An Employer of Record is an organization that legally employs workers on behalf of another company. Essentially, the EOR becomes the official employer for tax, insurance, and compliance purposes while the worker performs tasks for the client company. This partnership allows businesses to expand their operations into new regions without setting up a legal entity in that country.
How does the EOR model work?
When a company partners with an EOR, the latter takes on the responsibility of hiring, payroll, benefits administration, tax compliance, and ensuring adherence to local labor laws. This includes:
Official employment for global and remote teams
Drafting employment contracts that comply with local laws
Background checks for new hires
Processing international payrolls and compensations
Tax documentation and proper filing based on local laws
Employee benefits and intellectual property protection
Recruitment
Onboarding
Legal compliance
Risk management
Contract terminations
How it works
EORs create a presence in various countries either through local entities or by hiring subcontractors. They partner with benefit providers to offer health insurance, pensions, and more. Businesses can hire from countries where the EOR operates. The EOR manages all employment-related tasks, while businesses handle daily work assignments and scheduling.
Benefits of using an EOR
Faster and cost-effective international hiring
Avoid legal complications and penalties
Access to a broader talent pool
Reduced HR workload
Enhanced data security
Better and localized employee benefits
Easier talent integration post-mergers
Quick market entry
Flexibility – companies can test new markets with a smaller team before deciding to establish a larger presence.
EOR vs PEO: Clearing the confusion
People often confuse EOR with Professional Employer Organizations (PEO). While both provide HR and payroll services, there are notable differences. A PEO co-employs workers with client companies, sharing employment responsibilities. In contrast, an EOR becomes the primary employer, shouldering all employment-related responsibilities and liabilities.
EOR vs GEO
Global Employer of Record (GEO) is essentially another term for EOR. When hiring internationally, the term ‘GEO’ often comes into play.
Independent Contractors
Typically, EORs specialize in facilitating full-time and part-time employment. Hiring independent contractors doesn’t usually require an EOR, as there are fewer regulatory obligations involved.
When should you consider an EOR?
Here are some typical situations when cooperation with an EOR might be a cost-efficient solution for your business needs.
Pilot programs. Before fully investing in a new market, companies can use an EOR to hire a small team for pilot projects.
Short-term projects. For projects with a definitive end date, an EOR can be a more viable solution than setting up a full business entity.
Remote workforce expansion. As remote work
Remote work, also known as telecommuting or telework, refers to a working arrangement in which an employee, contractor, or service provider performs their job duties from a location other than the employer's physical premises, typically from a remote or off-site location, often a personal residence or another remote work facility. This arrangement is facilitated through technology and communication tools that enable the individual to fulfill their work responsibilities without needing physical presence at the employer's place of business.
Remote work may be subject to legal and contractual agreements, including employment contracts, labor laws, and workplace policies, which govern various aspects of the arrangement, including working hours, compensation, data security, and compliance with applicable regulations.
Trends and management practices in remote work
Covid restrictions have dramatically affected the popularity of remote work. Now, almost two years after the pandemic’s end, we can analyze new trends.
Hybrid work models. Many organizations adopt hybrid work models that combine both remote and in-office work. This approach offers employees flexibility while maintaining some level of physical presence in the office.
Digital transformation. Businesses invest in digital tools and technologies to facilitate remote work, including collaboration platforms, project management software, and virtual communication tools.
Focus on employee well-being. Companies recognize the importance of supporting employees' mental and physical well-being in a remote work environment. This includes offering wellness programs, mental health resources, and flexible scheduling options.
Results-oriented performance management. Performance management shifts towards results-based assessment rather than tracking hours worked. Goals and objectives are emphasized, allowing employees to demonstrate their productivity regardless of location.
Virtual onboarding and training. Remote onboarding processes become more comprehensive with the use of digital training modules and virtual orientations for new hires.
And here are some management practices that help remote work stay efficient, comfortable, and profitable.
Data security and privacy. As remote work involves handling sensitive data off-site, organizations are emphasizing data security and privacy measures, including encryption, secure access, and cybersecurity training.
Remote work policies. Companies are formalizing remote work policies to provide clear employee guidelines regarding expectations, communication, availability, and remote work expenses.
Global talent pool. Remote work allows organizations to tap into a global talent pool, enabling them to hire the best talent regardless of geographic location.
Communication and collaboration. Enhanced communication and collaboration tools are essential for remote work, with video conferencing, chat platforms, and project management tools playing a central role in keeping teams connected and productive.
Performance metrics and analytics. Companies are utilizing data analytics to monitor remote employee performance, identify areas for improvement, and make data-driven decisions about remote work effectiveness.
Flexible work hours. Flexibility in work hours is becoming more common, allowing employees to adapt their schedules to their individual needs and preferences, enhancing work-life balance.
Training for remote managers. Managers are receiving training and resources to effectively lead remote teams, including coaching on virtual leadership, communication skills, and team-building strategies.
Legal and compliance considerations. Organizations are ensuring compliance with labor laws, tax regulations, and employment regulations in various jurisdictions when managing remote workers across borders.
Performance recognition and rewards. Remote workers are recognized and rewarded for their contributions through virtual recognition programs, performance bonuses, and career advancement opportunities.
Remote work tools
Effective remote collaboration relies on various tools and technologies that facilitate communication, project management, document sharing, and team coordination. These are some of the most popular tools for effective remote collaboration with some notorious examples.
Video conferencing software (Zoom, Microsoft Teams, Google Meet)
Instant messaging and chat apps (Slack)
Project management software (Trello, Asana, Notion)
Document collaboration (Google Workspace, Microsoft 365)
File sharing and storage (Dropbox, Google Drive, OneDrive)
Virtual whiteboards (Miro, Microsoft Whiteboard)
Screen sharing and remote control (TeamViewer, AnyDesk)
Time tracking and productivity monitoring (Toggl, Clockify, Hubstaff)
Email and calendar apps (Gmail, Outlook)
Collaborative design and creativity tools (Adobe Creative Cloud, Figma)
Password managers (LastPass, 1Password)
Virtual private networks (NordVPN, ExpressVPN)
Collaborative code and development tools (GitHub, GitLab)
The tools are all here – better and more efficient than ever. Selecting the right combination will be quite beneficial for effective remote work and collaboration.
MWDN has been working according to the remote model long before the Covid, so we have a full range of expertise on how to make your dedicated remote teams efficient and productive. Leave us a message to find out more about ways in which we can help your business grow. becomes more prevalent, EORs allow companies to hire talent from anywhere without legal constraints.
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The Employer of Record model offers a strategic solution for businesses looking to tap into global talent pools without the administrative and legal burdens that come with international hiring. As companies continue to expand their boundaries in search of growth and talent, EORs will play an increasingly vital role in shaping the future of global employment.
