For business owners looking into global expansion, hiring international talent, or branching into new global markets, it’s overwhelming to employ foreign staff in a legal and compliant way. Hence, you must abide by and know all the local employment laws and payroll while fulfilling other employer obligations. This initiative requires business owners to expand and learn more about unfamiliar and foreign labor laws.
Instead of doing and processing these HR responsibilities yourself, consulting with an Employer of Record (EOR) company would be helpful. Not only can they help ensure compliance with necessary foreign laws, but they also go beyond and streamline your entire hiring process so it’s seamless and efficient.
Before partnering with an EOR, it’s essential to understand what an EOR is and ask the right questions to align expectations with your EOR company. Explore the frequently asked questions below to ensure clarity and transparency in your collaboration.
What is an Employer of Record (EOR)?
An EOR acts as a crucial intermediary, shouldering the legal responsibilities of employing a group of workers on behalf of a client or company. Rather than establishing a direct employment relationship with the client, these professionals are employed by the EOR.
Companies use EOR services to streamline their global expansion efforts by quickly and compliantly hiring employees in foreign countries without the need for establishing legal entities. The main challenge they wish to solve through EOR is navigating complex international labor laws, tax regulations, and compliance requirements, ensuring that they can operate efficiently and legally in various jurisdictions while minimizing the administrative burden and risks associated with international hiring and employment.
In essence, an EOR serves as the formal employer for a group of workers, assuming responsibility for all employment-related obligations and ensuring adherence to pertinent labor laws. Collaborating with an EOR not only offers companies the flexibility to efficiently manage their workforce but also helps mitigate legal risks and streamline administrative procedures.
Related post: EOR 101: The Ultimate Guide to Employer of Record
12 Questions to Ask When Choosing an EOR Partner
Engaging in a new partnership is daunting, so it helps to list the questions that need clarification before starting. Hopefully, the list below will address the different queries you might have to help you ease into the process.
1. Does the EOR company have a proven track record of success?
To ensure that the EOR company delivers on its promises of expert knowledge, honest pricing, and prompt service, it’s crucial to conduct thorough research and due diligence. So, start by requesting a list of past clients with similar objectives, budgets, and talent requirements as yours. Reading reviews on independent websites, forums, and communities can also provide valuable insights into the EOR’s reputation and performance. Lastly, don’t hesitate to ask for references and proof of experience, especially considering the importance of delegating project management tasks to them.
2. How Does an EOR Ensure Compliance with International Employment Laws?
Each country has its own set of labor laws designed to protect the rights of both employers and employees. However, navigating these regulations can be complex and time-consuming, especially for your business venturing into international markets.
This is where an EOR company becomes invaluable, as it specializes in complying with labor laws across different jurisdictions in the country you want to outsource. By partnering with an EOR, your enterprise is also assured that its operations adhere to the relevant regulations, mitigating the risk of legal issues and penalties.
3. What Is the EOR’s Expertise in My Target Country?
A good EOR partner has knowledgeable and experienced staff in the markets or industries where you wish to grow or recruit talent. Failure to ensure compliance with local labor laws and regulations can result in significant consequences, including non-compliance penalties, legal expenses, and damage to your business’s reputation. Therefore, it’s crucial to choose an EOR company that thoroughly understands the intricacies of the country’s labor laws where you intend to operate.
4. Are the EOR’s Pricing and Fees Completely Transparent?
Asking about pricing transparency can provide valuable insights into the EOR company you’re considering partnering with. Ensure to evaluate different service providers and prioritize those that are transparent about their pricing structure in terms of setup costs, taxes, or termination fees that may apply. These additional expenses can vary depending on factors such as the target country and the specific skill sets required for your project.
For example, recruiting skilled professionals in niche industries like software development may incur higher costs due to the specialized expertise involved. Be wary of EOR companies that may introduce hidden fees or markups later in the process, as this can impact your budget and disrupt multiple aspects of your business operations.
5. Is the EOR Present in the Specific Countries Where I Need to Hire?
If you partner with a competent EOR company, the location of where they operate must be the least of your worries since an EOR provider can work from anywhere in the world and ensure delivery. However, some EOR companies specifically operate within their focused job markets. For instance, there are EOR companies based in the Philippines that excel in providing local HR services for global employers in need of Filipino talents. This is due to several factors, including cultural compatibility with Western nations, a highly skilled workforce, and cost-effectiveness. These attributes position EORs in the Philippines as an ideal destination for businesses seeking reliable service providers.
6. What Range of Services Does the EOR Offer?
As your business evolves over time, your needs and requirements will inevitably change. So, it’s advantageous to select an EOR partner that offers a comprehensive suite of services capable of accommodating your evolving needs. Additionally, your chosen EOR should provide a platform or system to manage all aspects of your distributed workforce, eliminating the need to juggle multiple HR solutions.
7. How Does an EOR Differ from a BPO and Which Is Right for My Needs?
An EOR firm takes care of the administrative and legal tasks involved in hiring remote workers. This means your company doesn’t have to establish a local entity in the country where you’re hiring to comply with local labor laws. The roles and responsibilities fulfilled are closely aligned with your business’s operational framework. In contrast, a business process outsourcing (BPO) company subcontracts certain business activities to another vendor as part of their overall solution.
