Companies hiring abroad must either establish an entity or partner with an employer of record service that is responsible for managing local HR processes.
An employer-of-record (EOR) service helps companies onboard, care for, and pay full-time employees located in different countries. An EOR owns an entity, which means they can run global payroll, administer localized benefits, manage international employment contracts, help with work permit & visa paperwork, and are responsible for maintaining compliance with labor and tax laws. They can also help companies manage startup equity, crypto payments, stocks, and other benefits.
An EOR is also referred to as a local employer, local employment partner, HR services, global employer of record, international employer of record, Global Employment Organization (GEO), and sometimes erroneously as a global PEO or Professional Employer Organization.
For many companies, partnering with an EOR is the first step towards true global expansion and caring for remote workers across the globe.
An EOR service is sometimes referred to as a PEO, or professional employment organization. Technically speaking, there are a few key differences between the two. Both are global payroll solutions. However, in most countries, a PEO follows a co-employment model, so you will still need to establish a local legal entity. The PEO helps manage local HR processes, but does not assume full responsibility for ensuring compliance.
The EOR helps companies determine what is a competitive salary, but the company actually decides what compensation should include. The EOR simply ensures that the compensation and benefits package is commensurate with the job description, required tasks, and the employee’s past experiences.
On paper, the EOR is the official employer, but the company is still in charge of day-to-day management and oversight of international employees.
While some EOR services partner with recruiting or staffing agencies, the EOR is not generally responsible for finding talent. An EOR is not a temp agency or a global recruiting services firm. In general, companies are responsible for identifying the right candidates for open positions, whereas the EOR helps them onboard, hire, pay, and administer comprehensive benefits for full-time employees.
Access to a global talent pool. You can offer best-in-class benefits to top talent across the world.
Streamlined onboarding, including international background checks. The process of opening up an entity or establishing a subsidiary can take months, or even years. For many businesses, the upfront costs and timeline can hamper business progress, since they won’t be able to compliantly hire employees around the world until the business presence is established. An EOR, on the other hand, allows companies to hire a team member in just a few days.
Scalable in multiple states, providences, and countries. An EOR service will allow you to build your team across one or multiple countries at your own pace. Partnering with an EOR is a good option for building a local hub in another country, or hiring employees from multiple countries at the same time. If you’re looking to hire a team of developers in Brazil, or markets from multiple European countries, an EOR can streamline that process for you.
Expertise. Most scaling companies don’t have the in-country expertise to build out a local HR function.
Low-risk way to globally test out markets. An EOR service allows employers to explore new markets without having to invest heavily in establishing a local business presence.
Cost. In the long run, you will save on regulatory costs, as well as associated expenses with hiring and building a local HR team.
Hire quickly and compliantly. Penalties, fines, and legal actions fall on your EOR. You don’t want to risk lost licenses or even business sanctions because you didn’t offer one benefit. You don’t want to face fines, penalties, lost licenses, business sanctions.
Deeper understanding of the target country. If you’re building a product for users in Brazil, for example, hiring Brazilian talent can enable you to better understand the country’s customer base.
Better products and services. By diversifying your team, choosing the best talent on the market, tapping into new resources, and going global, your products will inevitably improve.
IP protections. An EOR like Via writes employment contracts that ensure your business maintains full control over your IP across borders. For this reason, an EOR approach can be even more secure than working with independent contractors or freelancers.
Termination and severance requirements. At will employees are only a US legal concept, so when operating abroad, you will have to navigate offboarding more carefully.
Global benefits administration. Each country provides benefits through a unique healthcare, social security, and retirement system. Your EOR can help you determine what elements need to be in your compensation packages to remain competitive. Common benefits include health insurance, dental, vision, meal vouchers, transportation voucher, retirement accounts, flex spending about, paid time off, sick leave, workers compensation, mental health support, office stipends, and fitness stipends.
