EOR – Talent500 Blog

6 Reasons why you need an EOR

Posted on October 19, 2022 by shanthamurthy

Every company, regardless of its size, dreams of increasing its global presence at the right time. Recruiting people globally is a great way to enter new worldwide sectors, and a global Employer of Record (EOR) can assist you in this endeavor.

An EOR is a third party organization that specializes in handling all the legal and operational requirements of building a global workforce for its client companies. Thus, traditional employment responsibilities like management of payroll and taxation, employee benefits, and other such administrative and legal obligations are undertaken by the EOR.

Consider a global EOR as your multinational HR staff that is familiar with the intricate payroll rules and labor laws of the many countries where your personnel is situated. The benefits they provide are crucial for any multinational organization to achieve their growth and scalability goals.

6 reasons to engage an EOR today

No longer restricted by geographical barriers, companies today are ready to dive into the pool of global talent. However, hiring outside your home country comes within certain pre requisites.

Most businesses partner with an EOR in order to create a successful worldwide workforce without having to deal with the trouble of setting up offices abroad. An EOR offers the crucial flexibility required for growing an ideal international team.

Here’s how~

Ease of global expansion with an EOR

Establishing a local company through incorporation and registration in a new country can be highly time-consuming, expensive, and compliance-riddled.

An EOR solves this problem by managing the employer’s payroll, employment, and immigration needs in the host nation. Through its network and experience, the EOR acts as a liaison between the client-company and potential employees, also assisting in ensuring compliance.

Thus, engaging an EOR is highly beneficial for companies that want to access new geographies without the permanence of setting up a corporation.

Remote-first operations

According to studies, as many as 70% of companies are considering becoming hybrid or remote-first organizations, enabling both current and prospective workers to work remotely. However, managing teams remotely is a very complicated process that must take into account a variety of factors, including the labor laws in each nation and potential inexperience.

Your business will be able to test this strategy out with no restrictions on team strength, thanks to an EOR. This would lead to a smoother transition that would be better prepared, as well as significant time and money savings.

Better compliance across multiple countries

Every country has its own set of employment and taxation laws, non compliance with which can result in hefty fines and penalties. Thanks to presence across multiple countries, global EORs are able to undertake the fulfillment of all these regulatory and legal requirements on behalf of their clients and ensure smooth functioning.

Limited risks

All employment agreements are between the Employer of Record (EOR) and the employee, therefore managing benefits, claims, employee remuneration, and termination are under the legal purview of the EOR. Additionally, the EOR manages work license application and renewal adherence if you are recruiting foreigners, making it even simpler for your business.

Easy payroll management

For the purpose of taxation and management of foreign exchange, most countries mandate that salaries to local residents be disbursed from bank accounts within the host country. Additionally, management of payroll also requires the factoring in of taxation and employee benefits, which vary for every country. The EOR undertakes end to end payroll management to free you from these tasks.

Access to global talent

One of the biggest advantages of partnering with an EOR is the ability to hire across country borders. By undertaking the end to end management of all hiring responsibilities, a global EOR enables you to build your distributed team without having to invest a major chunk of time and capital into registering and operating a local entity. Companies can take advantage of the competitive cost of hiring and the wide range of talent present across the countless emerging talent hubs throughout the globe by partnering with EORs.

Employers of Record are becoming an important resource for firms looking to hire personnel internationally. It offers a hassle-free hiring, onboarding, and working experience for a firm. Companies are reaching their scalability and expanding goals more quickly than before.

If you are planning to expand business operations internationally, an EOR can help you deploy services quickly without risking non-compliance with local laws. Our team of experts at Talent500 can help you with this. Set up a consultation here.

6 tips to transform your remote recruitment process

Posted on September 23, 2022 by shanthamurthy

Thanks to the pandemic, the need for remote employees has increased dramatically, with a growing percentage of businesses desiring to embrace the new normal even once Covid-19 has faded. Workers are no longer bound to the business-as-usual approach. Research says that 76% of people prefer working remotely in the foreseeable future.

With 90% of workers saying they’re more productive, 44% saying they’re ready to leave their current jobs for a remote one & 93% saying remote work is better for their organization, there is no dispute over the fact that remote working is truly the future of employment.

