What Is a Global Employer of Record (EOR)? 7 Key Considerations for Choosing One
.jpg)
As the world grows more interconnected, businesses can no longer afford to approach global expansion as an afterthought. For example, if you want to break into a new market, you can no longer just set up an office and assume everything will fall into place. You need to consider local laws, customs, business practices, and even cultures.
Partnering with one of the employer of record companies can help ease your transition into a new country and smooth out uncertainties that could jeopardise your growth and profitability. This article will help you understand what global employer of record services are, how they can benefit your organisation, and key considerations for choosing an EOR.
Cercli’s global HR system can help you achieve your objectives by simplifying the process for understanding worldwide EOR and how it can support your organisation. Then, when you are ready to choose one, our solution can help you identify a suitable option for your company.
What Is a Global EOR, and How Does It Work?
A global Employer of Record (EOR) is a third-party organisation that becomes the legal employer of your international staff. It enables companies to hire employees in other countries without the need to establish a local entity in each location. While your business directs the employee’s work, sets performance expectations, and manages day-to-day responsibilities, the EOR takes care of everything required to ensure that employment is compliant with local laws.
This includes:
- Drafting locally compliant employment contracts.
- Running payroll and handling tax withholdings.
- Managing statutory benefits, leave entitlements, and insurance.
- Ensuring compliance with labour laws and regulatory changes.
EORs: Your Gateway to Global Hiring Without Entity Setup
The global EOR utilises its in-country legal entities to employ individuals, thereby allowing your company to avoid the costs and complexities associated with setting up local operations. It is beneficial for companies looking to test new markets, hire remote talent, or scale internationally without delays.
In short, a global EOR provides the legal infrastructure and HR administration needed to support international hiring, allowing you to grow into new regions while remaining compliant with local employment requirements.
Related Reading
- Best Employer of Record Companies
- Employer of Record vs Staffing Agency
- Employer of Record Payrolling
- Challenges of Managing a Global Workforce
- Consequences of Payroll Errors
Benefits of Working with a Global EOR
A 2020 Ernst & Young report highlighted that 64% of companies expanding globally struggled with compliance management, leading to increased legal risks and operational costs. Those that leveraged EOR services reported a 50% decrease in compliance-related issues and a smoother entry into new markets.
Expanding globally means adhering to each country’s varying:
- Labour laws
- Tax regulations
- Employment standards
This complexity can lead to costly compliance errors and legal penalties. An EOR helps address these challenges by ensuring compliance with local laws and handling all employment-related legal responsibilities.
Simplifying Payroll and Benefits Across Borders
When expanding globally, managing payroll and benefits becomes increasingly complex due to the varying tax systems, currency conversions, and benefit regulations. EOR services centralise and automate payroll, ensuring accurate and timely payments across all regions while adhering to local requirements.
Reducing Cultural and Language Barriers
When expanding globally, businesses often encounter cultural differences and language barriers that can impact communication, employee engagement, and overall business operations. These challenges can lead to misunderstandings, decreased productivity, and difficulties establishing a cohesive company culture across diverse regions.
EOR services help bridge these gaps by providing local expertise and managing HR processes in the native language, ensuring that cultural nuances are respected and communication is clear and effective.
Facilitating Cross-Border Talent Mobility
EOR services are crucial for supporting cross-border talent mobility as the global business environment continues to evolve. This is clear in their ability to manage complex visa and work permit requirements.
EOR providers can help streamline international relocation by supporting:
- Visa application processes
- Work permit procurement
- Residency and immigration requirements
Depending on the country, some EORs may facilitate visa applications directly or coordinate with local partners to help manage immigration requirements. Not all EORs offer full visa sponsorship, particularly in regions with strict immigration policies.
Accessing Global Talent Pools: EORs as Your Strategic Advantage
This is especially valuable in industries facing talent shortages, as it allows businesses to tap into global talent pools without being hindered by complex administrative challenges. By leveraging EOR services, companies can quickly:
- Deploy talent to new markets
- Reduce the time and costs associated with international relocations
- Ensure compliance with immigration laws and regulations
- Provide a smoother transition for employees moving to new countries
As businesses continue to seek out the best talent regardless of location, the role of EOR services in supporting global mobility will become increasingly important.
