Employer of Record (EOR) services: the gateway to your international development

Going international has become a necessity for many companies seeking growth, and that's where Employer of Record (EOR) services come in.

Such a strategy is essential to facilitate your global expansion. But how do you go about it?

Don't panic, we'll guide you through the intricacies of EOR, from definition to selection criteria.

Let's get started! 🧳

See all software Global HR management

What is an Employer of Record service?

An Employer of Record, or EOR, defines an intermediary organization that facilitates the hiring of staff abroad by acting on your behalf. This legal entity handles all the administrative formalities on your behalf, in accordance with local labor legislation.

And let's not forget another key point: consolidation. Many companies use EORs to rationalize their operations in certain countries, with the aim of:

• reduce costs ;
• avoid having to manage a local legal entity.

EORs are most appropriate in an international context. But you can also use them within the same country if legislation varies from state to state, as in the USA for example.

🧐 For example, an American company wishing to hire in France can use an EOR. New employees are then recruited by the EOR while working for the company in the USA. In this case, the EOR is simply an intermediary who makes it easier for the American company to export.

In short, EORs take care of all the red tape, without you having to set up a new legal entity where you want to export or recruit. This saves you considerable time and energy.

EOR and portage salarial: similarities and differences

👉 The operation of an EOR is quite similar to the system of portage salarial in France. The two systems share a common objective: to facilitate the employment and administrative management of workers. In both cases, they take care of administrative, HR and compliance aspects, freeing companies from these constraints so that they can concentrate on their core activities.

On the other hand, if you're a French company looking to export abroad, you'll need to keep their differences in mind.

Scope of application

• 🇫🇷 Portage salarial: designed primarily for the French market, it enables self-employed workers to benefit from the advantages of an employee, while retaining their autonomy in finding customers and organizing their work.
  
  
• 🌍 EOR: EOR providers, on the other hand, focus on supporting companies in their international expansion outside France. They provide a full range of administrative services to facilitate the hiring of staff in different jurisdictions, enabling organizations to expand into new markets without having to establish a legal entity on site.

Customer relations

• 🇫🇷 Portage salarial: here, the worker is employed by the "portage salarial" company, which invoices a client for its services. They benefit from the flexibility needed to organize their work and find clients, while enjoying the social benefits of an employee.
  
  
• 🌍 EOR: in an EOR service, the employee is officially employed by the EOR provider, but works for the customer, who retains the power of direction and control. This model is therefore used by companies with no legal presence in a given territory, to hire local workers.

What are the differences between EOR and PEO?

The Professional Employer Organization, or PEO, is often associated with EORs for international payroll management, and sometimes even mistakenly confused. Understanding the differences is crucial to choosing the right solution for your situation.

A PEO is also a third-party company, the difference being that it is a co-employment arrangement with the client company. In this case, your company remains the official employer, while sharing some responsibilities with the PEO, including everything to do with human resources.

💡 To use a PEO abroad, you must have a local legal entity in the country where you wish to hire.

👉 With an Employer of Record service, you don't need to have a legal entity in the target country, nor sign a co-employment contract.

💡 Please note: it's also important to differentiate between direct and indirect EOR.

• Direct EOR: the EOR provider owns and manages its entities and is directly responsible for compliance in these countries to keep operations active. It's autonomy and efficiency, up to 90% faster thanks to a direct presence in the country. Ideal for those aiming for transparent, personalized international management.
  
  
• Indirect EOR: the EOR provider relies on a third party. This approach presents significant compliance risks, as it depends entirely on the reliability of the third party and its compliance with regulations. So be careful when choosing your EOR provider!

The role of an EOR abroad

As we have seen, an EOR is an employer on your behalf. It therefore plays a key role for all companies seeking to export or recruit internationally.

But what does an EOR do in practice? Here's a closer look at the main functions. 👇

1- Ensuring compliance with labor law

The EOR ensures that the employment contract complies with the laws of the country where the employee is based.

States all have very different legislation, and jumping in head first is the best way to get out of the legal framework, especially if you're looking to export to different regions. It's safer to delegate this part to comply with the countless labor laws.

👉 For example, if an American company wishes to recruit in France, it must accommodate itself to French labor law and respect the terms that make it up, including:

• management of working hours and overtime ;
• the minimum wage, or SMIC ;
• the number of paid vacations and RTT days allocated per year;
• hiring and contract termination procedures, etc.

2- Managing employee payroll

Once you've recruited abroad, you also need to pay your employees. Here again, each country proceeds in its own way. It's essential to know what's involved to avoid illegal practices.

👉 For example, a French employee needs a valid payslip and precise information to justify his situation and declare his income.

Fortunately, the Employer of Record service takes care of everything:

• legal conformity of the payslip ;
• the question of gross and net salaries;
• payment in the correct currency;
• tax deductions ;
• social security contributions;
• payment deadlines, etc.

3- Dealing with visas and international mobility

For companies operating in different parts of the world, it's not uncommon to organize internal mobility. This is one way of managing your company's human capital and enhancing your employees' skills.

Nevertheless, your employees need a specific visa to work abroad, and the procedures vary from country to country. With all the documents to be submitted and the various appointments to be organized, it's clearly not all plain sailing.

👉 For example, if you want to send one of your French employees to Japan, you need to obtain a visa to work legally on Japanese territory.

In this case, EOR takes care of the whole process:

• definition of the appropriate type of visa (work, business, residence permit, etc.) ;
• sponsoring the visa application (necessary in some countries);
• preparation of the file and necessary documents;
• logistical support in planning the trip (accommodation, air tickets, etc.);
• coordination with local authorities;
• monitoring visa status, etc.

