As businesses continue to expand to other countries, Employers of Record (EOR) offer an easy way for companies to manage employees in countries where they don’t have a legal presence.
The EOR industry has been rapidly evolving due to global workforce expansion and remote work trends. However, businesses face challenges when choosing the right EOR service provider to meet their goals, making it essential to evaluate key factors such as global coverage, compliance expertise, flexibility, and customer support.
In this article, we will explore key factors in choosing the best EOR service for your business.
Factors to Consider When Choosing an EOR
Selecting the ideal EOR service depends on your unique business goals and operational requirements. The following key factors will help you make the right decision.
1. Global Coverage
Some EOR service providers don’t operate on a global level and restrict their operations to countries where they have a strong legal expertise, and an established infrastructure. This allows them to ensure compliance with labor laws, tax regulations, and other legal obligations.
For instance, while global EORs like Remote and Oyster operate in over 150 countries worldwide, others like Papaya Global primarily cater to clients in the U.S. and Canada. Therefore, select the best EOR service that supports your hiring needs in the countries you’re targeting.
2. Compliance Expertise
Assess an EOR’s compliance expertise in the countries where you want to hire employees to protect your business from legal issues. Check if the EOR has a proven track record of navigating complex country-specific laws and regulations.
Start with evaluating their history, case studies and testimonials to understand their reputation. Consult independent reviewers and ask for referrals from other businesses to gain a clearer picture of the EOR’s reliability and compliance standards.
3. Flexibility in Services
When choosing an EOR provider, consider their ability to offer flexible solutions that fit your business needs and adapt to changing demands.
Depending on your business model, you may require a certain mix of employees including full-time employees, part-time, freelancers, remote workers, or contractors. A flexible EOR provider can accommodate these needs, helping you pay for the exact type of talent you need, whether it’s for ongoing operations or short-term goals.
EORs can also help businesses scale rapidly, especially during periods of expansion and high growth, such as project launches, entering a new region or response to a market shift. They allow you to quickly onboard new staff to deal with these changes. Conversely, when you experience off-peak periods and might need to reduce your workforce, an EOR can help manage layoffs or transitions smoothly while ensuring compliance with local labor laws.
Flexible EORs offer tailored international hiring solutions that cater to companies of all sizes and industries and meet industry-specific requirements and regulations. They also offer customizable service packages that let businesses pick only the services they require, like international payroll, compliance help, or employee benefits, without paying for anything extra.
4. Pricing Transparency
EOR packages come with different pricing models. Some may charge a flat fee per employee, providing a predictable cost structure, while others use a percentage-based model, where the cost is calculated as a percentage of the employee’s salary.
For example, Deel and Papaya have an employee per month pricing model. This model is ideal for small businesses or startups with changing team sizes, as it allows for scalable and predictable pricing based on the number of employees per month.
Some EORs charge a percentage of each employee’s salary, usually between 5% to 25%. This model is ideal for businesses hiring low wage employees and also operates in sectors such as retail, government, or manufacturing where employee numbers don’t change often. However, as salaries increase, the percentage-based fees will also rise, leading to higher overall costs. This can become expensive for businesses with highly paid employees or those planning salary increases over time. In such cases, you may consider an EOR that offers a flat fee pricing up to a certain number of employees.
A company that requires only certain Employer of Record services, like compliance, or payroll services will also prefer the custom pricing model. This allows them to pay only for the services they need without committing to a full-service plan. While this model provides flexibility, it can complicate long-term budgeting and may be more costly for smaller companies.
Few EOR providers charge separate fees for onboarding, offboarding, performance management, compliance, termination or managing specific benefits. Look into these additional costs when considering the overall value and affordability of the service.
Ask for quotes upfront, and make sure it includes a comprehensive list of all fees, including setup, monthly, and termination costs to ensure no hidden charges exist.
5. Technology and Platform
When choosing an EOR provider, select the one with robust technology and infrastructure to meet your business needs. Ensure the provider’s software integrates seamlessly with your existing systems, as data plays a critical role in effective workforce management. Verify that the systems’ data security measures complies with data protection regulations.
