An Employer of Record (EOR) is a non-profit organization that employs and pays employees on behalf of a different company and is responsible for all formal employment duties. Employer of Records Employer of Records allows companies to legally and effectively engage with foreign workers in a foreign state or country without the need to establish an organization in the local area or risking violating local laws regarding employment. There are various words used to indicate that an outside employer of record services is in place for local work, including local employer local partner, local EOR and back office staffing and in China an FESCO (Foreign Enterprise Service Corporation).
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What Can An Employer Of Record Perform?
The most basic definition of the term “EOR” is that an Employer of Record is a third party local entity serving as an intermediary within the existing relationship between employer and employee. The EOR is responsible for performing all legal requirements and regulations related to the areas of immigration, employment and payroll, however, it does not take part in day-to- working activities.
In most cases it is the EOR is the employer registered for the worker, however, the EOR has no managerial or supervisory role to the employee’s job. The original employer is the one who maintains the actual relationship of employment and makes all the decisions regarding the compensation, duties of the position projects, and termination.
In particular “the employer” is the legally-constituted entity
- Assists in arranging all work permits and visas to the worker, to avoid delays or denials
- A registered entity that is responsible to run an efficient, local payroll in the country.
- Meets host country’s laws on labor, local agreements and worker protections
- Informs the client about mandatory notice periods, termination regulations and severance payments
- Does the host country act as the interface between the employee and the authorities of the government
Why Use An Employer Of Record?
The main reasons to use Employer of Record Employer of Record are primarily to get around the regulatory and cost challenges when employing employees in remote locations. Each nation (and some regions or states) have their own payroll, employment and work permit regulations for businesses that are non-residents operating. The difficulty of implementing the rules could be a major hurdle to expanding business beyond international boundaries.
If a business is committed to a particular country, the DIY method for incorporation and registration, and managing a local payroll might be worth it. Nevertheless, for many businesses who are just starting out in a new industry or small businesses with limited HR resources an EOR could be a great alternative.
It is often employed as the basis of a full GEO (Global Employment Organization) solution, which simplifies foreign employment for any company of any size. It’s equally efficient for local residents as well as expats as it is fully in compliance with the host country’s laws. The reason is that there isn’t any reason to be concerned about violation of labor, tax, and regulations on employment when there’s an EOR solution that is available in nearly any country.
Employer Of Records And Liabilities
In the EOR, model clients have some degree of control over their operations, and take on the responsibility for safety at work and the related compliance with on-site regulations.
However, the employer in charge assumes all responsibility and liability in connection with employment-related issues like administrative operations including tax, payroll, benefits and record compliance.
The client now has an experienced group of individuals who can handle these difficult issues. The employer of record must be in charge of issues of tax, compliance, and regulatory questions.
This gives the client time to think about, design and enhance his business.
The Future Of International Employment Using An EOR
The advantages of employing the GEO Local Employer of Record for international assignments becomes evident when companies consider the expense and time required when attempting to do it yourself. The EOR gives a layer of legal protection for companies and also takes responsibility for the many factors required to hire employees abroad.
The direction of this EOR solution is guaranteed in the current climate, as more nations are changing their local laws regarding employment and immigration to stop abuses and the reductions in tax revenues. Businesses must find a way to meet the challenges of conducting business overseas The EOR is becoming a fundamental method of employing expats and locals.
