What is an Employer of Record (and How It Can Help Streamline Your Hiring Process)

Share this post


When a company grows bigger, additional (and time-consuming) responsibilities multiply. Handling all the tasks can be overwhelming for business owners, especially when operating on a large scale. Globalization has made it convenient for entrepreneurs to take their businesses on a global scale, but hiring international employees can still be challenging due to differences in labor laws and regulations that vary for every country.

If you are starting to expand your business and in need of hiring employees from other countries, then an employer of record can take on the challenge for you. Before anything else, what is employer of record?

human resources concept

What is Employer of Record and How Does It Work?

An employer of record (EoR) is a third-party organization that handles global employment for your growing business. This helps you focus on your business expansion without having to worry about employment processes. It also provides services that involve managing the hired local employees, payrolls, taxes, benefits, and personnel record management, all made possible by the employer of record’s HR experts.

An employer of record serves as the intermediary between the company and the international employees. While they are responsible for global employment, their task is limited only to human resources administrative work. Supervision for day-to-day work performance is still overseen by the employer and its team.

What are the Responsibilities of an Employer of Record?

The responsibility of an EoR is not limited to hiring international employees for your company. Its services can vary from company to company and can be tailored depending on the needs of the client. Here are some of the common responsibilities carried out by the EoR:

  1. Hiring and onboarding local workers
  2. Managing payrolls and taxes
  3. Drafting employment contracts
  4. Arranging work permits for the client
  5. Providing benefit packages to employees
  6. Complying with local labor laws and regulations
  7. Creating a smooth offboarding process

What are the Benefits of an Employer of Record?

Having a partnership with an employer of record is very beneficial to client companies. It is convenient and time-saving for business owners in terms of hiring and managing manpower. It is also safer to let a third-party to handle compliance with local labor laws to avoid liabilities or minimize risks. Here are some specified benefits of an employer of record:

  • More cost-efficient and time-saving than setting up local incorporation
  • Helps you in monitoring compliance with labor and tax laws
  • Hires and trains employees instantly
  • Takes over human resources responsibilities for the international market

What to Look for in an Employer of Record Provider?

These are important things to consider when choosing an Employer of Record provider:

  • Your employer of record provider should have HR experts who will ensure the onboarding of top talents that will make up your workforce. You’ll need a reliable partner that will provide you with services that can contribute to the growth of your business.
  • Your prospective EoR partner should be responsive and accommodating. Make sure that your partner will respond quickly to your concerns and needs. A client account manager should also be provided to accommodate your team’s queries in the local time zone and language.
  • Your EoR provider should have price transparency. There should be no hidden charges that may appear along transactions. After all, you’re looking to hire an EoR to save time and money, so you wouldn’t want to pay for unnecessary expenses that can affect your company’s budget.
  • Your EoR partner should be knowledgeable about employer burden cost and should inform you accurately. Of course, it is part of the employment process to consider insurance, social contributions, and paid leave. Employer burdens vary by market, and it is your EoR partner’s responsibility to provide you with accurate reports on those requirements.
asian young adult sitting at desk across from other man

When to Use an Employer of Record?

Companies that are globally expanding tend to search for partners that will help them manage their growing workforce. If you are about to promote your business to countries where you do not have expertise regarding their employment laws, then hiring an EoR suits your needs.

Here are some situations that you can assess if your company needs to hire an employer of record:

1. Your company wants to explore new markets without establishing a local legal entity.

Setting up an entity is time-consuming and not financially practical, especially for companies that are just starting to expand. An employer of record can help you explore new markets without having to establish a local entity. Through EoR, you will be able to hire international employees conveniently, which will give you more time to focus on marketing strategies and attracting new customers.

2. You lack expertise in employment and tax laws of a certain market.

As a business owner, you wouldn’t want to risk violating the employment and tax laws of a market where you hired your international employees. Laws and regulations may vary from one country to another. So, if you are not an expert in that field, hiring an EoR can do all the work for you. They will handle the employment process inclined to the requirements and standards of your chosen market, making you worry-free from penalties for non-compliance.

3. Your company needs to protect your intellectual property.

Hiring international employees without proper caution can put your IP at risk. A reliable EoR can offer IP protection that will extinguish those risks and put your mind at ease. Intellectual property protection is important for businesses of all sizes because their products and services distinguish them from competitors in the market and draw in potential customers or investors.

young asian businesswoman working on laptop

Streamline Your Hiring Process with Outsource-Philippines’ EOR Services

If you are planning to expand your business in the Philippines but are uncertain about where to start employing workers and contractors, Outsource-Philippines is here to help you. With our Employer of Record services, you can focus on growing your business without worrying about hiring employees. Partner with us to experience the top-notch performance of our HR experts. Contact us today and get a free quote!