Navigating Global HR Challenges with an Employer of Record: Insights for Multinational Companies

Global expansion and entering new markets present great opportunities and challenges in compliance and creating a seamless working experience for employees abroad. Hiring foreign workers for full-time positions requires adherence to all legal and social norms. However, laws and regulations in different countries are constantly changing and can become significant obstacles to your goal. Keeping up with all the rules on your own is challenging, as managing a business itself requires time, effort, and resources.

At the same time, entering new markets offers promising prospects. It brings greater profitability to your business investments instead of being limited to domestic markets. For example, Apple increased its global revenue from $274.52 billion in 2020 to $394.33 billion in 2022, largely due to global expansion. So, what can you do to create your own success story and overcome challenges such as global hiring?

More and more companies are turning to an Employer of Record (EOR) service provider to mitigate risks during globalization and delegate a significant portion of responsibilities. By utilizing an EOR, companies rely on them to ensure global payroll, benefits, and compliance in the countries where they plan to hire employees. This strategy helps entrepreneurs achieve success abroad by bypassing bureaucratic hurdles.

What is global hiring with EOR?

An Employer of Record organization is a registered employer of a business service that acts as the employer of record for tax and legal purposes. Such a company ensures compliance with corporate requirements in establishing foreign legal entities, payroll processing, and workforce management. This way, businesses delegate a significant portion of administrative work and have the opportunity to focus on other crucial aspects, such as marketing, product and service improvement, and further expansion.

How does EOR work?

An EOR company primarily handles the hiring and termination of international employees, bringing the best talent to your project while ensuring compliance with international personnel management requirements. Collaborating with a partnering employer guarantees that your company is not legally responsible for labor law violations when hiring international workers. The official employer of the record service takes legal responsibility for several aspects, including:

• Payroll processing for employees;
• Ensuring overall business compliance;
• Tax processing and reporting;
• Employee insurance and maintaining appropriate coverage;
• Calculation and payment of payroll taxes;
• Managing sponsorship applications and visa requests.

Using employer-of-record services is particularly beneficial for your business when dealing with financial matters and labor legislation in different countries. EOR solution takes on legal responsibility for your hired international employees, acting as the lawful employer, handling employment contracts, processing international payments, and complying with local requirements in each country. They provide legal support in case of terminations and administer bonuses. Additionally, the employer of record services handles tax and contribution payments.

Thus, collaborating with an EOR helps mitigate risks associated with legal and tax matters. The official employer acts as an intermediary between companies and their foreign workers, facilitating the establishment of branches abroad. They handle complex tasks such as compliance with labor laws and wage requirements. Moreover, in some countries, for business establishment, a foreign director must have a residence visa. Without such a visa, global hiring is impossible until the company hires a local director.

Therefore, while working with an EOR, you not only successfully enter new markets but also eliminate unnecessary risks and have the opportunity to attract the most talented employees who will eagerly contribute to your company’s growth and development overseas.

Benefits of Employer of Record Services

Getting rid of bureaucratic difficulties and constraints is the main goal you achieve with an Employer of Record (EOR). But let’s take a closer look at why this is advantageous for your business:

• Transferring personnel management to an official employer saves time and allows you to focus on efficient business development.
• Working with a registered employer ensures greater accuracy in personnel management, payroll processing, and other payments.
• An EOR partner assists with record management, ensuring report accuracy and process efficiency.
• Using an EOR solution reduces regulatory risk as they are responsible for compliance with tax and labor requirements in different countries.
• EOR can simplify the taxation process, avoiding the need to establish a permanent establishment in the country of operation and taking full responsibility for tax compliance.
• Utilizing EOR services allows you to concentrate on business development, mitigate risks, and save time and resources associated with personnel management and taxation.

Thus, global workforce management optimization and compliance with legal requirements in different regions become an easy step for you. While your competitors struggle to handle these tasks on their own, they are losing the time that you gain along with the opportunity to surge ahead and confidently capture your market share.

Wrapping up

The official employer takes responsibility for complying with labor laws and regulations in various countries, helping the company operate within the law and avoid legal issues and penalties. Additionally, by partnering with an EOR, businesses delegate complex tasks such as employment contract management, payment processing, taxation, and social contributions. This streamlines payroll processes and internal accounting. All of these grant valuable time to EOR partner companies for the development and promotion of their products, becoming the driving force for further rapid progress.