Global expansion requires a cautious examination of tax requirements, employee benefits, and compliance with local labor laws. Thankfully, there are service providers available to help alleviate the burden of these elements, and they are referred to as “Employer of Record or EoR“.
There are many benefits to working with EOR service providers. Yet, not every firm will offer the same services or quality. So, asking relevant questions is essential before making the partnership official.
What is an EOR?
An employer of record (EOR) is a third-party organization that upon partnership becomes the full legal employer of your employees.
A global employer of record permits businesses to lawfully employ workers across foreign lands.
This is done without the need to establish a local presence or fear of breaking the laws of the region.
What does an EOR do?
They assume all employer-related duties on behalf of your company. An EOR takes on a company’s human resources responsibilities and onboards, pays, manages, supports, and offboards your supported employees while you maintain and control the day-to-day operations.
- Hires and manages employees (work assignments, performance, engagement, etc. )
- Supports you in local employment and tax laws and helps you avoid employee misclassification.
- Manages the entire employee lifecycle from onboarding through to offboarding.
11 Questions to Ask an Employer of Record
1. What countries do you operate in, and how well do you understand the host country’s compliance regulations?
This question confirms whether the EOR provider possesses the expertise to support your enterprise in specific regions. Employment laws and regulations vary markedly across countries, and failure to comply can lead to penalties or legal entanglements.
Furthermore, familiarity with cultural practices and regional distinctions will allow for better employee management. Which is essentialto enhancing both retention and satisfaction.
2. Do you have the necessary local labor leasing license to operate legally in each country?
The requirement for an employee leasing license depends on a country’s local labor leasing regulations. If a license is required, it may be the legally most favorable option for clients compared to alternative structures, such as the consulting model.
For instance, in Germany, the EOR model falls under employee leasing laws governed by the German Employee Leasing Act (AÜG). Operating without the necessary license can result in significant penalties. These include fines of up to €30,000 per violation and even criminal charges.
Finally, it never hurts to ask for a provider’s operating model and leasing licenses.
3. What services do you offer, and can they support all aspects of global workforce management?
At the foundational level, many EORs handle payroll processing, tax compliance, benefits administration, and local labor law adherence.
On the other end of the spectrum, a more comprehensive EOR can offer advanced solutions such as custom benefits packages, employee training programs, risk management, and global workforce analytics.
Some providers even support talent acquisition, visa sponsorship, relocation assistance, and custom service-level agreements (SLAs).
4. How fast can you complete the hiring process, and what tools or tactics do you use to expedite it?
Are they using automation? or tactics that fasten the hiring process.
Automation can greatly enhance the speed of tasks such as payroll processing and onboarding, resulting in quicker hiring times and improved service.
For example, Gini Talent uses AI-powered platform to automate resume screening. To properly match candidates to job requirements based on skills, education, experience, and cultural fit. They developed their own ATS called GTS.
5. How frequently will you provide updates, and how transparent is your communication process?
Frequent updates and clear communication ensure alignment, transparency, and responsiveness.
Confirm how regularly they share progress, address issues, and maintain proactive engagement to meet your expectations.
6. Who will the contract agreement legally involve, and what are the terms for each party?
Understanding the contractual structure clarifies legal obligations. Determine which entities are bound, their respective responsibilities, and key terms to avoid future disputes.
The terms for each party should be clearly outlined in the contract, specifying the scope of services, fees, duration, and termination conditions.
7. What are the procedures and implications for terminating an employment contract?
Termination policies should comply with local laws while minimizing business risks. Understand timelines, severance requirements, and how they support transitions during contract closures.
It’s important to inquire about any fees related to termination, as these can vary among EOR providers. Some EORs may charge termination fees, which can range from 5% to 20% of the employee’s gross salary, covering costs associated with ending the employment relationship.
8. How do you ensure the security and confidentiality of our company and employee data?
Data protection is paramount. Verify their cybersecurity measures, encryption protocols, and compliance with regulations like GDPR to safeguard sensitive information.
Confirm that the EOR employs advanced encryption techniques to protect data both at rest and in transit. Does the EOR have a clear and effective incident response plan to promptly address any data breaches or security incidents?
9. What measures do you take to ensure compliance with local labor laws?
Compliance is vital for mitigating legal risks. Confirm how they stay updated on regulations, handle audits, and adapt to labor law changes in each jurisdiction.
A good EOR provider vigilantly monitors local labor laws and promptly informs clients when updates to policies, procedures, or contracts are necessary.
10. What is your process for managing disputes or resolving potential SLA violations?
Dispute resolution ensures accountability. Evaluate their approach to addressing conflicts, SLA breaches, and compensation for unmet obligations to maintain a reliable partnership.
11. Can you provide a sample invoice to illustrate all costs upfront?
A sample invoice reveals hidden fees and ensures transparency. Requesting this helps you understand their pricing model, avoid unexpected expenses, and budget effectively.
Navigating the complexities of global employment can be daunting.
Let us handle the intricacies of compliance, payroll, and benefits administration, so you can focus on what you do best—growing your business.
Reach out today to discover how our Employer of Record services can simplify your international workforce management. For more info, fill the form below, and we’ll contact you shortly.