With remote employment becoming the best way forward, companies of all sizes are scrambling to find the best remote hiring process. Read on to see how you can smoothen out your remote hiring experience.

Considerations when hiring remote workers

Various countries have varied taxation, safety, and health systems, as well as different regulations for employment contracts, payrolls, and legal compliance. Knowing best practices for remote hiring is imperative. So what should be considered?

Management of payroll & taxation

Your remote employees will be subject to their home country’s tax regulations, so it is important to be well aware of all employer tax obligations in a new country. Similarly, many countries require the existence of a local bank account for the payment of salaries.

Calculating compensation

Every country has a certain set of statutory benefits, social insurance rules, and other regulations that must be complied with. For example, Indian employment law mandates an employer contribution towards the pension fund of an employee. When calculating compensation, employers must also factor in the cost of providing these statutory benefits.

Knowing this ahead of time can help you prevent confusion and ensure that the employee receives fair compensation.

Intellectual property & data protection

International remote employees can raise the danger of cybercrime and hacking for your company if they are linked to unprotected networks. Before appointing remote employees abroad, you would want to assess your security procedures to determine if they can effectively prevent such threats. Certain countries like those within the European Union follow a stricter standard of data protection (GDPR), non-compliance with which can result in strict legal measures against the company.

Strict regulations that outline how to utilize VPNs, intranets, and data encryption should be in place for businesses that wish to move toward a remote workforce.

Misclassification of employees as contractors

Incorrectly and unlawfully classifying employees as independent contractors when they are employees is misclassification. Employee misclassification refers to a government determination that the employees of the organization have been given the wrong legal category.

The legal protections generally provided to employees, such as hourly wage regulations, workers’ insurance, and severance compensation, are not afforded to employees who are misclassified as contract workers. Additionally, misclassification of employees can result in heavy legal penalties.

Building the perfect remote recruitment process

Companies that previously provided little or no remote job choices will need to change their stance to attract and keep top personnel. Additionally, 2 out of 3 firms stated that their employees perform better while working remotely.

Below are a few tips to help you build your global team.

Build a strong employer brand online

Employer branding has long been seen as a crucial element of workplace performance since it contributes to the retention of employees and productivity improvement. The ability to recruit and keep a competent remote workforce is quickly becoming a key component of successful human resource (HR) strategies.

You should define a well-built EVP (employee value proposition) and cultivate your company culture so that employees feel a connection to your way of working. This way, you are well set for remote recruitment even before starting! In the age of digital presence, your company website and careers page play a huge role in painting a favorable image in the minds of potential candidates.

Posting across the right job boards

Before beginning the process, be mindful of who will view your job ad and also what perks and compensation they would anticipate. You need a precise job description, a strong grasp of how the position will be carried out remotely, and a list of the skills and abilities that candidates must possess. Ensure that you post across remote-friendly job boards like Angellist, Flexjob & Jobspresso to attract remote employees.

Use your digital presence

Integrating content into your remote hiring process is a highly impactful practice. You can do this through your social media. Think about including an introduction video in your job description or sending it to applicants after they have been scheduled for an interview. Use your pages on Instagram, LinkedIn, and blogs to advertise yourself and your company better.

Here is your chance to make a strong initial impression, which is especially crucial given that you won’t be conducting a face-to-face interview.

Use an AI-powered recruitment software

AI for recruitment offers a chance for recruiters to spend less time on tedious, repetitive chores like optimizing the filtering of applications, starting evaluations automatically, or setting up interviews with applicants.

AI-powered tools can look at many profiles, saving users time and allowing them to concentrate on more crucial things. Processes and groupware may be analyzed by AI to create more simplified and effective procedures.

AI can also aid in reducing hiring prejudice, which is essential to rules and regulations related to inclusion and diversity. The use of a candidate fit score guarantees that applicants are evaluated based on their experience and skill set rather than a biased demographic.

Build a structured & objective interview process

Make sure the interview is direct & to the point. Ask questions that will help you gauge the interviewee in minimal time. For this, you’ll have to organize your interview process in advance, including the technologies you’ll employ.

