There has been a major change in the way global hiring strategies are employed by organizations in the recent past. With companies going remote but still wanting to access global talent regardless of the physical limits, the task of recruiting and retaining a workforce has become more complicated. This is where Employer of Record (EOR) comes in — a forward-thinking solution for forward-facing businesses. An EOR company can be a great help in making global hiring easier. Continue reading to know the how’s and why’s.
The Evolving Global Hiring Landscape
The conventional employer-employee relationship boundaries have been undergoing transformation due to widespread remote work. Following are some emerging trends shaping global hiring –
- More Companies Adopting Remote-First Policies: More organizations are implementing remote-first plans which allow people to work from anywhere. This change is prompted by the need to have more flexibility and reach out to more talent.
- Geographical and Cultural Backgrounds of the Workforce: Organizations are trying to install DEI by hiring people from different cultures and countries which means that they have to understand the different employment laws and practices.
- Growth of the Gig Economy: There has been substantial development in the gig economy which implies that employers are now employing freelancers or independent contractors from various countries. Efforts have to be put in place to monitor and adhere to these flexible working arrangements.
- Varying Normative Requirements: Every nation has its own tax code and its provisions which may be hard to comprehend and apply because of the population density of the organization.
What is the Role of an EOR in Global Hiring?
An employer of record (EOR) is an organization hired to employ individuals on behalf of another corporation and accepts the obligations that accompany such employment. This scenario applies in particular to the global domain where it is always challenging or tedious to deal with a multitude of legalities regarding employment, payroll, and employee benefits across jurisdictions. Here’s how an EOR eases global employment:
- Making Legal Aspects Easy
Hiring people in various countries is not easy, especially concerning employment laws. Every single nation has a unique legal framework when it comes to labor, taxation, and employee benefits.
An EOR company takes on the responsibility of ensuring compliance with these local laws. As a result, they take full responsibility, drafting legally compliant employment contracts and respecting laws related to labor among other things, shielding your company from legal risks and penalties.
For example, Multiplier, a leader in the field of EOR services, helps businesses to remain compliant with the laws and regulations in all the areas they operate in. They make sure that all employment processes from recruitment, contracts, and dismissal notice are conducted within the legal framework, hence enabling business people to do business as it should be done.
- Making payroll and administering benefits more efficient
Administration of payroll and administration of employee benefits active in the international market is tedious as it is handling various tax regimes, foreign currencies and benefits enmeshed in one package. An EOR helps in alleviating this task by aggregating payroll and related processes inclusive of the payment of wages, dispersing wages, tax deductions, and more, as well as the provision of protected health insurance and pensions.
With an EOR company, business establishments do not go through the hassle of establishing a local payroll for purposes of settlement and this helps businesses in making timely and accurate placements. This simplified process saves operational time, administrative costs and also improves the contentment of employees regarding the remittance of their salaries and allowances.
- Saves Time When Marketing an Organization’s Products or Services
When an organization sets their sights on a new country, the process is usually hitched with bonafide paper work requiring time and costs. An EOR extends entry into a market because a business can hire employees and start operations with the use of EOR without the need of having to first set up a legal entity in that country. Such flexibility is beneficial for businesses that wish to explore new business models in different markets or those that are seeking growth swiftly.
For instance, if a software development company based in America, wants to recruit software engineers in Japan, Multiplier, an EOR company, will manage hiring, onboarding and payroll processing in Japan so that the company can incorporate the staff into their workforce without waiting for a Japan based subsidiary to be formed.
- Managing Risks
There are risks that come with managing a global workforce such as lawsuits, compliance issues and resolving tax matters among others. An EOR reduces these risks by assuming the risk of employment as a business entity. It takes care of all disputes arising out from employment, compliance with labor regulations, and remitting relevant taxes thereby shielding your business from unnecessary risk.
Businesses can relieve themselves of the threats that international employment normally brings about by outsourcing it to EORs.
- Effective Management of Diverse Workforce
As businesses grow, so is the need for diversity and inclusion which promotes hiring of employees from many cultural and geographical backgrounds. An EOR can handle the intricacies associated with hiring people from foreign nations including the need to appreciate local work culture and how people conduct themselves at work.
How to Choose the Right EOR Company?
- Geographical coverage: Check the EOR’s geographical presence with respect to the countries you intend to hire.
- Knowledge of Compliance issues: Engage an EOR that understands the local legal landscape of employment.
- Technological and Administrative Support: Get an EOR that integrates appropriate IT solutions and customer care to carry out payroll handling and compliance efficiently.
- Profile and credentials: Always hire an EOR that has had experience dealing with management of global employment of people.
Multiplier is well-known for its comprehensive global coverage and expertise in handling international employment challenges.
Conclusion
The contribution of an EOR company in managing various hiring facets, reducing compliance tasks, handling payment methods and procedures, speeding up market entry, and better risk management assists enterprises in pursuing global employees without complications.
If you are a small business and seeking to enter new markets or if you are a big business venturing into international markets, an EOR can help you reach the desired goals in business internationalization allowing you to direct your energy in activities that are relevant in building a business.
