Global EOR: What it is and Why Entrepreneurs Should Know About it

Expansion is a long-term goal of many growing companies. The further your business grows, the more customers you can potentially reach, increasing your profits and revenue.

However, as your organization expands, there are also various forms of administration you need to be aware of, such as “EOR” or “PEO” solutions. An Employer of Record commonly known as an EOR is just one of the tools you can use to accelerate your growth in a rapidly growing international business.

Today, we’re going to be looking at what the term “EOR” actually means, why it’s so important to modern entrepreneurs, and when a global EOR might be valuable to your brand.

What is a Global EOR?

A global Employer of Record is a company committed to helping businesses with the worldwide expansion of their brand. These third-party agencies handle the recruiting, hiring, and HR processes for your company as you expand into new marketplaces.

Rather than replacing your HR (Human Resources) division, a Global EOR offers supplementary support to ensure you can hire overseas staff. You can use these companies when you’re expanding your business into new regions. Without an EOR (or a Global PEO), you would need to open a subsidiary in each of the countries you plan to recruit in. This means registering your company in a range of different locations and complying with a host of specific regulations.

Hiring people through an Employer of Record or a similar agency means you don’t have to have a local version of your company in each destination you want to hire talent from. An EOR can take care of all the administrative tasks regarding local employment, managing everything from onboarding staff to paying team members on your behalf.

What Does an EOR Do?

An Employer of Record basically acts as the “legal employer” of staff members you want to hire overseas, while you retain the role of managing employer. In other words, your EOR handles things like setting up contracts in accordance with local employment laws and managing payroll taxes. The EOR can also:

  • Handle various recruitment expenses
  • Manage timesheets for various employees
  • Terminate contracts and dismisses employees on your behalf
  • Supply work permits and visas if necessary
  • Supply benefits relevant to local employees.

On the other hand, you’re responsible for calling the shots on hiring decisions, assignments, duties, and compensation. The EOR simply ensures your hiring policies are followed while keeping your business compliant with local laws.

For instance, organizations looking to hire from multiple nations across Europe can simply provide their EOR with information on who they want to hire and where they want to hire professionals from. The EOR is then responsible for navigating local laws, handling paperwork, and onboarding your employees. This frees organizations of the various distractions, time, and costs associated with expansion.

Is a Global EOR the Same as a PEO?

It’s easy to get confused about the meaning of Global PEO compared to Global EOR.

A Global PEO (professional employer organization) is essentially the same service as an EOR, allowing companies to access more of the talent they need. However, a Global EOR is not the same as a domestic or local PEO.

Like an EOR, your PEO can maintain payroll services and record-keeping for your employees, while you direct the daily tasks and activities of team members. A local PEO as used in the USA however will do further tasks such as be the purchaser of health insurance etc

Does Your Company Need an EOR or PEO?

EOR and PEO partners can be a very valuable tool for rapidly-growing start-ups and business leaders. When a company partners with an Employer of Record or a PEO, they’re taking steps to empower their global expansion strategies and talent acquisition methods.

These strategies can even help you grow your business during periods of restricted mobility and local lockdowns, which has made them increasingly valuable in the last couple of years. The right global agency allows you to hire full-time employees, instead of contractors with minimal risk, without having to set up a legal entity in the country you want to expand to.

By using an in-country partner EOR will ensure your hiring ad payroll is in full local compliance with employment rules and regulations while keeping costs low allowing you to focus on your day-to-day activities.

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan