According to Business Research Insights, the Employer of Record (EoR) market is projected to reach over $8 billion by 2031.
It’s fast becoming a linchpin for any company looking to access the global talent pool as they seek to navigate the complex world of international labour laws, employee management and benefits compensation.
The primary benefit of engaging with an EoR is to ease the administrative burden of hiring internationally – employment regulations vary considerably worldwide.
For example, in Germany, employees are entitled to six weeks of sick leave after working at a company for just one month. By contrast, their neighbours in France offer unlimited sick leave for employees who have been in a role for more than six months.
By hiring through an EoR, companies can avoid the cumbersome process of developing a legal entity in a foreign country and adapting to each legislative change to ensure compliance.
This helps avoid costly penalties. For example, in Germany, violating the minimum wage law can result in a fine of up to €500,000.00 In some countries, like Portugal, labour laws are so important that provisions are entrenched in national constitutions. Here, employers can get fined even for sending a text message to an employee outside of work hours.
Ultimately, a trusted EoR partner means peace of mind, but only when done right. Companies can expand into emerging and highly talented markets without worrying about potential legal problems and administrative headaches when hiring internationally.
Alongside the growth of the EoR business model, there has been a growth in EoR providers. These providers tend to offer different delivery services focusing on speed of delivery and onboarding, superior technology capabilities or good old fashioned customer service.
However, some key differences set providers apart. Consider something like regional expertise. Often, EoR firms specialise in certain areas, such as the European or Asian market, while others focus on providing global coverage via their partner network. If you’re looking to expand into more than one region, consider the amount of local expertise and coverage you will require.
For example, while a provider may be able to navigate holiday structure in the English-speaking and culturally familiar United States, they may struggle to maintain compliance within the Asian market, whose holiday calendar is completely different to that of the West.
A quality EoR provider should be agile and able to adapt to your changing business needs. Some EoR providers only offer fixed long-term and permanent contracts whilst others support the use of Independent Contractors. All of these employment models fulfil a specific purpose and require specific regulations in order to remain compliant in a particular jurisdiction. It is not a one size fits all approach!
You should also think about how an EoR provider structures its costs. Hidden costs are a common issue when engaging with “inexpensive” EoR services. Anything from currency exchange fees to compliance-protection fees can lead to costs that far exceed the initial quote. Transparent pricing is not an unrealistic expectation you must have.
It’s common for EoR providers to focus on tech. Providers will onboard you onto a platform, allowing you to hire ASAP, but with little consideration for what this means practically for you.
Ultimately, working internationally is the same as working within your country; it’s a people-first process. A quality EoR provider should focus on a consultative approach, which makes onboarding an international employee easier.
Choosing an EoR provider can be difficult; there’s much to consider, but the priority should always be human connection and customer service.
If you’re looking to expand globally or would like some more advice on what sets EoR providers apart, please don’t hesitate to reach out to us.
Tel: +44 (0) 115 888 2268
Email: solutions@portasglobal.com
