Understanding Employer of Record (EOR) Services

The current remote-working and officeless era offers a better opportunity for companies to expand globally. That means they can access new markets with the brightest, best, and most diverse talent.

However, there is one major concern – local employment laws and regulations are complex and vary from one country to another. Every country is unique in terms of the following:

  • Tax systems
  • Payroll cycles
  • Employment rights
  • Benefit schemes
  • The penalties for not adhering to employment laws and regulations
Understanding Employer of Record (EOR) Services

Many companies don’t have the time and resources required to hire top talent from any country globally, including Canada. That’s why many businesses choose employer of record services to meet their worldwide employment needs and requirements.

An employer of the record service provider can help your business recruit top talent, draft employment agreements, handle tax and social security payments, and process payroll in Canada. The benefits and functions an employer of record offers are numerous. Let’s keep reading to understand everything in and around employer of record (EOR) services.

What is an Employer of Record (EOR)?

An employer of record is a company that functions as the lawful employer on behalf of your company. That means your EOR of choice assumes lawful responsibilities for employing workers from any part of the world and completing key tasks such as:

  • Payroll processing
  • Administering benefits
  • Filing taxes
  • Ensuring their workers are employed compliantly in their local country or state

Companies usually seek employer of record services when they’re after top talent in countries or overseas markets where they do not have an existing local entity. It’s a straightforward and cost-effective way of hiring a great workforce rather than establishing a legal entity that requires more time and resources.

An employer of record ensures all processes meet the rules and regulations of every local jurisdiction. With EOR services, businesses of any size can hire and onboard any number of workers. Top-rated EOR service providers manage thousands of global workforces. Some organizations use EOR companies on an ad hoc basis or a one-off basis.

How Does an EOR Service Work?

EOR services allow companies to deploy their team members globally. Let’s take a look at some EOR workings that make it possible.

International Infrastructure Model

EOR service providers can use two infrastructure models to establish local entities in different jurisdictions, which include the following:

  • Wholly-owned company: Employer of record service providers that utilize the wholly-owned model are the ones that own and control independent subsidiaries globally. A wholly-owned infrastructure model employer of record is more reliable since it’s in full control of the local subsidiaries/entities that your business can utilize to employ global talent from target countries.
  • An aggregator: An aggregator model involves an umbrella organization with subcontractors in certain countries. This model may not be scalable and could show that the employer of record doesn’t have the local lawful expertise. Also, it could indicate that the EOR service provider doesn’t have the presence required to manage your company’s hiring and employment.

Legal Compliance

An EOR service provider who’s a leader in the industry features a team that helps create local compliant contracts. The same team ensures correct worker classification. On top of that, the team adds new employees to company payrolls and sets up optional and mandatory worker benefits. By doing so, it makes sure that the workers have the right health coverage and social security rights, among other benefits.

Payroll and Tax

Businesses with workers from overseas don’t need to understand their obligations as employers, like employee benefits and tax withholdings. Employer of record companies are responsible for processing global payrolls timely and accurately while also collecting tax documentation. Your EOR can offer support for your company and workers at any time.

Local Partners and Freedom of Work

The EOR is legally responsible for several company tasks, from hiring global talent to processing payroll. But you still have full freedom and responsibility to keep track of these tasks while at the same time managing day-to-day activities.

When it comes to local partners, most EORs have numerous partnerships that can enhance your worker benefits package. A good service provider works with partners globally to provide top-notch healthcare and perks. That means your company may be eligible for benefits it couldn’t otherwise access.

An employer of record enables your business to keep up with the current era of the workplace and minimize the stress, effort, costs, and time required to set up local entities in foreign countries you want to expand to. Be sure to work with an industry leader if you want to enjoy high-quality EOR services.

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