The technology should also support essential administrative functions such as payroll, employment agreements, onboarding, and managing employee information. Additionally, evaluate the platform’s features to ensure it can simplify and automate these processes effectively.
Advanced features like real-time reporting, benefits enrollment, and other tools make an EOR platform more efficient, helping you manage tasks and improve the employee experience.
6. Customer Support
Select an EOR provider with strong and reliable customer support. Avoid EOR providers that rely solely on automated chatbots or generic support systems.
Automated systems often struggle to provide in-depth solutions for unique business challenges, leading to delays and frustration. Human support ensures that your specific needs are understood and handled efficiently, helping you effectively navigate complex employment laws and compliance concerns.
7. Payroll and Benefits Management
Assess the range of benefits the EOR provider offers to attract and retain talent. EORs that provide competitive health insurance like retirement plans, and paid time off enhance employee engagement and satisfaction.
The benefits they provide should also comply with local regulations. This is essential for maintaining a compliant and motivated workforce. They should be able to handle all aspects of payroll, including wage calculations, tax filings, and timely payments in the regions they operate.
8. Employee Onboarding
Employee onboarding helps new hires integrate smoothly into the company and become productive members of the team. Choose an EOR provider that offers a comprehensive onboarding process. This ensures that employees receive the support they require from day one, including orientation, training, and access to resources. This in turn leads to higher job satisfaction and faster ramp-up times, contributing to overall business success.
Questions to Ask for Selecting the Right EOR Provider
Below are the key questions to consider when evaluating potential EOR providers.
1. Do you operate in all the countries where I want to hire?
Choosing an EOR that operates in your target countries ensures a seamless and efficient approach to managing your global workforce. This helps your business comply with local laws, streamlines payroll and benefits administration, and reduces legal risk, allowing your business to focus on growth and productivity.
2. What services are included, and what’s extra?
When evaluating an Employer of Record, it’s essential to understand which services are included in their standard package. This way, you can determine if these services align with your company’s operational, financial and strategic goals. Additionally, assessing whether the EOR charges extra for certain services such as compliance and legal consultations will help to reveal any hidden costs that may affect your budget.
3. How transparent is your pricing? Are there hidden fees?
Understanding how transparent an EOR’s pricing is and whether there are hidden fees can help you plan effectively and avoid unexpected expenses.
4. How do you handle compliance with local laws?
The EOR service provider you choose should be able to navigate complex local laws and regulations in the regions you want to hire. They should have a dedicated team of legal experts and partners with local law firms to track regulatory changes.
5. Can you scale your services as my business grows?
There might be cases where you need to expand your workforce rapidly or enter new markets as your business grows. The right EOR provider should be flexible to accommodate these changes.
6. How quickly can you onboard new employees?
Their onboarding process should follow the average time frame of 1-2 weeks, although this would be dependent on the complexity of the local requirements and documentation. Understanding the onboarding process and what documentation is required from both employer and employee(s) clarifies the onboarding workflow, helping you prepare and streamline your operations for a smooth start.
7. What level of customer support do you offer?
Look for EOR providers that offer ongoing customer and payroll support. Assess the provider’s communication channels, availability of dedicated account managers, and responsiveness to inquiries or issues.
8. What measures do you take to ensure data security?
The EOR should have a reliable, and user-friendly platform that allows companies to track and store employee data correctly. The platform should integrate with Human Resource Information Systems (HRIS) and payroll systems to streamline data management and reporting. Ensure the provider you select complies with data privacy laws in the jurisdictions they operate.
Final Words
Evaluating global coverage, legal expertise, flexibility, and customer support is crucial when choosing an EOR because these factors can greatly impact your business’s success. You can reduce risks, stay compliant, and keep your operations flexible. The right EOR service helps ensure that expanding globally is smoother and more manageable, enabling you to employ workforce from countries where your business does not have a legal entity.