboard new employees.
They also simplify the hiring process as they take care of all the legal steps to ensure:
- Proper employee classification
- Correct legal employment
- Hiring processes align with local labor and tax laws
Common misconception: An EOR takes over the role of a company’s HR department.
What EORs really do: While they manage many HR processes, they don’t take over the hiring process.
Talent acquisition experts are still responsible for identifying, interviewing, and finding the right candidate; the EOR is responsible for HR processes to follow.
EORs stay up to date with local laws and manage all the paperwork that comes with it. They also understand employee termination protocols, which is important for drafting employment agreements and ensuring that employers follow correct termination processes should they need them.
Why businesses need a global EOR:
- Reduces the complications related to global hiring
- Avoids employee misclassification
- Mitigates risks, fines, and penalties
- Avoids labor law and tax mistakes
- Affords intellectual property (IP) protection and transfers
- Offers centralized management of international employees
- Consolidates and centralizes all documentation and information
- Understands localization of payroll, benefits, taxes, and stock options
3.3. EOR’s responsibilities
An EOR is responsible for managing the onboarding process and providing foreign employee support. They act as the in-country partner who takes care of HR processes and compliance while the company focuses on growing their business and attracting the right talent.
The main focus of the EOR is on employee onboarding, HR, payroll, and legislation and compliance.
Onboarding is the process of integrating new hires into the organization. Since the employer isn’t “present” in the foreign country, the EOR takes over the role of guiding the new employee by ensuring all necessary preparations for the employee to start working.
- Extending the offer of employment
- Managing the paperwork
- Getting contracts drawn up and signed
- Adding the employee to workforce management software
- Ensuring the employee gets and sets up their equipment
- Giving the employee all the information they need regarding leave applications and sick days