The process of hiring someone comes with a host of responsibilities. Taxes, benefits, and all associated costs. Nevertheless, some companies uncovered a way to lighten this load. How? They hire an Employer of Record (EOR).
This blog showcases the leading EORs in Pakistan, describing each service provider’s advantage and focus. But before we delve into the list, let’s clarify some terms first.
What is an Employer of Record (EOR)?
An Employer of Record is a third-party organization that acts as the employer for tax purposes while the employee works at another company (the client company).
In other words, the EOR takes on the traditional employment tasks and liabilities. These include Employee Payroll, Compliance with Local Labor Law, Taxes, and Employee Benefits.
What an EOR Does:
- The EOR is officially the employer of your workforce on paper. This is especially useful for companies hiring in countries where they do not have a legal entity.
- Adherence to local labor laws, tax regulations, and employment standards in the country of operation.
- Manages salaries, tax deductions, and employee benefits in alignment with local regulations.
- Draft employment contracts that meet legal requirements in the respective country.
- Assumes the legal and financial risks of employment, such as penalties for non-compliance.
What an EOR Does NOT Do:
- Make operational decisions for your business.
- Assist with marketing, sales, or any other business activities.
- Intervene in day-to-day management or control over your workforce.
You remain responsible for directing the employees’ daily tasks and responsibilities. The EOR’s role is strictly administrative and legal.
How does an EOR differ from a PEO?
A Professional Employer Organization (PEO) is an HR outsourcing option service that works through a co-employment model. The PEO handles tasks like payroll and benefits administration for a business.
Imagine you’re hiring workers. With an EOR, the workers are legally someone else’s employees (the EORs), but you tell them what to do.
Whereas, with a PEO, they’re legally your employees, but you have a helper (the PEO) managing the HR and legal paperwork. Hence why they call it a co-employment model.
To learn more about PEOs, check our article: How a PEO Company Can Save You Time and Money.
Why Choose an EOR in Pakistan?
Hiring in Pakistan involves navigating challenges such as compliance with labor laws, managing payroll taxes, and meeting other legal requirements.
For instance, companies must ensure contributions to the Employees’ Old-Age Benefits Institution (EOBI) and comply with progressive income tax brackets ranging from 0% to 35% based on salaries.
EOR services are particularly valuable for international hiring in Pakistan. I.e. they prevent companies from setting up a local entity in Pakitan. The Employer Of Record is the legal employer of your Pakistani workforce. So, there’s not much burden left for you to carry.
Top Five Employer of Record (EOR) Services in Pakistan
The following are five verified and reliable Employer of Record (EOR) service providers in Pakistan:
1. Gini Talent Pakistan
- Services: Payroll management, compliance with Pakistan labor laws, onboarding, and offboarding support, benefits management, and termination support.
- Strengths: They offer cost-effective solutions. Are clear communicators, flexible, agile, and have a strong global presence. Also, they can properly manage an international workforce no matter the scale size. They monitor and analyze your workforce performance. They use GTS for talent acquisition & advanced HR technology tools.
2. Horizons
- Services: Payroll management, compliance with Pakistan labor laws, onboarding, and offboarding support.
- Strengths: It provides recruitment services directly, without subcontracting, to assist clients in expanding teams
3. Native Teams
- Services: HR administration, global payroll management, benefits provisioning, and tax compliance.
- Strengths: Known for its legal and compliance expertise and efficient HR automation
4. Deel
- Services: Global payroll, contract management, benefits administration, and compliance with Pakistan’s tax regulations.
- Strengths: Known for user-friendly software. Also for good management of remote teams across multiple countries.
5. Remote
- Services: Full compliance with Pakistan labor laws, payroll processing, benefits management, and termination support.
- Strengths: Offers tools for easy employee management and guarantees strong legal compliance to mitigate risks.
6. Papaya Global
- Services: Centralized payroll management, compliance with local labor laws, and global workforce analytics.
- Strengths: Excels in managing large-scale international operations with advanced analytics tools to track employee performance globally.
Finally, these 5 EOR providers can help businesses hire in Pakistan without establishing a local legal entity.
Key Factors to Consider When Choosing an EOR in Pakistan.
1. Adherence to Pakistan’s labor laws, tax regulations, and payroll requirements.
For example, in Pakistan, businesses pay overtime at 200% of the standard rate for hours beyond the legal workday and meet obligations like EOBI contributions (5% from employers).
Certainly, the right Employer of Record (EOR) service provider should be aware of these kinds of employment laws & tax regulations in Pakistan to provide you with efficient support.
2. Scalability is essential for businesses with fluctuating workforce needs.
Leading EORs will provide customizable solutions to match industry demands, whether in tech, manufacturing, or services. Moreover, flexibility and agility are key, as it makes them ready for fluctuations in fast-growing or high-demand industries.
3. Comparing service costs to ensure value.
Employers should evaluate the total cost of payroll processing, onboarding timelines, and compliance assurance to find a provider that aligns with their budget while offering comprehensive services.
These 3 considerations can help you select an EOR that aligns with your goals while entering Pakistan’s market.
Cost Comparison: EOR vs. Other Hiring Methods
Comparing EOR Service Costs in Pakistan
Hiring through an Employer of Record in Pakistan proves to be a cost-effective alternative to traditional hiring or outsourcing.
While setting up a local entity involves legal registration, compliance fees, and office maintenance costs, EORs provide a solution by consolidating these into a single service fee.
This helps businesses manage budgets effectively without hidden overheads.
- Firstly, EORs manage benefits programs like health insurance and retirement plans. This consolidation can lower overall costs by leveraging economies of scale, providing competitive benefits at reduced rates.
- Secondly, EORs ensure companies comply with local labor laws, tax regulations, and employment standards, avoiding potential fines and legal expenses.
- Finally, their handling of payroll processing reduces the need for internal payroll staff and minimizes errors or delays that could lead to costly penalties or compliance issues
Hidden Costs of Hiring Abroad Without an Employer Of Record
When businesses expand internationally without an EOR, they risk incurring significant hidden costs. These may include the following:
- One, non-adherence to labor laws or tax regulations can result in financial fines or reputational damages.
- Also, the costs of hiring local talent or expatriates are often higher without an EOR’s expertise.
- Lastly, establishing a local entity requires a lot of time and money, delaying market entry and growth opportunities.
Employer Of Record and Multicurrency Payroll Solutions
Global businesses operating in Pakistan would naturally need to manage payroll across multiple currencies. But worry not, cause EORs offer multicurrency payroll solutions. Which enables easier payment to employees in local currencies while simplifying tax reporting. This ensures the following:
- Employees are paid on time, in their preferred currency.
- Payroll is aligned with Pakistan’s tax regulations, minimizing errors.
- Financial transparency and smoother operations overall.
Conclusion
Expanding into Pakistan offers promising opportunities but requires addressing many measures.
Gini Talent proposes EOR solutions perfectly designed to support your business growth in Pakistan or anywhere else. Effective global recruitment for both specialized and large-scale needs, with us, you will discover what peace of mind really looks like.