Why use the services of an Employer of Record ? 4 advantages

There is no obligation to use an EOR. You can recruit abroad by setting up a legal entity, but this can quickly become complicated and time-consuming.

The EOR has a number of advantages, so it's in your interest to use an intermediary and delegate.

1 - Setting up abroad without having to create a legal entity

Setting up a legal entity abroad is a demanding process that requires a thorough understanding of the local market... and a certain budget!

You need to follow local regulations vigorously, because every mistake can cost you dearly. And as we've pointed out, laws differ from country to country. So you need to take time to learn and apply them.

EOR works like a thread-cutter, since you can achieve your goal of hiring or setting up abroad without having to go through the process of creating a legal entity. 🎯

The process is faster, less costly and less restrictive.

2 - Facilitating international recruitment

If the Employer of Record saves you time by avoiding the creation of a legal entity, it also enables you to access a new market more quickly.

You'll have access to a much wider range of talent, without having to worry about geographical boundaries. If the perfect profile presents itself to you, you can hire it without difficulty. The world is open to you. 🌎

3 - Transition to full remote for greater flexibility

Telecommuting is becoming more and more widespread, and many companies are deciding to make working from home the norm, in full remote.

With the possibility of hiring abroad or in different regions within the same country, you're not only benefiting from a greater diversity of talent, you're also encouraging widespread remote working.

If some of your employees can work from abroad, why shouldn't those in your own country be able to work from home?

The great thing about an EOR is that it can help you establish policies and practices that support a cohesive and effective corporate culture, from anywhere.

4 - Turn your freelancers into employees

For many companies, it's sometimes simpler to use freelancers for certain tasks. Sometimes, however, certain roles can be advantageously transformed into salaried positions.

This transformation is beneficial for the company, which will emerge more stable and engaging, but also for the freelancers, who will benefit from job security and social benefits (health, pension, unemployment insurance, etc.).

✅ In this situation, EOR facilitates the conversion of freelancers into employees by helping you draw up employment contracts that comply with local legislation, wherever your new employee is based. It takes care of the administrative aspects of employment, such as:

• payroll ;
• benefits ;
• taxes ;
• insurance.

7 criteria for choosing the right Employer of Record

Criteria 1: Legal expertise

Make sure that the EOR has good expertise in labor and tax laws in the countries where you plan to hire. If you're looking to set up in China, an EOR with knowledge of Korean labor law won't be much help. 🙈

Also remember to check their track record on legal and regulatory compliance.

Please note: direct EORs are generally more reliable than indirect suppliers when it comes to maintaining compliance; this is essential to avoid costly fines.

👉 Examples of solutions: Deel EOR, a tool dedicated to HR management of international teams, offers EOR services covering over 150 countries. Thanks to Deel EOR, you can recruit and onboard your employees abroad, without administrative complexity. And all in full compliance, since Deel meets regulatory requirements throughout the employee's life cycle (reference salaries, working hours, etc.).

Criteria 2: Network reach

If you're thinking big for your business, your EOR needs to offer as broad a network as possible. An Employer of Record with an extensive international reach guarantees you won't have any worries later on: you're sure to be able to recruit almost anywhere.

A good EOR should offer a wide range of countries, so you can select the one that best suits your future prospects.

👉 For example, Atlas HXM offers a very broad direct EOR solution, as it is established in over 160 countries. It enables us to find the best talent for you, while ensuring that the employment contract complies with local regulations. And, of course, Atlas supports you in all HR tasks, from human resources management and legal support to visa management.

Criteria 3: Experience and reputation

An EOR with a good reputation is an EOR you can trust. What's more, if he or she is experienced in your sector of activity, he or she will be better able to meet your needs.

Check an Employer of Record 's reputation by looking for reviews or testimonials.

Criteria 4: Scope of services

All EORs offer the same basic range of services, but some go even further: these are the EORs you should be looking out for.

Not all companies have the same requirements, so it's best for you to select an Employer of Record that can tailor its services to your company's unique needs.

Criteria 5: Customer support and assistance

Good customer support is essential, especially for an employer acting as an intermediary. Its availability, responsiveness and ability to resolve problems must live up to your expectations.

Make sure support is multilingual, because for an international company, support that's accessible to everyone is crucial.

👉 For example, Remote offers 24/7 customer service in several languages (French, English, German and Dutch). No matter where you are in the world, our support team is there to help you. You also benefit from all the services of an EOR, from administrative management of human resources to compliance with local labor laws.

Criteria 6: Technology and infrastructure

If you're looking to go through an Employer of Record, it's because you want to be able to communicate and work effectively with people who are geographically remote.

Make sure, therefore, that the EOR you select uses fast, efficient technologies, such as for payroll management.

It is also essential for the service provider to ensure advanced data security.

Criteria 7: Cost

The perfect EOR for you must not only be tailored to your needs, it must also fit your budget. So make sure you get the best value for your money.

Make sure you understand how the EOR structures its fees, and beware of hidden costs.

See all software Global HR management

Employer of Record services at a glance

Employer of Record is a strategic ally for companies aspiring to international expansion.but without the complexity and costs associated with setting up legal entities abroad. 🤩

Whatever your objectives, EOR knows how to meet your needs and expectations, from compliance with strict regulations and total human resources administration to international mobility management.

In short, the Employer of Record is the world at your fingertips, for less effort!