Employer of Record (EOR) services: the gateway to your international development

Going international has become a necessity for many companies seeking growth, and that's where Employer of Record (EOR) services come in.

Such a strategy is essential to facilitate your global expansion. But how do you go about it?

Don't panic, we'll guide you through the intricacies of EOR, from definition to selection criteria.

Let's get started! 🧳

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What is an Employer of Record service?

An Employer of Record, or EOR, defines an intermediary organisation that facilitates the recruitment of staff abroad by acting on your behalf. This legal entity handles all the administrative formalities for you, in accordance with local employment legislation.

And let's not forget another key point: consolidation. Many companies use EORs to streamline their operations in certain countries, with the aim of:

• reduce costs ;
• avoid having to manage a local legal entity.

EORs are most appropriate in an international context. But you can also use them within the same country if the legislation varies from state to state, as in the United States, for example.

🧐 For example, an American company wishing to recruit in France can use an EOR. New employees are therefore recruited by the EOR while working for the company in the United States. In this case, the EOR is simply an intermediary who makes it easier for the American company to export.

In short, the EOR takes care of all the tedious administrative side without you having to set up a new legal entity in the place where you want to export or recruit. This saves a great deal of time and energy.

EOR and portage salarial: similarities and differences

👉 The operation of an EOR is fairly similar to the system of portage salarial in France. These two schemes share a common objective: to facilitate the employment and administrative management of workers. In both cases, they take care of administrative, HR and compliance aspects, freeing companies from these constraints so that they can concentrate on their core activities.

On the other hand, if you are a French company looking to export abroad, you should bear in mind the differences between them.

Scope of application

• 🇫🇷 Portage salarial: designed primarily for the French market, it enables self-employed workers to enjoy the benefits of an employee, while retaining their autonomy in finding clients and organising their work.
  
  
• 🌍 EOR: EOR providers, on the other hand, focus on supporting companies in their international expansion outside France. They provide a full range of administrative services to facilitate the hiring of staff in different jurisdictions, enabling organisations to expand into new markets without having to set up a legal entity locally.

Customer relations

• 🇫🇷 Portage salarial: here, the worker is employed by the "portage salarial" company, which invoices a client for its services. They benefit from the flexibility needed to organise their work and find clients, while enjoying the social benefits of an employee.
  
  
• 🌍 EOR: under an EOR service, the employee is officially employed by the EOR provider, but works for the client, who retains the power of direction and control. This model is therefore used by companies with no legal presence in a given territory to hire local workers.

What are the differences between EOR and PEO?

The Professional Employer Organization, or PEO, is often associated with EORs for international payroll management, and sometimes even mistakenly confused. Understanding the differences is crucial to choosing the solution best suited to your situation.

A PEO is also a third-party company, the difference being that it is a joint employment arrangement with the client company. In this case, your company remains the official employer, while sharing some responsibilities with the PEO, particularly everything to do with human resources.

💡 To use a PEO abroad, you must have a local legal entity in the country where you wish to hire.

👉 With an Employer of Record service, you do not need to have a legal entity in the target country, nor do you need to sign a co-employment contract.

💡 Please note: it is also important to differentiate between direct EOR and indirect EOR.

• Direct EOR: the EOR provider owns and manages its entities and is directly responsible for compliance in these countries so that operations remain active. It's autonomy and efficiency, up to 90% faster thanks to a direct presence in the country. Ideal for those seeking transparent, personalised international management.
  
  
• Indirect EOR: the EOR provider relies on a third party. This approach presents major compliance risks, as it depends entirely on the reliability of the third party and its compliance with regulations. So be careful when choosing your EOR provider!

The role of an EOR abroad

We have seen that an EOR is an employer on your behalf. It therefore plays a key role for all companies looking to export or recruit internationally.

But what does an EOR do in practical terms? Let's take a closer look at the main functions. 👇

1- Ensuring compliance with employment law

The EOR ensures that the employment contract complies with the laws of the country where the employee is based.

States all have very different legislation, and jumping in head first is the best way to get out of the legal framework, especially if you're looking to export to different regions. It's safer to delegate this part to comply with the countless employment laws.

👉 For example, if an American company wants to recruit in France, it has to accommodate French labour law and respect the terms that make it up, including:

• management of working hours and overtime ;
• the minimum growth wage, or SMIC ;
• the number of days paid leave and RTT allocated per year;
• terms and conditions of recruitment and termination of contract, etc.

2- Managing employee pay

Once you've recruited abroad, you also need to pay your employees. Here again, each country does this in its own way. You need to know what is involved to avoid illegal practices.

👉 For example, a French employee needs a correct payslip and very precise information to justify his situation and declare his income.

Fortunately, the Employer of Record service takes care of everything:

• legal compliance of the payslip
• the question of gross and net salaries
• payment in the correct currency
• tax deductions
• social security contributions
• payment deadlines, etc.

3- Dealing with visas and international mobility

For a company operating in different parts of the world, it is not uncommon to organise internal mobility. This is one way of managing your company's human capital and improving your employees' skills.

However, your employees need a specific visa to work abroad, and the procedures vary from country to country. With all the documents to submit and the various appointments to organise, it's clearly not all plain sailing.

👉 For example, if you want to send one of your French employees to Japan, you need to obtain a visa to work legally on Japanese territory.

In this case, the EOR takes care of the whole process:

• defining the appropriate type of visa (work, business, residence permit, etc.) ;
• sponsoring the visa application (necessary in some countries) ;
• preparing the file and the necessary documents;
• logistical support in planning the trip (accommodation, plane tickets, etc.);
• coordination with local authorities;
• monitoring visa status, etc.

