Everything You Need to Know About Employer of Record Payroll Services

Home » Blog » Everything You Need to Know About Employer of Record Payroll Services

Table of Contents


Expanding a business into a new country can be a daunting task. There are many legal and regulatory requirements to navigate, and businesses must be prepared to handle various new challenges.

One of the most significant obstacles is setting up a legal entity in each country, which can be a time-consuming and costly process. But the good news is that there is an alternative – Employer of Record (EOR) services.

An EOR is a global employment services provider that handles payroll, benefits, taxes, stock options, and compliance for a company’s employees in different countries. By partnering with an EOR, a company can employ and pay workers in other countries without local legal entities, making it quick and affordable.

Read on to explore some facts about EOR Payroll:

  • It has been forecasted that the Employer of Record Market shall grow to USD 6794.5 million by 2028 at a CAGR of 6.9% during 2022-2028. In 2021, it was at USD 4235.8 million. This growth is because businesses expand to international territories without the need for a local entity. EOR services also help you eliminate additional taxes and introduce strict compliance measures per local employment, economic, and business laws.
  • According to a survey, small-scale businesses, that depend on EOR/PEO services are less likely to fail and have also increased their hiring by 7% as compared to businesses that don’t
  • EOR services are primarily based on automation, giving the dual benefit of making it accessible to all stakeholders and leaving no room for error.
  • Out of all the payroll benefits, direct compensation automation forms 47% of the entire procedure.
  • Considering automation, payroll processing and grown by 3700%

From what EOR services are to what they do, the benefits of working with an EOR, and how they differ from payroll companies, here is everything you need to know about Employer of Record services.

What Are EOR Services?

EOR services help businesses looking to expand their teams into new markets. Unlike co-employment, where two companies employ the same person, the EOR is the only employer on paper. The EOR’s involvement is limited to HR functions like payroll and benefits administration.

What Does an EOR Do?

An EOR represents a business and works on its behalf, managing employees in another country. Its core services are:

It Helps with Hiring Employees

An EOR employs workers in another country on behalf of a company. It is responsible for onboarding, training, and setting the right expectations among the new hires.

It Helps in Employee Retention

Besides hiring, onboarding, and training, EOR services help your business apply attractive employee benefits packages, eventually leading to low employee turnover, low absenteeism, and maximum employee satisfaction.

It Understands the Local Norms and Requirements

EORs are well-equipped with all legal laws, protocols, policies, cultural rules, and employee norms of the other country, which makes them more viable as a substitute for the employer there. They understand rules related to national holidays, sick leaves, overtime, minimum salaries, employee benefits and perks, incentives, etc. 

It Helps with Legal Obligations

EOR performs various HR and legal functions like hiring, payroll, benefits administration, managing international contractors, and distributing employee stock options.

Domestic Services

An EOR can also help businesses employ workers in other states or regions within the same country.

Employer of Record vs. Payroll Company

Let’s understand the differences between an EOR and a Payroll Company.

Operational Work

While both EORs and payroll companies provide HR and payroll services, the former offers a more comprehensive HR service for businesses looking to expand globally, including filling out paperwork and complying with labour laws. In contrast, a payroll company focuses primarily on payroll software solutions and may offer some HR assistance.

Personalized and Customised Service

While a payroll company will help you with support and automation regarding payroll and expect you to choose from the multiple pre-curated packages it offers, EOR services provide more personalised support. The EOR experts will assign a dedicated SPOC or a team for your business and will work according to your specific needs ensuring accuracy at every step.

Authority and Liability

A payroll company has limited association with your business, wherein it will help you with the payroll system for your overseas employees and benefit from a few add-ons. EOR, on the other hand, takes legal responsibility and acts as your representative in a foreign land, where it performs all its duties and takes up liabilities diligently.

Benefits of Working with an EOR

Partnering with an EOR frees up time and enables effective administration of employee benefits, payroll, compliance monitoring, and workers’ compensation. Given below are some of the key benefits.

Competitive Quality of New Hires

It also allows businesses to onboard quality talent quickly and stay competitive, even in the tightest labour markets.

Strong Network

Working with an EOR is often more flexible, enabling businesses to access all the services they need and work with a variety of providers in their network.

Handling of Multiple-Currencies

EOR services make it easy for you to disburse salaries in one currency to them. In return, they pay multiple employees in the currency prevalent in that country.

