Employer of Record (EOR) Services: Top 10 Frequently Asked Questions

1. What is an Employer of Record (EOR) and how does it work?

An Employer of Record (EOR) is a third-party organisation that becomes the legal employer of a company’s workforce in a foreign country. The EOR handles all employment responsibilities, including payroll, taxes, benefits, and compliance with local labour laws, allowing businesses to hire employees internationally without setting up a local entity.

2. What are the primary benefits of using an EOR service?

Using an EOR service provides numerous benefits, including compliance with local employment laws, cost savings on establishing and maintaining a local entity, reduced administrative burden, faster market entry, and access to a global talent pool.

3. How does an EOR ensure compliance with local Labour laws?

An EOR stays up-to-date with local Labour laws and regulations, ensuring that all employment practices are compliant. This includes adhering to statutory requirements for payroll, benefits, taxes, and employee rights, which mitigates the risk of legal issues and penalties.

4. Can an EOR help with employee onboarding and offboarding?

Yes, an EOR manages the entire employee lifecycle, from recruitment and onboarding to offboarding. They handle employment contracts, offer letters, employee documentation, and the termination process, ensuring a smooth and compliant experience.

5. What types of businesses benefit most from EOR services?

EOR services are ideal for businesses of all sizes looking to expand internationally, particularly those wanting to test new markets without significant investment. Startups, SMEs, and large enterprises can all benefit from the flexibility and cost-efficiency of EOR services.

6. How does an EOR handle payroll and benefits administration?

The EOR manages payroll processing, ensuring timely and accurate salary payments, tax withholdings, and compliance with local regulations. They also administer employee benefits, including health insurance, retirement plans, and other statutory benefits required by local laws.

7. What is the difference between an EOR and a PEO (Professional Employer Organization)?

The main difference lies in the employment model. An EOR is the legal employer in the host country and takes full responsibility for compliance and payroll, while a PEO involves co-employment where both the company and the PEO share employment responsibilities. An EOR does not require the company to establish a local entity, whereas a PEO does.

Learn more through our blog: What is PEO and How Does it Work Compared to EOR?

8. How quickly can a business start hiring through an Employer of Record?

Businesses can start hiring through an employer of record almost immediately after signing the service agreement. The EOR’s established infrastructure allows for rapid onboarding of employees, ensuring compliance with local laws and regulations.

9. What are the cost implications of using an EOR service?

While using an EOR involves service fees, it often results in overall cost savings by eliminating the need to set up a local entity, reducing legal and administrative expenses, and ensuring compliance with local Labour laws to avoid fines and penalties.

10. How does an EOR support international expansion?

An EOR enables businesses to expand internationally with minimal risk and investment. By handling all legal, administrative, and HR-related tasks, an EOR allows companies to focus on their core operations while ensuring compliance and efficient management of their global workforce.

Ready to expand internationally without the hassle of local entities? Our Employer of Record (EOR) services handle employment responsibilities, from benefits administration to compliance with labour laws. We also offer payroll outsourcing, outplacement service, and visa application support. Discover the benefits of partnering with us for global expansion.  Contact us today and learn more how Links’ services can support your business.