8. How much does an EOR typically cost?
The cost of an EOR service can vary depending on several factors, such as the size of your company, the number of employees being managed, the complexity of the payroll and HR functions, employee salaries, and the geographic location. Typically, EOR services charge a monthly fee per employee, which can range from a few hundred dollars to several thousand dollars. Meanwhile, there are EOR providers who also charge additional fees for services such as onboarding, termination, or compliance. Thus, it is important to carefully review the pricing structure and contract terms of different EOR providers to find the one that best fits your company’s needs and budget.
9. What is the internal staffing capacity of an EOR?
The internal staffing capacity of an EOR refers to their ability to effectively manage and support the employees placed in their employment. This includes having a dedicated team of professionals who are knowledgeable in areas such as HR, payroll, benefits administration, and compliance. They should also have the infrastructure to handle any issues or inquiries that may arise throughout the employment period. Hence, having a strong internal staffing capacity can ensure that your business is well taken care of all throughout the agreement.
10. What level of support do they offer to global employees?
It is ideal for an EOR to offer a high level of support to global employees as their legal employer. EORs must ensure that workers are paid accurately and on time and that they receive all the necessary benefits and entitlements. Additionally, the EOR provides support and guidance to employees regarding their employment rights and obligations, ensuring a smooth and positive work experience for global workers. For this reason, an EOR plays a crucial role in providing comprehensive support to global employees, allowing your business to focus on their core job responsibilities.
11. Does the EOR offer any learning resources?
An EOR is a professional service that helps companies manage their workforce. While the primary focus of an EOR is to handle administrative tasks such as payroll, benefits, and compliance, they also offer additional resources to support employee development and learning. This initiative can include access to online training platforms, educational webinars, and industry-specific workshops. By offering learning courses, the EOR not only benefits the individual employees but also contributes to the overall success and productivity of your company.
12. Are they a direct or indirect EOR provider?
EOR companies can be considered both direct and indirect providers, depending on the context. Directly, EORs serve as the legal employer for a workforce and act as the intermediary between your company and the employees, managing all employment-related matters. In this sense, EOR companies are direct providers, fulfilling the role of an employer on behalf of your business as their client.
On the other hand, they can also be seen as indirect providers since they do not directly hire or select the employees. Your company still has control over hiring decisions and can dictate the qualifications and requirements for the positions. Ultimately, EOR companies offer a hybrid solution that combines direct employer responsibilities with indirect employee sourcing.
Related post: The Benefits of Using an Employer of Record Service
Key Considerations When Choosing an Employer of Record (EOR) Company
Now that you’ve asked the necessary questions, you can narrow your search by looking at their responses. Before you partner with them, look at their qualities first as an EOR company and see if they match yours.
Respectable reputation and excellent track record
If your EOR partner prioritizes efficient onboarding procedures, your business can fully leverage the benefits they offer, including professional services, expert industry knowledge, and employee retention. They should aid and provide subject-matter expertise to address any queries workers may have regarding their job path, such as contracts, pay slips, benefits, taxes, and more.
As stated in the research from the University of Warwick, people were 12% more productive when happy. It keeps them comfortable and effective, which is your goal. As such, it’s important to remember that your EOR partner must know the ins and outs of a country and comply with proper labor laws to ensure the appropriate compensation of your employees.
A balance between automation and human expertise
It is crucial to consider the balance between automation and human expertise when choosing an EOR partner. Automation has become increasingly prevalent in various industries, including HR and payroll management, since it can streamline processes and increase efficiency. However, you must ensure that there is still a strong human element involved in the EOR services provided.
Human expertise is invaluable when it comes to resolving complex issues, providing personalized support, and understanding the unique needs of each client. Hence, choose an EOR company that strikes the right balance between automation and human expertise to have a seamless and effective experience for your business and employees.
Proactivity
A proactive EOR company’s commitment to staying ahead of industry trends and regulations in assisting your international hiring needs is essential to look up to. Begin by examining client testimonials to gauge their track record and ask about their capacity to meet your expectations regarding onboarding timelines and adaptability to external changes. Furthermore, assess their flexibility and expertise in addressing your company’s specific requirements, as well as their responsiveness to inquiries and effectiveness in seamlessly integrating new hires.
Stepping Into Global Expansion with an EOR by your side
Partnering with an EOR can be a game-changer for companies looking to expand globally. With an EOR, you can navigate the complexities of international employment laws and regulations with ease. By outsourcing the administrative tasks associated with hiring and managing employees, you can focus on your core business functions and strategically expand into new markets.
Additionally, the expertise and network of an EOR can provide you with access to local talent, ensuring that you have the right team in place to drive your global expansion efforts. Going into global expansion with an EOR by your side is a smart and efficient way to achieve your international growth objectives. Thus, let the tips and questions to ask when choosing an EOR be your guide to helping you choose your next partner.
One CoreDev IT is an EOR company in the Philippines that helps you with back-office, project management, software development, clinical research services, and more. Regardless of your location, we can connect you with highly skilled and competent Filipino workers who are precisely matched to meet your specific business requirements.
Check out our Frequently Asked Questions (FAQ) page for other questions you may have. Otherwise, contact us to learn more about our services!