The EOR is responsible for opening an in-country bank account, paying employees in a local currency, managing payroll taxes and social security contributions, and ensuring ongoing compliance, even as local employment laws change.
Putting an employee on payroll vs. hiring them as a contractor can make them feel more valued, and often, it's the right thing to do for compliance. With an EOR, you can hire employees in days, as opposed to months.
Some businesses are weary of engaging with an EOR service provider because of poor experiences with other recruiting, payroll processing, and hiring services. Similarly, highly skilled workers are weary of outsourcing, because they have a reputation for offering mediocre pay and benefits.
It’s true: many global payroll organizations rely too heavily on third-party services, which means that they don't have sufficient knowledge of tax laws or local HR processes. This leads to miscommunication and unhappy employees.
An EOR service like Via, however, can function much more like a strategic partner. Via, for example, owns its entities and has a team of local legal and HR experts to help customers. When companies partner with Via, for example, the company makes all of the hiring and termination decisions, and manages the employee’s day-to-day activities.
Are you looking to expand your business into one market, or multiple markets? Do you have serious expansion plans in one country?
If you’re not ready to fully embrace a new market, or are only hiring a few employees, then using an EOR is probably the right path for you, especially if you have employees in multiple countries.
No. Make sure that your EOR service has its own entity. Many PEO services and outsourcing companies market themselves as EOR, when they don’t have an entity.
Yes and yes. The wide-spread adoption of remote work means that CMOs, CTOs, VPs, and other executives are choosing to live away from HQ–or even abroad. An EOR enables companies to find and recruit the best talent without worrying about immigration policies and relocation costs.
Should a legal action arise that requires the EOR to intervene, the company’s contract grants the EOR the right to ensure that compliance is being met with more difficult matters, such as terminations, severance, unemployment.
When choosing your EOR partner, you want to make sure that they are compliant with all employee data regulations, including the GDPR in the European Union and CCPR in North America. This is especially important when sharing employee and client data with third parties.
Your EOR partner should have best-in-class cybersecurity practices established. By choosing the wrong partner, you risk lower quality control, more data/security breaches, and risks of losing IP.
Many companies try to cut corners by hiring foreign employees as contractors, rather than putting them compliantly on payroll. While this might work as a short-term solution, it’s not sustainable for long-term growth.
Growing startups and major enterprises alike want to hire employees in new countries around the world, but aren’t sure how and don’t have time to learn the labor laws in a new country.
Companies that partner with Via as their EOR services provider can onboard employees with our established entities in just 24-48 hours. You can keep track of your entire team, including making payments and administering benefits, on the Via platform.
Our local team’s responsibilities include managing ongoing human resources (HR) admin, including accounting, legal, taxes, payroll schedules, employee documents & contracts, and service provider information. If any issue or question pops up, we provide ongoing customer support and make ourselves available whenever you have pressing questions.
We manage all of the local paperwork and HR process so that you can focus on what matters: building products, offering services, and managing your business operations.
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As your employee’s legal employer, an EOR service like Via usually charges a monthly fee for its services.
An employer of record company or provider helps companies onboard employees based on foreign countries, put them on local payroll, and administer localized benefits. The EOR provider onboards employees on behalf of the parent company.
An employer of record helps businesses to hire employees quickly, test out new markets, scale up without establishing a physical presence abroad, and reduce costs associated with regulation and building a human resources team abroad. As you expand globally,The employer of record is responsible for mitigating compliance risks, no matter how complex the situation is.
PEO services help companies hire employees and manage local HR processes, such as payroll and benefits. However, you will still need to open an entity to partner with a PEO, since it’s technically a co-employment model. EOR’s services, like Via, own their entities abroad, handle the entire process of hiring, and take full responsibility for maintaining compliance abroad.
While the terms employer of record and PEO are used interchangeably sometimes, they are not the same, though they are both related to GEO. A PEO enters into a co-employment relationship with their client, which means companies are still liable for compliance and need to have an entity, which can lead to wasted time and money.