What is an Employer of Record (EOR)?

What is an Employer of Record (EOR)?Ivana Georgievska
June 15, 2022

Employer of Record (EOR) is essential for hiring remote.

In the age of business globalisation and remote work, partnering with an Employer of Record (EOR) provides added qualities to your organisation.

Key Takeaways

  • An Employer of Record is a global employment services provider that helps companies with financial and legal procedures needed to manage outsourced, i.e. remote employees abroad. 
  • It is the formal, legal employer of your staff. Therefore, the EOR is responsible for paying your team and maintaining compliance with local labour and tax laws;
  • This includes dealing with employee or contractor taxes, benefits, insurance, visa application, sponsorship applications, and other transactions and operations concerning human resources.
  • Companies often hire EORs to decrease all the procedures and complications related to human resources operations, such as market access, market understanding and participation, and managing payroll for international employees.
  • This invaluable outsourced service keeps a business in compliance with labour law and other fields of related regulations and significantly assists the company during its internationalisation.
  • In international scenarios, regulations regarding benefits and taxes can vary and be very complex. 
  • EORs help companies penetrate new markets, manage benefit systems more efficiently, and obtain stay/work permits and visas.
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First, we should make the distinction between

Professional Employer Organisation (PEO) and; Employer of Record (EOR).

A Professional Employer Organization (PEO) is better understood as an employee leasing company.

It is an HR firm that other companies contract to take over certain administrative functions, such as payroll, taxes, and employee benefits.

The PEO hires and pays the employees on behalf of your company and takes responsibility for all formal employment tasks. 

The PEO and the client organisation are co-employers of the contracted employees.

Both co-employers will work closely in taking on all the HR administration that comes with expansion.

In co-employment, the PEO and the organisation must be registered as legal entities in the country where the employees are located. 

What are the typical eor employer of record services?

  • Processing and funding payroll
  • Depositing and filing taxes
  • Handling unemployment
  • Handling workers’ compensation
  • Issuing Forms W-2
  • Collecting and processing time sheets
  • Creating and maintaining employment contracts
  • Employee onboarding 
  • Maintaining certificate of insurance
  • Completing and storing Forms I-9
  • Complying with E-Verify
  • Doing background checks and screenings
  • Offering and administering benefits
  • Off-boarding employees
  • Terminating employees

Lano is one of the most reputable companies specialising in the Employer of Record function, among other HR services.

Want to book a call with them? Click here.

Lano - employer of record company (EOR)

Benefits of using Employer of Record

There are many distinct benefits.

The services EOR supplies are the core of a Global Employment Organization system that makes foreign employment not complicated.

In many cases, the EOR has the most significant benefit when doing business in foreign countries, where local employment's cost, complexity, and compliance risk may be prohibitive.

An EOR is a modern and innovative way of paying great people.

Expansion to new markets

The first step is setting up a local entity via incorporation and registration if a company decides to spread the business in another country or hire talent abroad.  

This do-it-yourself process is highly time-consuming and expensive. In addition, it requires skilled legal and accounting support to ensure compliance.

A global EOR solution can employ professionals in multiple countries without needing to register a business locally.

It also ensures that all staff are hired in full visa and immigration compliance.

This saves on the cost of establishing multiple international subsidiaries and allows new employees to be onboarded within days. 

If you need to only temporarily hire staff on a task or project basis as contractors, then you should consider using an employer of record. 

Access to diverse talent pools

When expanding, it is always challenging for businesses to find qualified professionals to progress the company's vision and goals.

The steps needed to source, recruit, assess and hire such talent are costly and time-consuming. 

Having an EOR partner who can support you in recruiting a high-quality workforce and conducting the HR processes that positively contribute to your company culture is invaluable.

guide to remote team

Keeps your global team happy

One of the essential aspects employees need to consider is your competitive benefits packages.

An EOR can be a great solution to gain improved access to pension plans, paid time off, health insurance, etc., that will directly raise the employer reputation of your company. 

By providing these benefits, your employees will be more motivated to perform, be productive and contribute to the overall team effort in making their company prosperous.

Mitigate risks

Hiring an employer of records allows business owners to shift the burden of responsibility off the organisation and onto a third party.

Since the employer of record is the one featured in the official documentation, drafting agreements, and paying taxes, the organisation will be the one to take the fall should something go wrong. 

Using an EOR means a business owner doesn’t have to worry about the consequences of accidental tax documentation negligence or non-compliance with local labour laws.

In specific markets and industries, companies may be inclined to avoid employing staff altogether and instead engage those individuals as independent contractors.

This is a risky move.

Suppose the tax or employment regulators, or courts, consider the true nature of the professional’s engagement to be employment.

In that case, a company could have severe penalties and liabilities.

As employees through an EOR are bona fide, there is a reduced risk of misclassification or pressure to take specific (harmful) actions.

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In a global and remote work business environment, having an Employer of Record as a partner shows your awareness of future-of-work trends. 

Only global (remote) companies that invest in improving their employee experience hire diverse talent and nurture an inclusive and supportive company culture that can stay competitive in any industry and market. 

Working with the best professionals for the job help them thrive in their local communities while applying internationally standardised criteria for quality of work and employee management, allowing business to grow faster and reach more significant heights. 

Finding the right partner and the best team for the job only takes it. 

Expand your team globally with Lano

Expanding your team quickly and efficiently has never been easier!

Talentroo is on a mission to make remote work hiring easier for ambitious companies.

Forget the slow old fashioned ways of talent sourcing and outdated employee retention plans.

When building a diverse, dedicated and talented team, the secret to success is the ability to hire anywhere, no matter where your business is.

This is why Talentroo has partnered with Lano, a platform for global teams, that enables businesses worldwide to hire, manage and pay contractors and full-time employees from across the globe.

Wonder how?

  • Employer of Record: with Lano, businesses can hire full time employees abroad without opening up a local entity.
  • International payroll: Lano’s automated global payments are available in multi currencies, with access to one of the lowest FX rates - 2% cheaper than market.
  • Contractor management: Manage the whole contractor lifecycle - from onboarding to payments, compliantly and efficiently.
  • Broad coverage - Lano supports all employment types: full-time, freelancer and contractors in 180 countries worldwide.
  • Global customer care: 24/7 support in multiple languages - English, German, Spanish, French and Polish.

Talentroo and Lano are committed to the dual mission of enabling companies to take the leap towards building a successful international team.

Thanks to our partnership, Talentroo clients can access more flexible pricing and expand faster than ever before.

Take advantage of this partnership by booking a call and learn about the possibilities for global hiring. Lano will help you take the next step towards international expansion.