Create a list of questions that will help you gauge whether your prospect would be a good match for working remotely. Ensure that you give due weightage to soft skills along with technical qualifications. The goal is to determine if they possess the communication abilities necessary for remote collaboration as well as the time management, organization, and self-discipline skills needed for working from home.

Think about it:

What characteristics make a candidate an excellent fit?
Which abilities should they possess? (Skills that can and cannot be negotiated)
What character attributes do you value most?
What benefits can this applicant provide the business?

Plan ahead of time!

Remote onboarding process

As employers, we must build an onboarding process that is not restricted by time zones and boundaries. This entails putting in place a strong training program and dealing with the documentation required by employing an employee. Employing a buddy system is also helpful.

The employee would have a one-to-one “friend” that they could go to with any of their queries and thoughts, leading to quicker and clearer communication. Also, sending a welcome kit with a few goodies along with important documents also goes a long way in making the employee feel ready to go from day one.

The benefit of an EOR

When hiring across borders, the management of payments, tax, and regulatory documentation on your own can be extremely time-consuming and capital-intensive. Unless your company is a global firm with legal entities throughout every nation in the globe, it is incredibly simple to violate international payroll laws and tax duties, and the consequences can be severe.

At this stage, you must have a partnership with a company that can assist you in handling these aspects of your global hiring process. Making the right choice for your partner requires careful consideration; for example, you must choose one that you could rely on with the payment of salaries and management of taxes. This is why an EOR (Employer-of-Record) is ideal in this situation.

An Employer of Record is a third-party company that manages every element of the labor in a foreign nation. The EOR is responsible for managing all parts of the workforce, including hiring, payroll, taxes, benefits for employees, and legal compliance.

Conclusion

The excitement for, and various advantages of implementing remote work into a corporate strategy might overwhelm worries about employing a company’s first remote worker. Before the onboarding procedure starts, however, company executives should address the intricacies of remote work, such as staff objectives, level of experience, and availability.

Even though no hiring process is flawless, especially when introducing new workplace standards, keeping these six factors in mind will result in a smoother hiring and onboarding process for businesses, HR professionals, supervisors, and remote work candidates. It may also be the initial step in establishing a company’s image as a remote-enabled organization and broadening its rules on remote work to cover more distributed team members.

If you’re looking for a different but meticulous remote hiring experience, look no further than Talent500. We offer pre-vetted professionals with on-field experience & personalized AI algorithms to design tailored talent acquisition and management solutions for you. Want to know more? Sign up here.

3 Main reasons to use Employer of Record

Posted on April 5, 2022April 5, 2022 by shanthamurthy

By definition, an Employer of Record (EOR) is an arrangement that acts as a “go-between” for the client company and the employee. Unless you have used an EOR in the past, it can seem daunting to get on board with the concept and what it entails.

Let’s look at it this way – if an organization plans to expand operations in a country where they have no footprint, it can be difficult to stay on top of things with complex local regulations, taxes, and benefits. The easiest solution is to hire a third-party organization to take responsibility for paying employees. The hired organization will also be responsible for handling payroll, taxes, insurance, benefits, and visa and sponsorship applications.

EORs give companies easy access to new markets by simplifying HR-related operations, while overall supervision and management controls remain with said company, and not the external partner. When organization’s hire an EOR service, the partner firm only becomes the registered employer of the company’s workers and provides the company with a legal entity to manage compliant payroll inside the host country.

Does your company need EOR services?

The primary goal of using EOR is to overcome the regulatory and cost hurdles when expanding and hiring in a new country. Every country has its own employment, payroll, and work permit requirements for foreign companies. Dealing with local laws and regulations can be a major challenge to business expansion internationally.

Unless you are a big firm with enough resources to take the DIY approach of incorporation, registration, and setting up a local payroll, an EOR is an ideal alternative. It is a tool devised to provide companies a chance to enter a new market even with limited HR resources.

An Employer of Record solution is available for almost any country and is often included as the core of a comprehensive GEO (Global Employment Organization) solution. As an EOR is in full compliance with the host country laws, it works with both local workforces as well as expats.

What are the benefits of using an EOR?

Despite what it may come across as, the benefits of an EOR go beyond just providing easy access to a competitive markets with complex cost, payroll, and compliance policies.

