Does Your Business Need an EOR to Hire Globally?

Guest post written by Omnipresent

As remote working continues to gain traction, businesses are realizing that they can expand their talent pools further than ever before. In fact, they can hire the very best candidates from across the world. But global employment is complex; there are different laws and regulations in every country, and it’s really challenging to stay compliant.

That’s where the Employer of Record (EOR) model can help. EORs help businesses hire and pay international workers compliantly so they can attract and retain world-class talent while saving time and money.

But what actually are EORs, and do you really need one to hire globally? We’ll be answering both those questions (and more!) in this guide. Let’s dive in.

What Is an EOR?

EORs legally employ talent on a company's behalf and do so in accordance with all the local employment laws and regulations. So, for instance, if a company in the United States wants to hire talent in Ireland, they can do so through an EOR. The EOR would become the legal employer of that talent and then “lease” the employee out to the company, which would retain full control over the employee’s day-to-day management.

Because EORs take on legal responsibilities for employing the company's chosen talent, they also assume responsibility for:

Onboarding
Payroll processing
Providing statutory benefits
Offboarding

How Do EORs Work?

Employers must have a local entity (i.e., an established business presence) in a country or jurisdiction to employ there. When they don’t, they can partner with an EOR that already has a local entity in the country to employ talent on their behalf.

As the legal employer, the EOR draws up and co-signs the employment contract with the employee. Parallel to that, the EOR and the client sign a different contract called a "service agreement." This agreement details the client’s relationship with both the EOR and the employee.

The service agreement normally states that the business is responsible for day-to-day employee management, including their responsibilities, tasks, and reporting structure. The EOR, on the other hand, is responsible for taking care of all the HR compliance, including onboarding, payroll, and statutory benefits. Some EORs also provide supplementary benefits to help make the job offer more attractive.

What's the Difference Between EORs and PEOs?

Although some use the terms interchangeably, Professional Employer Organizations (PEOs) and EORs aren’t the same:

EORs allow you to hire internationally without setting up a local entity because the EOR employs talent on your behalf.
PEOs take care of some HR functions, like payroll, but you must have a local entity in order to use one. This is because PEOs and clients enter into a co-employment relationship with the employee. PEOs are sometimes called “global payroll providers.”

Essentially, if your company wants to hire talent abroad but doesn't have an entity in the target country, use an EOR. But if you are already established in a foreign country and want to outsource some HR functions, use a PEO.

Benefits of Using an EOR

EORs provide a number of strategic benefits to organizations as they hire internationally and expand into new markets:

Save time and money: Processing payroll, managing employee benefits, and complying with employment laws is really time-consuming - particularly if you’re hiring in a new market where the local rules are unfamiliar. EORs take care of all of this for you, freeing up your HR team’s time and resources to focus on other revenue-generating operations.
Remain compliant: The most significant hurdle that comes with hiring abroad is remaining compliant with local labor laws, which vary significantly from country to country. If you don’t stay compliant, your business risks hefty fines and legal action. Fortunately, EORs manage all of this and more, so you don't have to.
Tap into a global talent pool: By working with an EOR, you can find exceptional talent in places you may not have considered previously and break free from the highly competitive domestic recruiting market.
Test new markets without setting down permanent roots: Expanding a business overseas is a time-consuming, costly endeavor that's not guaranteed to succeed. The agility EORs provide allows you to test the waters before jumping in and setting up a more permanent entity, such as a foreign subsidiary.

How to Choose an EOR That's Right For Your Business

With hundreds of EORs operating across the globe, it can be difficult to know what makes one better than another. Here are a few key qualities to consider when choosing an EOR:

It combines intelligent automation with human expertise
Onboarding and managing talent in multiple countries isn't easy, which is why the best EORs have embraced automation technology to streamline manual processes and save you time. However, EORs shouldn't be completely reliant on technology — having human experts with a deep understanding of local labor laws, payroll, and benefits work is equally as important.

It fosters positive employee experiences
Providing a positive employee experience is one of the most effective ways companies can retain talent, so your EOR should make that a priority. One of the ways this can be achieved is to ensure the EOR has a quality support team that acts as a liaison between the company and the employee. They should remain available across time zones, communicate in a timely manner, and effectively answer questions that employees have about onboarding, payroll, benefits, etc.

It provides global coverage
Some EORs may only operate within one region, country, or jurisdiction. This is fine if you are only focusing on one region, but if you are looking to hire globally or think you might be in the future, it's best to find an EOR with global coverage.

It offers great value for money
When it comes to costs, you shouldn’t just look at the base pricing; consider the flexibility, quality, and time savings the EOR can provide too. Does the EOR have hidden fees or cut corners? Is their customer support providing an excellent employee experience? Can they accommodate your unique business needs? Upfront monetary costs are important, but a top-quality service that helps you retain talent can provide much longer-term value.

It’s proactive and agile
International hiring is dynamic; it changes with new labor legislation and other external forces on the market. A good EOR should act as a transparent partner that guides you through international hiring processes, making certain labor laws and compliance risks known.

So, Do You Need an EOR to Hire Globally?

While it may not be 100% necessary to partner with an EOR to hire global talent, forgoing them certainly opens your business up to legal liabilities and could be a drain on your team's time, effort, and resources.

As the world continues to become more interconnected, relying on experts to provide a one-stop shop for all of your global employment needs is a no-brainer, especially when your international hiring efforts are critical to business longevity. Accidentally skirting a labor law or failing to pay a tax you didn't know existed is enough to cause serious business disruptions, so why take the risk?

EORs like Omnipresent have proven to be integral to businesses like yours. Our mission is to help you build the best teams on earth, so you can meet your ambitious goals quickly and efficiently. We partner with you to mitigate risk, improve employee experience, and help your business grow. Our expert team is by your side throughout the whole process.

If you’d like to find out more about Omnipresent’s EOR service, feel free to book a call with our team today.

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