Employer of Record Services: All You Need to Know!
For most businesses that are expanding or in the growth stage, managing their growing internal processes often becomes complicated and tiresome. As a result, companies often take the outsourcing route to match the speed at which the business is growing. In this scenario, an Employer of Record (EOR) can add tremendous value to the company.
EOR services are becoming increasingly popular given the need for businesses to expand their operations locally and globally, with the need for a flexible, cost-effective, and compliant model. In this guide, we will go through what an EOR service is, what they do, and the benefits they offer. We will also look at some of the top EOR services you can consider to help you achieve your business goals.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party entity that assumes the legal and administrative responsibility of employing and meaning the company’s workforce on their behalf. This means that the EOR becomes the official employer of record for the employees, handling all aspects of employment, such as payroll management, benefits administration, compliance with labor laws, and HR support.
Thus, while the client company is still the decision-maker in charge of directing and managing the daily activities of its employees, the EOR will take on the administrative, HR, and legal aspects. This allows the client company to focus on its core business function, making it ideal for companies that are expanding to new markets or are currently challenged due to legalities, HR or administrative burdens, and other regulations.Thus, while the client company is still the decision-maker in charge of directing and managing the daily activities of its employees, the EOR will take on the administrative, HR, and legal aspects. This allows the client company to focus on its core business function, making it ideal for companies that are expanding to new markets or are currently challenged due to legalities, HR or administrative burdens, and other regulations.
What Are the Services Offered by an EOR?
The EOR essentially partners with the client company to take care of administrative, HR, and legal aspects of the company, which focuses on processes such as:
1. Payroll Management
Processing payroll, salaries, deductions, and other requirements such as W-2, 1099s, etc.
2. Employee Onboarding
Managing the client company’s resources, hiring, and onboarding is taken care of my EORs.
3. Benefits Management
EOR helps client companies manage employee benefit programs such as health insurance, retirement plans, vacations, sick leaves, and other benefits.
4. HR Support
The EOR provides HR support to the client company and its employees, including recruitment, employee relations, and termination assistance.
5. Compliance Management
EOR ensures the client company complies with all applicable labor laws and regulations, including minimum wage requirements, overtime regulations, and workers’ compensation insurance.
6. Tax Filing & Legal Compliances
Ensuring that all tax obligations for the company, such as federal, state, and local taxes, are paid comes under EOR’s responsibility. Also, the EOR ensures that the client company complies with all legal obligations such as employment contracts, compensations, insurance, and other legal requirements.
7. Risk Mitigation
EOR helps the client company mitigate employment-related risks, such as compliance with employment laws and regulations, by taking on the legal and administrative responsibilities associated with employment.
EOR vs. PEO: What’s the Difference?
A cursory look at EOR may give many the impression that they are nothing but a Professional Employer Organization (PEO). However, the critical difference between an EOR and PEO is in their services. While EORs take care of legal, compliance, administrative, and HR activities, a PEO is focused mainly on the HR aspect.
| Responsibility | PEO | EOR |
| Payroll & Taxes | Yes | Yes |
| Employee Benefits (Pension, Insurance) | Sometimes | Yes |
| Local Employee Contracts & Compliances | No | Yes |
| Employee Timesheets / Holidays | Sometimes | Yes |
| Company Expenses & Reimbursements | Sometimes | Yes |
| Severance / Terminations | Sometimes | Yes |
| Employee Legal Responsibility | No | Yes |
| Collective Agreement Responsibility | No | Yes |
EOR vs. Staffing Agency: What’s Unique?