No need for local incorporation

As mentioned above, not every company has the resources to set up a local entity via incorporation. The entire process of incorporation and registration is time-consuming, expensive, and complicated. Plus, when entering a new market, it is beneficial to explore future growth prospects before setting up a foreign subsidiary. An EOR offers the best alternative as it provides an already existing legal entity to handle hiring, payroll, employment, and immigration. As the EOR partner has the expertise to ensure full compliance with local laws, running smooth operations in the host country becomes infinitely easier.

Immigration compliance

Regardless of country, there are regular changes and updates to the country’s immigration policies and rules. Additionally, the increased scrutiny of work permits by foreign governments makes it challenging for multinational corporations to comply with the local laws and regulations. As immigration violations can have lasting (and damaging) consequences for any company, one way to avoid this would be to use an EOR. With an EOR, companies can manage remote payroll issues, avoid overuse of business visas, and eliminate the risk of multiple entries into the country.

Running a local payroll in the host country

Most countries have a restriction against ‘remote payroll’, i.e., remitting by the home country payroll. This is why they make it mandatory for foreign entities to run payroll in compliance with local standards with a registered entity. When companies use an EOR, they do not need to take on the additional burden of calculating and withholding statutory deductions from pay such as taxes, pensions, and health insurance. The hired organization takes care of these critical details, so the company can focus only on meeting their objectives.

EOR vs. Entity: choosing the right model for your business

Posted on September 13, 2021September 14, 2021 by temp

Global expansion has become more of an imperative for businesses than a choice. Setting up a new entity in a foreign country is, however, not an easy task and requires commitment and extensive planning around a long-term business plan, the infrastructure, employment law, compliance, and regulatory frameworks. Less than 25% of US-based companies that expand globally are successful, mainly because they do not understand the local laws of the country they enter. Naturally then, the first step is to decide the most efficient and the most secure way to enter this uncharted territory.

Every company that decides to explore cross-border expansion has two routes.

Setting up an entity

This is the traditional way of expansion, where a company sets up a legal entity in new geography in the form of a foreign branch or subsidiary. Setting this up from scratch requires multiple steps that can take anywhere between a couple of months to over a year. To lay the foundation for their new business, the most important steps include getting the entity registered with the country’s local authorities, opening a local bank account, consulting with a team of local legal, financial, and HR consultants, ensuring compliance with tax and statutory laws, and recruiting their team.

Employing an EOR

With the Employer of Record, you don’t need to have a legal presence in the country. An EOR is a third-party organization that specializes in handling all the legal and operational requirements of building a global workforce for its client companies. They manage the hiring, payrolls, taxation, benefits, and legal compliances for this new branch, relieving the company of the time and risks of doing it all themselves.

Picking the right fit

Every company deals with its own set of requirements and restrictions, which is why there is no one-size-fits-all solution when it comes to global expansion. The trick is to find the expansion model that works best for you.

Here are some key questions companies need to ask themselves:

1. What is the purpose behind setting up operations in a foreign country?

Is it for entering a specific market long term, or getting access to certain resources that are available exclusively at a particular place? If yes, then setting up an entity might be a better option for you, keeping in mind that most countries offer a wide range of tax benefits and write-offs in the case of foreign direct investment.

However, if your reason for expansion is to tap into the talent pool of a specific country, or for the completion of a short-term project in a new country, then an EOR could be a more viable option.

2. How much capital are you willing to invest?

One of the biggest considerations when setting up a subsidiary or foreign branch is the money that you will have to invest. Take into account estimates for the costs of a physical structure/address, registering with local tax and labor authorities, opening local bank accounts, setting up payrolls, and linking up with the correct official authorities. Seems like a handful? Now add the cost of liaising with specialist tax consultants and employment lawyers, as you will have to constantly stay in touch with them. Finally, that leaves us with the recurring cost of maintenance and winding up (if things don’t work out). These costs will be significantly lower in the case of an EOR. Being in the business of setting up and managing global teams, an EOR will have in-house financial and legal consultants, as well as experienced personnel to manage the various aspects of talent acquisition and retention.

