Businesses have a few options when hiring people in a new nation. For instance, they might decide to grow and establish a legal company in that nation. Engaging an Employer of Record (EOR) is another well-liked choice, but what is an EOR?
Fundamentally, it's a method for companies to eliminate the hassle of hiring employees abroad. Payroll processing, compliance with local legislation and international employment regulations are all tasks that an Employer of Record service provider may handle.
More businesses than ever are using an Employer of Record to manage their foreign personnel. Here, we’ll look at when should you use an Employer of Record.
Working with an employer of record may make sense in a number of circumstances, including:
1. When you don't want to establish a legal local entity in the nation where you want to hire people.
The process of establishing a legal local entity is time- and money-consuming. It can cost up to RM400,000 and take months or longer. An EOR is a straightforward, affordable option to swiftly and cheaply hire foreign workers, unless doing so makes financial sense for your company. For a simple flat fee per employee, you can have employees prepared to work in a matter of days.
2. When you must hire foreign workers whose work cannot be categorised as contract work.
Even while using foreign contractors is a possibility, not all jobs fall under the contract employment category. You run the risk of facing harsh repercussions, like as fines and penalties, if you incorrectly categorise employees as contractors. EOR is a great option in these circumstances.
3. When a current employee relocates.
Employees are less physically bound as remote work grows more prevalent. Today's workers have the freedom to relocate anywhere in the world without losing their jobs. An EOR is a quick and simple approach to keep workers who opt to move without having to establish entirely new legal companies across numerous nations.
4. When you lack industry knowledge in employment and tax legislation.
In addition to adhering to a completely new set of employment laws, hiring an employee in a foreign country requires understanding how that country's taxes operate. Expecting to understand all of these laws on your own is unreasonable given how difficult they can be. An EOR can assist you in navigating new work markets because they are knowledgeable about these rules on your behalf.