7 Benefits of an Employer of Record Services

Expanding into a new market is tough. Setting up a local entity takes time, money, and legal work. An Employer of Record simplifies this. It lets you hire and manage employees abroad without establishing a legal entity. You focus on operations; the EOR handles compliance, payroll, and HR.

This article outlines seven key benefits for employers of record. Before we look at the EOR benefits, let’s first understand what an Employer of Record does.

Understanding the Roles of an Employer of Record

Here are the insights into the 7 roles of an employer of record, which provide a support system for a successful team operation and business expansion internationally:

Legal Employer

EORs are legal employers of remote professionals hired for foreign companies with no legal entity in the target country. As a local market expert, an Employer of record handles legal complexities around payroll, taxes, and dispute resolution for your remote workforce on your behalf.

Payroll & Tax Management

It manages payroll and tax obligations for your employees to comply with local labor laws and employment regulations. An EOR prepares and pays employees’ salaries on time and takes care of tax withholding and filing for your employees. 

Employee Benefits Administration

EOR handles the administration of employee benefits, including medical benefits, healthcare and insurance, retirement plans, and bonuses for your employees. Also, an employer of record provides and manages statutory benefits as per local standards.

Compliance & Risk Management

It protects employees and remote operations from legal liabilities and compliance risks. Your EOR partner ensures liability mitigation and workplace safety by handling employment-related risks, like workplace disputes and wrongful termination claims.

IT Infrastructure and Office Support

It provides the necessary IT infrastructure and office space to allow a quick start of your remote operation. An EOR handles IT service support, such as buying and distributing devices like laptops to your remote employees.   

If you prefer your employees to work from an office, the employer of record can lease an office and provide requirements such as Wi-Fi services for your employees.

Human Resource Support

EORs administer several human resources (HR) services from recruitment and onboarding to termination and offboarding. Besides governing contracts and non-disclosure agreements (NDAs), an Employer of record maintains employee records and documents.

Expat Transfer Support

It provides expat transfer service to ensure a smooth relocation of senior employees to lead your international remote team. EORs assist in visa and work permits for expatriate employees. Also, handling cross-border compliance is an EOR’s core service.

Key Benefits of an Employer of Record

Employer of record in India is suitable and beneficial for both small and large companies. These services act as the backbone to support your international team expansion and operations. Also, you aren’t required to set up a legal entity to hire and employ remote professionals in a foreign country when you use EOR services in India.

Below are detailed explanations of 7 employer of record benefits. 

1. Access to a Large Talent Pool

Companies can easily access a large talent pool globally and hire them when using EOR services. An employer of record has robust networks, infrastructure, and databases that help you recruit talent quickly and effectively in a given location. However, local EOR are limiting their service offerings within the country they are based. Local EORs are highly efficient when companies target a particular country to hire talent. For instance, Remunance is a local Employer of record that provides services in India only. 

2. Cost Reduction

With EOR services, foreign companies can set foot in a new market at reduced costs. This means that with an EOR services provider, you don’t need a lot of money to set up a legal entity. EORs become the legal employers of your workers. They have the facilities and support to manage your team on their payroll.

For instance, subsidiary formation is nearly four times costlier than local EORs. Also, you get additional employer of record benefits, including payroll administration, compliance assurance, and benefits management for your employees. 

3. Access to Legal & Financial Expertise

Partnering with an employer of record means you have access to legal & financial expertise for your operational support. Your EOR partner is fully responsible for managing employment laws, compliance, tax rules, and other legal and financial issues. Your Employer of Record company helps reduce legal and financial risks for you. This lets you focus on your main business goals.

4. Understanding the Local Culture

When expanding a team abroad, cultural differences pose a major threat to smooth operation. You may face challenges navigating a new market’s cultural nuances, which can affect your employees’ communication and coordination.

By working with an EOR services provider, you can understand the local culture. This helps you create a work culture that fits your business. It helps you understand the local communication styles and business etiquette. Understanding the local culture helps significantly when you want to convert your team into a legal entity.

5. Assessing Work Culture & Ethics

Work practices differ significantly from one country to another. Knowing the work ethics and culture of employees is crucial for business success. When you work with an EOR company, you can learn about the local work culture. This helps you understand the workplace environment, employee attitudes, and local labor trends. This will help you improve leadership styles, motivate employees, support work-life balance, and enhance communication in your team.

6. Setting Up Employee Policies

Once you understand the local market and work culture, companies can create employee policies. These policies will follow local rules and meet the specific needs of the business. Through EOR services experience, you can provide better employee policies that blend local employees’ aspirations and your unique goals.

You can create an HR policy about employee benefits. This can include good bonuses and medical benefits to improve job satisfaction.

7. Scalability and Business Expansion

EOR services help you grow your business. You can focus more on productivity and innovation. They handle your back office and administrative tasks. Also, you can easily increase your remote workforce with the same budget you allocate to your in-house team. With EOR service support, you can keep the best talent. This helps them work better while keeping costs low.

When Should You Use an Employer of Record?

Employer of record services are more effective and beneficial when you have the following business concerns and goals:

• • When you want to expand your business to other countries, you may not want to spend a lot of money. Setting up a legal entity can be expensive.
  • When you want to explore and test the new market before deciding on a long-term commitment.
  • When you have a team of contractors or freelancers but are worried about compliance regulations around them,
  • To reduce compliance risks when hiring, employing, and paying remote team members in a target market.
  • When you want to learn about the local culture and work ethics, it helps to adjust to a subsidiary company.