3. Are you committed to establishing a long-term presence in the new geography?

If you are confident that entering this market is the right decision for the business, or if the business already has a roster of loyal contractors in the chosen country, entity setup can be a worthy commitment. Most countries want to increase foreign infrastructural investments and therefore offer numerous tax exemptions to companies setting up their foreign branches. On the other hand, if you’re still weighing your options, or want to set up this new foreign branch only for a short-term project, then entering through an EOR would be a safer bet.

4. What is the timeline to begin operations?

If you are certain that you want to establish a firm presence in the foreign market and set up a base for years to come, then establishing an entity might give you better returns in the long run. However, setting up an entity can take anywhere between 3-12 months, depending on how investment-friendly the local legal regime is. Alternatively, if your presence on foreign soil is for a limited period of time – like a special project for a third party, completion of a time-bound goal, or if you want to test the waters before a full-fledged investment, then the EOR route is better suited. With an established base in the desired country, the EOR enables you to start operations almost immediately.

5. What is the desired size of the workforce?

The size of your team plays an important role in determining the route of expansion. When it comes to hiring and onboarding a limited number of employees, an EOR will certainly prove to be faster and more cost-effective. EORs have their own set of trained experts who can handle these processes, thereby reducing the client’s resources and simultaneously empowering them to focus on other aspects of the business. On the other hand, in the case of larger teams in a single country, having its own foreign entity enables companies to operate without any restrictions, while facilitating faster decision making.

6. Would the business benefit from the presence of local leadership?

Companies today rely on employees around the world, especially in leadership roles to leverage their diversity and local expertise to gain a competitive edge. In the case of an entity setup, businesses can leverage the presence of local leaders to effectively navigate the complex legal overheads and challenges when entering a new market. Conversely, if your new workforce does not require regular high-level decision-making, then choosing an EOR would be favorable.

To sum it up

Whether a company decides to set up a new legal entity or enter a foreign country with the assistance of an EOR, there exist certain advantages and limitations in both these routes. If the agenda behind the international expansion is the establishment of a definite physical and legal presence for a long period of time, then setting up an entity would be favorable. However, if a company wants to expand quickly and in a short duration of time, then taking the assistance of an EOR is immensely beneficial and cost-effective.

We hope that this blog post has been able to give you a holistic view of all the factors that weigh in on your decision; should you want to dive deeper, our team of consultants would be delighted to assist you with more information. At Talent500, we are helping global companies hire, build and manage global teams in 30+ countries by acting as their Employers of Record. We aim to transform high-impact companies by giving them access to a worldwide community of highly skilled professionals transcending geographical boundaries. Sign up here to take your first step towards global expansion!

How Employer of Record works

Posted on September 9, 2021January 24, 2022 by satya

According to the United Nations Conference on Trade and Development, 80% of the total world trade takes place due to multinational corporations. Setting up a legal entity or subsidiary in a foreign country is no mean feat; it requires a deep understanding of local labor laws, the local taxation framework and other legal and regulatory compliance. In terms of the timelines, this can take anywhere between 3-9 months.

For businesses seeking to accelerate this process and avoid overheads, an Employer of Record (EOR) is often a simpler alternative to get started.

An Employer of Record is a third-party organisation that serves as the legal employer for a company’s foreign employees. The EOR undertakes the management of all workforce-related aspects – from hiring & payrolls to taxation, employee benefits, and legal compliances.

Why EOR – The complexities of setting up in a new country

In an ideal world, hiring international employees would be as easy as setting up interviews via video conferencing and wiring their salaries to them at the end of the month. In reality, there are multiple hurdles in this process:

Upfront Investment

Setting up a legal entity in a foreign country requires a sizable investment in terms of capital, as well as time. In many cases, small and medium enterprises are not able to allocate the resources necessary for international expansion. An EOR solves this problem by charging companies a predetermined fee for undertaking all these responsibilities, consequently enabling them to hire from a global pool of talent.

Compliance with local & international laws

Every country has its own laws of employment which require strict compliance. This applies equally to taxation and foreign direct investment. EORs have legal teams that are well versed with the local laws, having years of experience in these areas.

Speed of operations

Registering a new entity and establishing a working framework can take months. Whereas employing an EOR allows companies to begin their operations within weeks, as they already have a framework in place for each step of the process.

