Does global talent acquisition sound promising for your business, but you’re apprehensive about the legal complexities? Then, an employer of record company (EOR) is your solution.
It’s a safe and efficient way to hire international employees without creating a legal entity in their country of residence. Moreover, it provides a host of benefits to your business, from compliance to risk mitigation.
So, if expanding your business abroad is on the cards, you must know how an employer of record can benefit your company.
An EOR is a third-party organisation that creates an employment relationship with your company’s chosen candidates. It takes care of all legal obligations and administrative tasks on your behalf. In other words, the EOR acts as your employees’ legal employer. Meantime, you remain in charge of their day-to-day work and responsibilities.
Employer of record companies do not carry out HR operations like recruitment and training. Instead, they solely exist to handle HR paperwork and compliance-related tasks.
See the difference between EOR and PEO for further clarification.
You can rely on the employer of record company for efficient and compliant global hiring that stretches from the onboarding stage to the end of an employment contract.
Here are some key services that a reputable EOR company can offer.
If you put on the scale hiring an employer of record company or managing human resources operations yourself, you should consider your international employment needs. If that’s a small to middle-sized team, the chances are you need more resources to cover all the compliance needs and concentrate on business growth simultaneously.
So, for startups, small businesses, or larger companies that need to outsource a limited team size, hiring an EOR company is a safe bet. It allows you to focus on scaling your business. Meanwhile, you have peace of mind that your employees’ employment is compliant and risk-free.
Lawsuits caused by non-compliance are a nightmare for every business owner, but they are especially risky when working with employees abroad. Labour laws and regulations in different countries can be complex, constantly changing, and hard to keep up with.
You must juggle various tasks- obtaining work permits, ensuring accurate payroll and tax compliance, staying up-to-date with labour laws and regulations, and providing a safe working environment. The process can be overwhelming, time-consuming, and take away from growing your business.
When you use employer-of-record solutions, you transfer the compliance burden onto EOR experts. Your chosen employer of record company is featured in all the official agreements and documentation. So, you don’t have to worry about a thing. They are legally responsible for handling all the tasks mentioned above on your behalf.
Besides the need for knowledge of local labour laws, hiring and managing employees in a foreign country has many other barriers to entry. For example, embassies of some countries may take months to approve your work permit requests. Besides, the process of obtaining work permits may differ between provinces or cities.
Other challenges include setting up legal entities, navigating cultural differences, and understanding local business practices.
One of the employer of record benefits is that it can lower entry barriers to enter the global workforce market. You can view employer-of-record service companies as ready-to-use vehicles in your chosen country, cutting down the time and resources needed to set up a legal entity.
Before hiring from a new country, you will need competent staff to handle all the legal processes or additional investments in training your existing staff. Besides, not knowing the local labor market could lead to hiring unqualified staff or paying higher-than-average salaries, another factor costing time and money.
On the other hand, an employer of record contract guarantees that your employees are handled by professionals who know the local labor market, employment laws, and business practices. This saves you time and resources on legal compliance, recruitment, and training while ensuring strategic hiring decisions.
When you partner with an EOR, your company continues to handle your employees’ daily operations and management with no significant changes. You get new employees from another country in exchange for a monthly fee, which is lower than the cost of setting up a legal entity or hiring local HR professionals yourself.
We have mentioned the time and monetary resources to set up a legal entity in another country. If your business is not yet ready for such an investment or you are only testing new grounds, hiring through an employer of record can be the best solution.
One of the employer of record benefits is that it takes care of all employment-related matters, including contracts, wages and benefits, tax deductions, social security contributions, insurance coverage, and more.
Employer of record have local teams well-versed in the nuances and complexities of the labour market, employment laws, and business practices. They can provide valuable insights and advice on hiring strategies, market trends, and potential challenges.
Additionally, their established relationships with local professionals, such as recruitment agencies and legal advisors, can help streamline finding and onboarding new employees.
There are different EOR operating models, including direct, indirect and hybrid. This means you can either work with an EOR that operates directly in your preferred hiring location or one that works with its network of local partners.
Besides this general distinction, it is important to consider the following factors while choosing a good EOR company.
If you want to enjoy all the employer-of-record benefits, prefer companies specializing in A-Z employment services. Instead of referring to different companies for HR, payroll, and compliance matters, choose the one that offers a full-service package.
Collab Fabrik – a combination of EOR and PEO services – offers just this. It helps you manage your remote employees without any hassle – from onboarding to compliance and payroll.
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To receive a truly tailored employer of record solutions, choose region- and niche-specialised EOR. These employer of record companies are specifically focused on hiring location or industry and have ample knowledge of the labour market and employment regulations in those areas. This is beneficial for companies operating in multiple locations as well as those looking to expand internationally because they can offer localised support and guidance.
If you’re located in the EU and interested in hiring from Armenia or other Caucasian countries, Collab Fabrik’s regional hiring expertise in this area makes it a reliable choice for your EOR needs.
A reliable employer of record company should have accepted contracts for regulating data security responsibilities and working rules to ensure these guidelines are practiced. Additionally, you may check if your chosen EOR trains candidates hired through them for data security and data privacy measures. This ensures that your remote employees know data security protocols and can help maintain the integrity of your company’s sensitive information.
Collab Fabrik is an Armenia and Germany-based EOR company specialising in providing tailored solutions for the EU market. With a team of experts who are well-versed in Caucasian labour markets and employment regulations, we ensure that our clients from Europe hire and manage qualified talent from the Caucasus region with ease.
Based on your needs, we can provide comprehensive EOR services such as:
Besides, Collab Fabrik can also go the extra mile and offer you some PEO services (finding and onboarding the right talent). For this, we have the following solutions:
Schedule a free consultation with us today to learn more about how we can support your business’s growth and expansion.
Employer of record companies act as the legal employer for remote employees, taking on responsibilities such as payroll management, benefits administration, and compliance with local labour laws. This allows businesses to hire and manage talent from different countries without establishing a legal entity in that country.
When a business partners with an employer of record company, the EOR becomes the legal employer for the remote employees. The EOR handles all administrative tasks and liabilities associated with employment, while the business controls day-to-day tasks and job duties.
A contract between the business and the EOR outlines the responsibilities and expectations of both parties. The employees are typically hired as contractors or leased back to the business under a separate agreement.
It depends on the services and level of support that your business needs. Some EORs charge a percentage of the employee’s salary, while others have fixed monthly fees.
Collab Fabrik’s package of EOR services does not suppose any upfront payments or excessive recruitment percentages. Our Employer of Record services start with as little as EUR 250 per month (+ the salary of the employee).
Here is a general guide for you on the salary costs in Caucasus:
The pricing changes based on whether you want to hire on a part-time or an hourly basis. The cost may also change depending on whether you also need our recruitment and assessment services.
So, we highly encourage you to consult with our experts to get a quote that fits your business needs.
Employer of record services are most beneficial for businesses that need to quickly and efficiently expand their global workforce without the time and investment required to establish a legal entity in a new country. This could include companies with short-term projects, seasonal work, or temporary remote positions.
