Employer of record services you can trust

The short answer is yes, but doing so either requires you to open your own legal entity in the country or employ the workers as contractors. Both strategies have their pros and cons.

If you open your own legal entity, you will be responsible for managing your entire presence in the new country. That means hiring lawyers, payroll specialists, benefits administrators, and other professionals. Doing so may make sense if you plan to hire hundreds of people in a new country, but if you only plan to employ a handful (or even a few dozen), an EOR is more cost effective.

Hiring workers as contractors requires you to be diligent. International contractor misclassification is a serious issue and can lead to hefty fines and penalties. Going through an EOR insulates your business from potential compliance risks by making workers fully fledged employees.

EOR is shorthand for “employer of record.” Some employers of record may use different abbreviations, such as “international PEO,” but the actual services provided all fall under the same banner of EOR.

That is not to say all EORs operate the same way, however. Some EORs own their own legal entities, while others act as intermediaries and do not own any entities. Other EORs may use a mix of their own entities and partner entities, which can be confusing to HR departments and employees — and may lead to issues of compliance.

An employer of record (EOR) can hire employees on your behalf in other countries, while a professional employer organization (PEO) may not. Some companies call themselves “international PEOs” and provide EOR services. Others using the term “international PEO” only provide services for companies that already own legal entities in other countries.

Think of it this way: if you want to hire a person in a country where you do not own a legal entity, you need an EOR. If you want help managing HR functions, like payroll and benefits administration, in a country or region where you already own your own entity, you need a PEO. Basically, a PEO offers most of the same services as an EOR, but does not handle the legal employment of your employees in other countries.

Learn more about the differences between an EOR and a PEO in our helpful guide.

Most EOR service providers use one of two pricing models: flat fee structures or percentage pricing. Flat fees are more transparent and tend to be lower, while percentage pricing can be very expensive.

Be cautious before working with any employer of record that charges a percentage instead of a flat fee. Global employment costs can be variable, but a good EOR accounts for these costs and can tell you what your bill will be up front. Percentage-based fee structures encourage companies to keep worker salaries low while funneling more money to third-party providers.

Remote’s EOR services are $599 per month (paid annually) or $699 (paid monthly). No hidden fees, minimums, contract lengths, or exclusivity agreements. Ever. Choose the plan that works for your team. View our pricing page to see how surprisingly affordable growing your global team can be.

Your employer of record’s biggest responsibility is acting as the local employer on paper for your employees in other countries. Your EOR shields your company from liability and compliance risks by employing workers legally on your behalf.

In addition, an employer of record handles the complicated HR work that accompanies hiring workers in other countries. Different places have different rules for things like how often employees should be paid, which currencies are allowed, how much paid time off employees must receive, and so on. Your employer of record manages all of these complexities on your behalf, so you can spend less time on administrative work and more time on growing your business.

Importantly, an EOR is not involved in the management of the employee’s tasks or performance. You work with employees employed through an EOR the same way you work with any of your other employees. The only difference between an employee in your office and an employee under an EOR in another country is in who handles the paperwork.

In payroll, an EOR manages the administration of employee pay in other countries. When you employ someone in another country through an EOR, you provide the funds, but your EOR handles the distribution of the employee’s salary, along with any necessary tax deductions, social security contributions, and retirement accounts.

Working with an EOR allows you to handle international payroll in compliance with the laws of countries beyond your own. With an EOR, you can hire workers in other countries without having to become an expert in the payroll laws and customs of those countries. You simply find the right person for the job, then let your EOR take care of the details.

When comparing employer of record services, you should consider the breadth of global HR solutions they offer — like payroll and benefits administration, onboarding, and local taxes — as well as the thoroughness of their local compliance.

Only work with an EOR that owns its own local entity in the country where you want to hire. Otherwise, you may end up with your own workers employed by an unknown third party in a country where you have limited oversight or control over the quality of their experience.

In addition, your EOR should be able to provide exemplary protections for your intellectual property.

Without those protections, you could be drawn into uncomfortable situations and lengthy court battles related to ownership of your IP in different countries — a nightmare scenario for any business.

Here are a few questions you may want to ask:

An employer of record can perform a number of HR and legal functions, including:

• Do you own an entity in this country, or do you outsource the employment and compliance to a third party?

• How do you protect intellectual property and invention rights in this country?

• Do you share employee data with any third parties?

• Do you keep all employee documentation for employees in all countries in one easy-to-access hub?

Remote owns all our own entities, provides the strongest IP protections and data security in the industry, and offers best-in-class global employment software to meet your needs.

Yes, it is legal to hire employees in other countries through an EOR. Some EORs are more compliant than others, though.

Only EORs that own their own entities can guarantee the maximum level of compliance everywhere they operate. Before you begin working with an EOR, make sure your EOR owns a local entity and has sufficient knowledge to handle localized payroll, benefits, taxes, and compliance, as well as stock options, if you offer stock to your employees.