EOR and staffing agencies help the client company free up resources and time, but they operate differently. While the staffing agency specializes in recruitment and hiring, the EOR is responsible for taking over the burden of compliance, HR, and administrative processes for the client company. Thus, while EOR works on speeding up the onboarding and administrative process, the staffing agency will provide specialized resources and meet the client company’s demand, bringing international recruits to a specialized talent pool.
| Parameters | EOR | Staffing Agency |
| Legal | Responsibility of EOR. | Responsibility of the client company. |
| HR (Hiring & Recruitment) | EOR is not in charge of Hiring and Recruitment. The EOR only helps with onboarding resources chosen by the client company. | The staffing agency specializes in hiring and recruitment for the client company. |
| Administrative | Allows client company to be in charge of employee tasks while EOR takes care of other administrative processes. | The client company oversees all administrative areas. The staffing agency is only responsible till the employee is hired. |
| Payroll & Benefits Services | Handled by the EOR for the client company. | Does not handle any aspect of payroll or benefits. |
Benefits of EOR
As businesses continue to grow and expand, managing a workforce can become a complex and time-consuming process. This is where an Employer of Record (EOR) service can be incredibly beneficial. Some of the key benefits of using an EOR service include the following:
1. Cost Savings
Hiring an EOR service can be a cost-effective solution for businesses, as it eliminates the need for hiring additional staff to manage HR and payroll functions. Instead, the EOR service takes on these responsibilities, freeing up resources and reducing overhead costs.
2. Simplified Payroll Processing
Payroll processing can be a daunting task for businesses, particularly those with a large workforce. An EOR service takes on this responsibility, managing all aspects of payroll processing, including tax withholding, deductions, and employee payments.
3. Streamlined Benefits Administration
Managing employee benefits can be time-consuming and complex. An EOR service can help simplify this process, administering employee benefits such as health insurance, retirement plans, and vacation and sick leave.
4. Compliance Management
Keeping up with labor laws and regulations can challenge businesses. An EOR service ensures compliance with all applicable labor laws and regulations, reducing the risk of non-compliance penalties.
5. Reduced Liability
When a business hires an EOR service, the EOR becomes its employees’ legal employer of record. This means that the EOR takes on the legal and administrative responsibilities of employment, reducing the liability and risk for the client company.
6. Flexibility and Scalability
As businesses grow and expand, their workforce needs can change quickly. An EOR service can provide flexibility and scalability, allowing businesses to quickly and easily add or remove employees as needed.
7. Focus on Core Business Functions
By outsourcing HR and payroll functions to an EOR service, businesses can focus on their core business functions, such as product development, sales, and marketing. This allows businesses to grow and scale more quickly without being burdened by the complexities of managing a workforce.
When to Use EOR Services?
While an EOR service can benefit the company in any situation, the ideal scenarios for working with an EOR are the following:
1. International Expansion
When a business expands into new markets, several legal and administrative hurdles exist, including employment laws and regulations. An EOR service can help simplify this process by taking on the responsibility of compliance with local labor laws and regulations and managing payroll and HR functions in the new market.
2. Temporary Staffing
When a business needs temporary staffing for a specific project or event, using an EOR service can be an efficient solution. The EOR service can provide temporary staff as needed, handle payroll processing and benefits administration, and manage all legal and compliance requirements.
3. Independent Contractor Management
Many businesses rely on independent contractors for specific projects or functions. However, misclassifying independent contractors can result in significant legal and financial consequences. An EOR service can help ensure compliance with legal and regulatory requirements for independent contractors, reducing the risk of misclassification.
How to Select an EOR Service?
Choosing an Employer of Record (EOR) service can be critical for any business. Here are some key questions you need to ask when selecting an EOR service:
- Geographic Coverage: Can the EOR provide coverage in all your operating regions?
- Compliance Expertise: Does it have a deep understanding of local labor laws and regulations?
- Service Offerings: Does it offer the support and service offerings you require?
- Technology Platform: Does it have a user-friendly technology platform that can integrate with your existing systems?
- Reputation and References: What is the track record of the EOR you are considering? Does it have good reviews, reputation, and testimonials from its previous clients?
- Cost: Is it the right fit for your budget?
- Customer Support: Look for an EOR service that offers responsive, personalized support to ensure you receive the assistance you need when needed.