Why use the services of an Employer of Record ? The 4 advantages

There is no obligation to use an EOR. You can recruit abroad by creating a legal entity, but things can quickly become complicated and time-consuming.

The EOR has a number of advantages, so it's in your interests to use an intermediary and delegate.

1 - Setting up abroad without having to create a legal entity

Setting up a legal entity abroad is a demanding process that requires an in-depth understanding of the local market... and a certain budget!

You need to follow local regulations vigorously, because every mistake can cost you dearly. And as we've pointed out, the laws differ from country to country. So you need to take time to learn and apply them.

The EOR works like a thread-cutter, since you can achieve your goal of hiring or setting up abroad without having to go through the process of creating a legal entity. 🎯

The process is faster, less costly and less restrictive.

2 - Facilitating international recruitment

If the Employer of Record saves you time by avoiding the creation of a legal entity, it also enables you to access a new market more quickly.

You then have access to a much wider range of talent without having to worry about geographical limits. If the perfect profile comes along, you can hire them without any difficulty. The world is open to you. 🌎

3 - Transition to full remote working for greater flexibility

Teleworking is becoming increasingly popular, and many companies are deciding to make working from home the norm, in full remote mode.

With the possibility of hiring from abroad or from different regions within the same country, you are not only benefiting from a greater diversity of talent, but you are also encouraging widespread remote working.

If some of your employees can work from abroad, why shouldn't those in your own country be able to work from home?

The great thing about an EOR is that it can help you establish policies and practices that support a cohesive and effective corporate culture, from anywhere.

4 - Turn your freelancers into employees

For many companies, it's sometimes easier to use freelancers for certain tasks. Sometimes, however, certain roles can be advantageously transformed into salaried positions.

This transformation is beneficial for the company, which will emerge more stable and more committed, but also for the freelancers, who will benefit from job security and social benefits (health, pension, unemployment insurance, etc.).

✅ In this situation, the EOR facilitates the conversion of freelancers into employees by helping you to draw up employment contracts that comply with local legislation, regardless of where your new employee is based. It takes care of the administrative aspects of employment, such as:

• payroll
• benefits ;
• tax
• insurance.

7 criteria for choosing the right Employer of Record

Criterion 1: Legal expertise

Make sure that the EOR has good expertise in the labour and tax laws of the countries where you are planning to hire. If you're looking to set up in China, an EOR with knowledge of Korean labour law won't be much help. 🙈

Also remember to check their track record of legal and regulatory compliance.

Please note: direct EORs are generally more reliable than indirect suppliers when it comes to maintaining compliance; this is essential to avoid costly fines.

👉 Examples of solutions: Deel EOR, a tool dedicated to HR management of international teams, offers EOR services covering more than 150 countries. Thanks to Deel EOR, you can recruit and onboard your employees abroad without any administrative complexity. And all in full compliance, since Deel meets regulatory requirements throughout the employee's life cycle (reference salaries, working hours, etc.).

Criterion 2: The scope of the network

If you're thinking big for your company, your EOR should offer as wide a network as possible. An Employer of Record with an extensive international reach guarantees that you won't have any worries later on: you can be sure of being able to recruit almost anywhere.

A good EOR should offer a wide range of countries, so you can select the one that best suits your future prospects.

👉 For example, Atlas HXM offers a very broad direct EOR solution, as it is established in over 160 countries. It enables us to find the best talent for you, while ensuring that the employment contract complies with local regulations. And, of course, Atlas supports you in all HR tasks, from human resources management and legal support to visa management.

Criterion 3: Experience and reputation

An EOR with a good reputation is an EOR you can trust. What's more, if they are experienced in your sector of activity, they will be in a better position to meet your needs.

Check the reputation of an Employer of Record by looking for reviews or testimonials.

Criterion 4: Scope of services

All EORs offer the same basic range of services, but some go further: these are the EORs you should be looking out for.

Not all companies have the same requirements, so it's best for you to select an Employer of Record that can tailor its services to your company's unique needs.

Criterion 5: Customer support and assistance

Good customer support is essential, especially for an employer acting as an intermediary. Its availability, responsiveness and ability to resolve problems must live up to your expectations.

Make sure that support is multilingual, because for an international company, support that is accessible to everyone is crucial.

👉 For example, Remote offers 24/7 customer service in several languages (French, English, German and Dutch). No matter where you are in the world, the support team is there to help you. You can also benefit from all the services of an EOR, from the administrative management of human resources to compliance with local employment laws.

Criterion 6: Technology and infrastructure

If you're looking to use an Employer of Record, it's because you want to be able to communicate and work effectively with people who are geographically remote.

So make sure that the EOR you select uses fast and efficient technology, such as for payroll management.

It is also essential for the service provider to ensure advanced data security.

Criterion 7: Cost

The perfect EOR for you must not only be tailored to your needs, it must also fit your budget. So look for value for money.

Make sure you understand how the EOR structures its fees, and beware of hidden costs.

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Employer of Record services in brief

The Employer of Record is a strategic ally for companies wishing to expand internationally. international... but without the complexity and costs associated with setting up legal entities abroad. 🤩

Whatever your objectives, the EOR knows how to meet your needs and expectations, from compliance with strict regulations and the total administration of human resources to the management of international mobility.

In short, the Employer of Record is the world at your fingertips for a minimum of effort!