What is an Employer of Record - A Guide to National and Global Hiring
Expanding across the country or internationally offers businesses the opportunity to tap into new markets and access a global talent pool. However, the complexities of international hiring can pose significant challenges.
Executive Summary
This blog explores how an Employer of Record (EOR) can simplify global expansion by handling employment requirements, ensuring compliance with local laws, and mitigating risks. It also differentiates EOR from Professional Employer Organizations (PEOs), highlights scenarios where EOR services are beneficial, and provides guidance on selecting the right EOR provider. With TCWGlobal's extensive experience and expertise, organizations can confidently navigate global hiring and achieve their expansion goals.
What is an Employer of Record (EOR)?
How Does an Employer of Record Work?
When to Use an Employer of Record
What to Look for in an EOR Provider
Employer of Record on a Global Scale
What is an Employer of Record? A Guide to National and Global Hiring
Expanding nationally and internationally offers numerous benefits for organizations, including access to a broader customer base and a diverse talent pool. However, the complexities of global hiring can pose significant challenges. This is where an Employer of Record (EOR) comes into play, simplifying the process and mitigating risks.
What is an Employer of Record?
A global Employer of Record (EOR) enables companies to quickly hire workers in new markets without the cost and complexity of establishing a legal entity in those countries. An EOR provider manages all employment-related tasks on behalf of the client organization, ensuring compliance with local laws and regulations.
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How Does an Employer of Record Work?
A national and global EOR has already set up entities in various states and countries, taking care of banking, insurance, taxes, HR, facilities, and contracts. They adhere to local employment laws to create a compliant infrastructure for employing and paying local workers. By hiring workers through its established entities, an EOR acts as the legal employer, allowing companies to expand nationally and globally without setting up their own entities.
EOR services include:
- Onboarding local workers with compliant employment contracts.
- Managing salaries, taxes, and benefits.
- Supporting in-state and in-country worker's HR needs.
- Offering cost-effective payroll tax management.
- Sending out W2's
While the EOR handles HR and payroll, the client company is responsible for day-to-day management, performance reviews, and termination decisions. This allows organizations to benefit from local talent without the associated risks.
Is an EOR the Same as a PEO?
Although similar, EORs and Professional Employer Organizations (PEOs) differ significantly. PEOs are more common in the U.S. and typically involve a co-employment arrangement, where HR and payroll tasks are shared between the PEO and the client company.
Both entities must be legally registered in the employee's country, sharing legal responsibility.
In contrast, a global EOR assumes full responsibility for legal compliance and entity establishment, freeing the client company from these burdens. When vendors refer to “global PEO” services, they often mean an outsourcing service similar to an EOR, not the co-employment model seen in the U.S. One more important aspect is that often an EOR offers significantly more legal protections than a PEO.
When to Use an Employer of Record
An EOR can be an ideal solution in various scenarios, including:
- Exploring New Markets: An EOR allows you to hire workers in target states and countries, helping you test the market without the commitment of establishing an entity.
- Ensuring Independent Contractor Compliance: EORs can hire your international contractors as employees, ensuring compliance with local laws and avoiding potential penalties.
- Acting as an Entity Stopgap: If you need to start operations quickly while setting up your own entity, an EOR can employ workers in the interim.
- Facilitating Acquisitions: If you acquire a workforce in a new country but lack a legal entity to pay them, an employer of record can manage payroll compliantly on your behalf.
What to Look for in an EOR Provider
When choosing an Employer of Record provider, consider the following:
- In-Country Presence: Ensure the provider has a permanent entity in your target countries, indicating their commitment and ability to offer comprehensive HR services.
- Local Expertise: The provider should have staff with extensive local knowledge and years of direct employment experience to handle complex employment situations.
Employer of Record on a Global Scale
With close to two decades of experience, TCWGlobal is a trusted EOR provider, helping organizations expand and hire in over 170 countries. Our GEO service leverages deep local expertise to ensure compliant and efficient global employment.
Visit our country hiring guides:
Need Help?
Whether you need expertise in Employer of Record (EOR) services, Managed Service Provider (MSP) solutions, or Vendor Management Systems (VMS), our team is equipped to support your business needs. We specialize in addressing worker misclassification, offering comprehensive payroll solutions, and managing global payroll intricacies.
From remote workforce management to workforce compliance and from international hiring to employee benefits administration, TCWGlobal has the experience and resources to streamline your HR functions. Our services also include HR outsourcing, talent acquisition, freelancer management, and contractor compliance, ensuring seamless cross-border employment and adherence to labor laws.
We help you navigate employment contracts, tax compliance, workforce flexibility, and risk mitigation, all tailored to your unique business requirements. Contact us today at tcwglobal.com or email us at hello@tcwglobal.com to discover how we can help your organization thrive in today's dynamic work environment. Let TCWGlobal assist with all your payrolling needs!
Discover how TCWGlobal's employer of record service can support your national and international expansion by speaking with one of our global solutions advisors today.