It Saves Time, Effort, and Money

Collaborating with EOR services allow you quick entry into foreign markets, as they have the right experience, expertise, tie-ups, and network in the overseas market where they are placed. It saves you a lot of time and money, as it allows you to focus on the operations of your core business while it manages your expanded business ad everything related to hiring, salary payroll, taxation, and legal laws.

employer of record indonesia

How to Implement EOR Services in Your Business?

While EOR services can offer significant benefits to businesses, implementing them can be a complex process. Here are some steps to help you get started:

Step 1 – Identify Your Needs

Before you choose an EOR provider, it’s essential to determine what services you need. Make a list of the countries you plan to expand into and the services you require, such as payroll, benefits administration, and compliance support.

Step 2 – Research EOR Providers

Look for EOR providers with experience in the countries you plan to expand into. Consider factors such as reputation, pricing, technology stack, and the range of services they offer. Speak to references and check the provider’s credentials to ensure they meet your needs.

Step 3 – Choose an EOR Provider

Once you have identified potential EOR providers, evaluate their proposals and compare their services, pricing, and terms. Consider how their solutions fit your business’s unique needs and whether they can offer customized services.

Step 4 – Onboard Your Employees

Once you have selected an EOR provider, you can start the onboarding process for your employees. The provider will handle the necessary paperwork and ensure compliance with local labour laws and regulations. Ensure your employees receive adequate training on the EOR’s systems and processes to ensure a smooth transition.

Step 5 – Monitor Your Engagement

It’s crucial to monitor your EOR engagement regularly. Ensure that you receive regular reports and that your provider is meeting your expectations. Review your provider’s performance and provide feedback to improve your engagement.

Using EOR Services in Specific Countries

It is important to note that EOR services vary from country to country, and businesses need to understand the specific regulations and laws governing employment in each country. For instance, in some countries, businesses must have a local entity to engage in commercial activities, making it impossible to operate solely through an EOR. However, some EOR providers have established partnerships with local entities, enabling businesses to operate legally in those countries.

How EOR Services Can Benefit Businesses Hiring Remote Workers

The Covid-19 pandemic has accelerated the remote work trend, with many companies adopting hybrid or fully remote work models. This presents new challenges for businesses, especially those looking to hire workers in different countries. EOR services can help businesses navigate the complex legal and regulatory requirements for hiring and paying remote workers in different countries.

Role of EOR Services in Mergers and Acquisitions

EOR services can also be helpful in mergers and acquisitions (M&A). M&A deals can be complex, primarily when the target company operates in multiple countries. EOR services can simplify the process of integrating a newly acquired company’s employees into the parent company’s payroll and HR system. Additionally, EOR services can help businesses manage employment-related risks and ensure compliance with local laws and regulations.

EOR Services for Compliance

One of the primary benefits of working with an EOR is that they ensure compliance with local labour laws and regulations. This is especially important for businesses expanding into countries with strict labour laws and regulations. EOR providers typically have a team of experts familiar with local laws and regulations and can help businesses avoid legal and financial penalties.

EOR Services in Startups

Startups face unique challenges when expanding globally, including limited resources and a lack of experience in foreign markets. EOR services can help startups overcome these challenges by providing HR and payroll solutions, allowing startups to focus on their core activities. Additionally, working with an EOR can help startups attract top talent and stay competitive in the global market.

How to Choose an EOR?

Choosing the right EOR is crucial to ensure that businesses are in compliance with local labour laws and regulations. Selecting a provider with a strong reputation and experience working in the country of operation is essential. Additionally, businesses should consider the provider’s technology stack, their services, and their contracts’ flexibility.

Help Your Business Expand and Grow with EOR Services!

EOR services provide businesses a cost-effective and efficient way to expand operations globally without setting up a local entity in each country. Working with an EOR enables businesses to focus on their core activities while ensuring compliance with local labour laws and regulations.

By partnering with an EOR, businesses can streamline their global expansion efforts and stay competitive in today’s rapidly evolving business landscape.

Therefore, businesses looking for expansion and long-term growth need EOR services to hire overseas’ talents in a different country. With EOR, you don’t need to launch a legal entity in the desired country where the employee resides. 
Your tie-up with the EOR officially permits it to become your legal employer, who will be responsible for hiring and transferring staff on behalf of your company under a service agreement. 

Table of Contents

Recent Blog Post

blog read more

In the ever-evolving landscape of Human Resources (HR), finding innovative solutions to streamline operations and maximize efficiency is a constant



blog read more

Introduction In today’s fast-paced business world, Human Resource professionals face a multitude of challenges. From managing payroll and benefits administration



blog read more

Introduction The Human Resources Outsourcing (HRO) industry has been experiencing significant growth in recent years, driven by various factors. Among