An Employer of Record (EOR) is something you may never have come across before.
But it can be enormously beneficial, especially for smaller businesses. The World Economic Forum praises EOR as a leveller to help smaller firms hire abroad, even when they don’t have the same resources that larger businesses do. With talent moving overseas and certain skillsets growing in other global economies, you might want to source employees from, say, Italy or Brazil.
But how do you deal with international employment law, benefits and other legal miscellany on top of everything else you have to do in a day? Well, you could do with an Employer of Record.
What is an Employer of Record?
An Employer of Record is an organisation that is responsible for legal matters surrounding employment, plus the legal responsibilities that go hand-in-hand with employing them.
As the employer, you’ll deal with the work side of things, such as assigning tasks and managing the employee. Meanwhile, the Employer of Record handles:
- Payroll
- Benefits
- Tax
- Remaining compliant with local employment laws
- Employee record-keeping
- Onboarding/offboarding
- Admin tasks that relate to the employee
Though Employer of Record is legal in most countries, you must take local labour laws into account when using one of these services.
When is an EOR a good idea?
Working with an Employer of Record is a good idea when you’re looking to explore new markets. It also works if you want to take on new talent that might not be based in the UK or you want employees on the ground ready to grow your business in another country.
To give you a fuller idea of what to expect, here are the pros and cons:
Pros
- Access talent from round the world
- Keeps you compliant with international laws
- More flexibility in working with staff
- Simplifies the hiring process
- Quicker to scale and expand your business
- Good for exploring new international markets
Cons
- May be limits as to where you can hire from
- Different countries impose legal limits
- Loss of control over some business operations
Whichever provider you go for, it means an extra cost to consider. According to Neontri, the typical cost is USD 200 – USD 500 per employee per month.
Who are the big players in EOR?
These are the biggest names around in the Employer of Record space.
Velocity Global
Velocity Global prides itself on its AI-powered platform, giving you hiring, workforce management and compliance in one place. It promises no hidden fees. Use its Employee Cost Calculator to find out how much you’d be spending per employee.
Features
- Payroll assistance
- Mobility services
- Reporting and analytics
- Employee data tools
- Around the clock support
- Operational in over 185 countries
Price: Pricing isn’t listed on the website, so you’ll need a quote from Velocity Global.
Rippling
https://www.rippling.com/en-GB
Rippling is more of a HCM (Human Capital Management) system. Your employee will be guided through every stage of their time with you, from onboarding to transitions and promotion, and ultimately to offboarding. Again, everything is in one place with smooth, seamless processes.
Features
- You can automate global compliance
- Integrations with 600+ apps
- Build custom policies
- Automate almost anything with workflow builder
- Easy-to-use report builder
- 185+ countries served
Price: No set pricing – get a free quote from Rippling.
Deel
Deel says that it can save you $210,000 (£166,600) worth of entity set-up costs per country. It’s a wholly owned entity, rather than relying on third parties, so your employees have a central contact point.
Features
- Handling local payroll services, benefits administration, taxes, compliance
- Benefits packages tailored to each country
- Support from local HR and legal experts
- Multi-currency payouts
- Over 15 flexible methods to pay your team
- Operates in over 160 countries
Price: Starts at $599 (£474) per month
EOR vs PEO
You could opt for a Professional Employer Organisation (PEO) instead. Rather than the full control that an EOR has, this is more of a ‘co-employer relationship’. Let’s look at the core characteristics of a PEO against an EOR.
Business presence
PEO: As the client, you must have a physical presence in place where you’re doing business
EOR: Find employees wherever your EOR operates
Insurance
PEO: Businesses must have coverage under the PEO’s insurance policy but if they fall short, you need to take out additional insurance
EOR: EOR carries out its own insurance policies
Minimum number of employees
PEO: PEO needs a minimum number of employees
EOR: EORs can work with organisations of any size
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