EOR or Employer of Records is not a new concept; however, it started gaining momentum after the rapid digital transformation after the coronavirus outbreak, which pushed many people to begin remote working.
People who work remotely are commonly referred to as freelancers or contractors.
Freelancers usually receive a gross salary and are responsible for paying taxes and completing all administration connected to legally working for someone. Depending on the country and regulations, freelancers must pay their own health insurance and pensions.
Although freelancing is a popular option, EOR enables people to work for anyone, anywhere in the world, as registered employees. This provides many benefits for individuals who work remotely.
Nevertheless, not all remote workers are hired by EORs; some are hired by employers, who require them to stay in their country or residence where they are employed for tax purposes.
To understand how EOR works and what kind of benefits you can receive, look at our guide; we will explain in detail what it means to be hired through EOR.
What Is Employer of Record (Eor), And How Does It Differ From Traditional Employment?
Employer of record (EOR) is a company that helps businesses hire workers overseas without having to set up a legal entity.
Here is an example: Let’s say a US-based tech company needs to hire a Sales Executive to expand sales in DACH Region.
The EOR, which has a presence in Germany, where the Sales Executive is located, becomes the official employer of the EOR.
While the employment contract with the selected EOR may not mention the company name, it does state that the employee will work on a client’s behalf.
Additionally, companies usually send separate documents, such as non-disclosure agreements (NDA) and non-solicitation agreements (NSA), for new employees to sign.
These documents provide further clarity and legal protection for all parties involved.
The EOR handles payroll management, benefits administration, and compliance with local labor laws and regulations.
The company is still delegating the day-to-day tasks and responsibilities and supervising and managing the worker. However, they are not responsible for the administrative and legal duties of employing the worker.
Being hired through the EOR, the sales executive is considered a registered employee and receives benefits such as vacation, retirement, and health insurance.
In this way, the EOR provides a bridge between employers and workers.
However, with EOR, the employer can outsource these responsibilities to free up time and resources for other business activities.
Remote startups operating in multiple countries and needing to navigate labor laws and regulations can benefit from this.
Benefits of getting hired through an EOR
Working for a global company through an employer of record allows you to work from home or anywhere in the world and still receive the benefits and rights registered employees receive.
Additionally, EOR agencies handle all administrative tasks on your behalf. The EOR will legally employ you in your country of residence and ensure you receive all the benefits your county is offering to its employed citizens.
To sum up:
- Working with an EOR can allow you to work with companies worldwide.
- EORs ensure that all legal requirements are met.
- Benefits and job security.
- Working through an EOR can provide flexibility regarding location, work hours, and permanent employment opportunities.
How to find and choose an EOR Agency
Most EOR agencies can easily be found through a simple Google search.
However, choosing one is the most challenging part.
Here is what to consider when selecting an EOR agency to work with:
- Start by researching EORs that specialize in your industry or the country you’re interested in working in.
- Look for testimonials and reviews.
- Contact the agency and ask about their services, fees, and experience working with employees in your country of residence.
- Ask for recommendations, or work with a recruiter who can help you find the right EOR agency.
Getting hired through an EOR and working with it on a day-to-day basis
EOR is a third party that ensures all administrative tasks are handled properly, and you answer directly to the company for the day-to-day operations.
However, you must maintain clear and proper communication with the agency to avoid potential issues and ensure your employment is smooth and hassle-free.
In addition, you may also need to provide updates on your work and any issues that may arise.
Working with an EOR can be a positive experience if you maintain good communication and a professional demeanor. EoRs usually respond quickly to HR needs and can help solve issues quickly.
Building solid relationships with the EOR and end client is the key to a successful career and ongoing work.
To Sum Up
Getting hired through an EOR offers many advantages for remote workers who may not have access to certain benefits.
Although the idea is not new, some individuals may not be familiar with this option. This guide aims to clarify the concept of EOR and expand the employment possibilities available to you.
FAQ
- Will I be considered an employee of the EOR or the end client?
The EOR takes on the legal responsibility of employing you; however, you will be working under the direction and supervision of the end client, and your work will be for their benefit, but as we said before, you will be employed by the EOR.
- Is it safe to work with an EOR?
Yes, working with an EOR is safe; however, before being employed by one, read the recommendations and gain knowledge about the reputation to ensure that you are working with a trusting agent.
- Can I select an EOR?
If you’re considering an Employer of Record (EoR) to help with employment responsibilities, you can only choose one after agreeing to a B2B collaboration with a company. This collaboration means you’ll manage the entire process, from being employed through the EoR to handling all related tasks. Typically, companies only partner with one EoR, and establishing this partnership can take a long time. Because of this, they may not be open to considering additional EoRs as partners.
- The company told me that they would extend an offer. What’s next?
Once you’ve agreed to work with an Employer of Record (EoR), the next step is to create an account with them through a link sent to you via email. This process, called EoR onboarding, involves submitting the necessary legal documents and bank account details. Once you’ve completed the onboarding process, the EoR will need some time to verify your information before extending an official offer contract.
- How long does it take for the EOR to present me with the offer?
The duration of the EoR onboarding process can vary depending on the EoR and your residency situation in the country where you’ll be working. For citizens, the process typically takes between one to two weeks. However, for those on a working visa, it may take longer, usually around two weeks, due to the visa verification process that the EoR must perform. Additionally, the duration may depend on whether the company has previously hired through the EoR in that country. If you’re the first hire in that country, the company may need to complete and sign some additional administration steps with the EoR, which could extend the offer granting period by up to two weeks.