If your organization is seeking to access talent based outside its own national borders, perhaps with a view to more meaningful international expansion at a later date (including the establishment of a local entity), you may have good reason to seek out an Employer of Record (EOR) service.
What is an Employer of Record, and what does it do?
An Employer of Record, or EOR, is an entity that serves as the legal employer of staff on behalf of another business (the EOR’s client).
This means it is the EOR that assumes responsibility for complying with the employment regulations applicable in whichever part of the world the given employee will be working. The EOR also takes on responsibility for such elements as payroll, taxes, employment contracts, and statutory benefits.
Otherwise, the relationship between the worker and the “employer” (the client company of the EOR) is much like any other employer-employee relationship. It is the EOR’s client company that oversees the employee’s tasks and job performance – which is, of course, the traditional area of responsibility for an employer.
How did the Employer of Record model develop?
EOR services can be traced back to the United States of the 1960s, when companies employing people across state lines sometimes faced challenges due to the different regulations that applied in different parts of the country.
Today, the typical organization that seeks out an EOR service might be based in one country (for example, Canada), while wishing to employ someone who will be carrying out their work in another jurisdiction (for example, Spain).
Indeed, in the present age of often “nomadic” working styles and widespread remote working, EOR services might have reached their peak level of relevance.
Could an Employer of Record service be the right choice for your organization?
The exact answer to this will depend on the circumstances and aspirations of your organization. It is certainly well-established that an EOR service can bring various benefits to businesses that are looking to employ people in other parts of the world, including helping to ensure the EOR client company’s compliance with the laws in the worker’s own jurisdiction.
Your organization could – of course – establish a local entity in the country in which you wish to hire. However, this tends to be done by larger companies that plan to take on a large number of staff in the given location.
If, then, you are looking to access the talent of a much smaller group of people, and you are still unsure whether your organization will be expanding into other territories in a more formal and serious way in years to come, an EOR service could represent a simpler and less costly solution.
To learn more about how our own Employer of Record service at Aspirock works, and whether it could be the right pathway for your organization, please don’t hesitate to contact us.