- Industry Expertise: Does the EOR have experience working in your industry? This point is crucial as this can help ensure that the service has a deep understanding of your unique HR and compliance needs.
5 Highly Recommended Employer of Record Service Providers
Now that we know what it takes to choose an EOR and the services that they provide, here is a look at the best EOR service providers and the key offerings of each:
1. Remofirst
With a presence in 150+ countries, Remofirst is the ideal choice for a global EOR provider that can help you take care of your global talent needs. The EOR platform helps you hire and manage full-time employees or contractors and is ideal for businesses looking to expand to a global talent pool.
Why pick Remofirst?
- International Payroll and Invoice Management
- Global Benefits Management
- Visa & Immigration Support
- Global Presence
Cost
- Global Payroll Services cost $199 per employee per month
- Contractor Services start at $19 per person per month
2. Deel
Deel is another well-established EOR that also has a presence in 150+ countries. The platform offers services ranging from global hiring, payroll management, taxes, and compliance risk management.
Why choose Deel?
- End-to-end resource management platform that allows you to control your team from onboarding to termination
- It has a user-friendly web app that makes it easy to keep track of your resources anywhere
- Integrated contract management, expense tracking, and customizable options
- 24/7 Support
- Integrations with other HR software available
- Free Pricing Calculator
Pricing
- Starts from $49 per contractor per month
- Starts from $599 per employee per month
3. Multiplier
Multiplier offers a comprehensive suite of EOR services, including payroll, tax compliance, benefits management, and legal support. It is ideal for companies with 200-1000 employees looking to expand globally.
The reason to choose Multiplier is its focus on risk management, with a team of legal experts to help ensure compliance with local labor laws and regulations.
Why go with Multiplier?
- Ideal for businesses expanding their horizons to new geographies or wanting to employ workers from different countries.
- User-friendly platform to handle all HR and payroll services, streamlining the process and making it easy to track information.
- Expert onboarding support and guidance.
- Compliance management to mitigate risks and local compliance regulations
Pricing
- $40 per freelancer per month
- $300 per employee per month
4. Foxhire
Foxhire is a well-known EOR service provider that offers its customers financial, administrative, insurance, and legal services. With a presence in over 100 countries, they handle payroll, timesheets, benefits, and other regulatory processes.
Why choose Foxhire?
- End-to-end EOR services from onboarding, background checks, payroll, benefits, compensation, and other administrative services.
- Customizable pricing makes it ideal for companies with various EOR needs.
Pricing
- On Request
5. Remote
An advanced EOR solution provider built for distributed and remote teams, Remote can help you hire contractors and employees in multiple geographies. In addition, it can run payroll, offer benefits, and help you expand your business globally.
Reasons to pick Remote
- Presence in over 150+ countries.
- Get access to clients beyond borders, and hire workers from anywhere.
- User-friendly and reliable platform to manage legal, financial, and administrative tasks.
- Integrations with various HR platforms.
Pricing
- $29 per month per contractor
- $599 per month per employee
Hire the Best Talent with Employer of Record Services!
To summarize, EOR services offer a valuable solution for businesses that want to minimize compliance, legal, administrative, and HR processes. By carefully selecting an EOR, you can unlock the benefits of a well-oiled company that complies with labor laws and regulations, streamlines HR and admin tasks, and keeps pace with your growing business operations.
Key Takeaways:
- Employer of Record (EOR) services can help businesses expand their global footprint and navigate foreign countries’ complex labor laws and regulations.
- EOR services offer various services, including payroll administration, tax compliance, benefits management, and HR support.
- Businesses should consider factors such as geographic coverage, compliance expertise, service offerings, technology platform, reputation and references, cost, customer support, industry expertise, scalability, data security, onboarding process, and cultural fit when selecting an EOR service.
- By choosing an EOR service that fits your business needs and values, you can reduce risk, ensure compliance, and focus on your core business operations.