In effect, a company is able to outsource all its duties with respect to the hiring, management of benefits & payrolls, and administration for its global workforce to the EOR. The EOR manages all taxation and regulatory related compliance for the company, making the entire process highly efficient and cost- effective.

Who do the employees work for?

The EOR enters into two contracts – the first is a service agreement with their client, for providing them all employment related services in the foreign country. The second is an employment agreement with the employees, where it agrees to pay them the agreed compensation and manage their perks and benefits.

Ensuring compliance with all employment and labor laws: Every country has its own set of laws governing employment. Well versed with the legal regime of the country, the EOR ensures due compliance with all employment laws.
Management of payrolls: The EOR undertakes the process of negotiating compensation, and pays the employees through its local bank account. It is the responsibility of the EOR to ensure the application of the correct taxation framework in accordance with the country’s laws.
Management of perks and benefits: Being in the same geographical location, the EOR has a much better grasp of the perks and benefits, and ensures that your workforce has access to the benefits that are most valuable to them.
Connect with the local ecosystem: An EOR gives you direct access to the right resources within a specific geography – the right recruiting partners, legal and financial consultants, or even the workspace.

In short, while employees are legally contracted by the EOR in their local region, in effect, they still work for the client and the client can retain all IP, creation processes and operational control.

Things to keep in mind while choosing an EOR

An EOR plays a huge role in the trajectory of a company’s expansion into a new territory, which is why it is imperative that businesses take an informed and reasoned decision when choosing one. The right EOR fits in line with the company’s vision, and has the requisite resources to bring it to fruition.

Here are some points that companies should consider in this process:

Established operations in the desired country

The biggest reason for employing an EOR is their grasp of the local laws and experience in operating in a particular country. Every country has its own set of employment legislations, tax regimes, and local operational guidelines. For example, while data privacy laws are not strictly applicable in most South-Asian countries, Europe’s data protection law, GDPR, demands a high level of compliance from all companies operating within the European Union. An EOR that is not locally present in the desired country will be unaware of these requirements, and hence, of little assistance to its clients. Here’s a list of the multiple countries where Talent500 can help companies hire their global teams.

Protection of your IP, data and information security

One of the biggest challenges that companies face when expanding into new territories is the protection of their intellectual property, data and proprietary information. Before choosing an EOR, it is essential to check their policies with respect to data collection, security protocols and mechanisms.

Data privacy & regulation

Before signing up, companies must enquire about the information the EOR is retaining, and how this information is being processed. Companies must insist on utmost information security via ironclad contracts.

Protection of Intellectual Property

A company’s trademark, logo, proprietary technology and all other IPR is highly valuable, and must be protected when venturing into new markets. Before selecting an EOR, it is crucial to verify that it has the requisite legal framework to be able to protect its client against potential IPR breaches.

Confidential Information

During the course of operations, a company has to share its sensitive information such as customer lists, pricing information & market strategy with its EOR, as well as the subsequent workforce. It falls upon the EOR to ensure that this confidential information is protected at all times. This is usually achieved through a dual method – the enforcement of airtight Non Disclosure Agreements with all employees, and the implementation of a robust security mechanism, complete with firewalls and multiple encryptions.

By removing the restrictions of hiring within a 30-mile radius, an Employer of Record enables companies to work with geographically diverse teams, giving them access to a limitless pool of talent. For companies that plan on firmly establishing their base through setting up a subsidiary, availing the services of an EOR is the best way to test the waters in a completely new market with minimal investment. The right EOR provides access to the best talent, while simultaneously remaining prudent about the investment of capital and effort.

Thinking about expanding into new locations? At Talent500, we are helping companies build, manage and scale global teams in more than 30 countries, including Pepsico, 7- Eleven, Target, H&M, Walmart, Ikea, and more. We have our roots at ANSR, a global market-leader trusted by the world’s leading organizations to set up, build and run high-impact, global technology hubs. For the last 15 years, ANSR has pioneered the global talent movement enabling $1.5B+ in capital investment.

Our dedicated team of professionals would be delighted to help you figure out the best match for your organization. Sign up here to take your first step towards global expansion!