A Cost-Effective Solution for Global Employment
Hiring and paying employees across international borders can be costly, especially when trying to pay employees in multiple countries, an endeavour that can result in expensive transfer fees. EOR service providers give you visibility over the transferred amount. This ensures no problems arise when employees receive their salaries.
Working with a global EOR provider simplifies this process and helps you transfer salaries on time, without worrying about fees and additional costs. EOR companies help you offer benefits at discounted local rates. For example, if you have team members in India and Egypt, it can help you access locally compliant benefits, which are often more cost-effective than international alternatives.
Entity Setup and Compliance Support
Companies that require on-the-ground and in-person operations often need to establish a physical presence in various countries. Some companies do this when they begin to expand and have dozens of team members in other countries.
Besides managing the recruitment process, the EOR service provider offers benefits packages along with ongoing HR support for your business.
Cercli: Your Local Partner for Seamless Global HR in MENA
Cercli is designed for companies in the Middle East that need a flexible, compliant, and reliable way to manage their workforce, whether teams are local, remote, or across multiple countries. Tailored for regional business needs, Cercli helps companies in the UAE, Saudi Arabia, and across the MENA region simplify HR operations, stay compliant with local regulations, and run payroll with confidence.
From managing WPS (Wage Protection System) registrations in the UAE, processing GOSI in Saudi Arabia, handling DEWS contributions, and ensuring contracts and benefits are compliant, Cercli simplifies regional payroll and HR. As companies hire remote employees, contractors, and global teams, Cercli provides extensive support for global workforce management.
The Power of a Unified Platform: Streamlining Global Payroll and HR
Companies can pay contractors or full-time employees in over 150 countries through multicurrency payroll, Employer of Record (EOR) services, and compliant international contracts, all through one unified platform.
Cercli gives HR teams a centralised system to manage every part of the employee lifecycle:
- Onboarding, asset management
- Leave tracking
- Time off calendars
- Payroll processing
- Offboarding
With one source of truth for all employee data, companies can eliminate manual processes, reduce payroll errors, and ensure full visibility across the entire organisation.
HR Functions that a Global EOR Helps You Perform
Streamlining Employee Onboarding for International Hires
According to a study by Click Boarding, which provides onboarding software to companies, employees who undergo a structured onboarding process are 58% more likely to remain with a company for three years. An employer of record simplifies the onboarding process for your employees, ensuring a smooth transition into their new role.
An EOR will facilitate the local onboarding process in your hire's location, managing all the administrative tasks, such as:
- Employment contracts
- Background checks
- Setting up payroll
A smooth onboarding process helps create a positive first impression of your company, which can boost engagement and productivity right from the start.
Payroll Management and Employee Payment
Managing payroll for global teams can be complex, especially when ensuring compliance across multiple countries. An EOR simplifies the process of paying team members in their local currency.
This means fewer exchange rate risks and administrative hassles, simplifying the payroll process to ensure that people are paid on time and in their preferred currency.
Administration of Employee Benefits Packages
An EOR manages employee benefits administration. They can offer benefits packages that comply with local regulations and meet employee expectations, including healthcare plans, retirement plans, and a whole range of other perks. Some providers can even offer global stock option plans.
The importance of offering the right benefits cannot be overstated, especially considering that 49% of employees will leave a new job within the first year because of dissatisfaction with their benefits. That is why it is more important than ever that you offer talent the benefits they want, no matter where they are.
Tax Management for Global Teams
EORs handle tax withholding for your team members, in line with the tax laws of each person's country. This ensures compliance and reduces the risk of potential liabilities for your company. An EOR remits the necessary amount from an employee’s payslip to the appropriate authorities.
EORs also file the necessary tax forms related to employment, such as income tax, social security, and unemployment taxes on your behalf. This helps ensure you avoid penalties and strengthens regulatory compliance.
Ensuring Compliance with Local Labour Laws
Local labour laws can change frequently and vary from one location to another, making it daunting to keep up with each country's requirements. For instance, your internal HR department would have to juggle minimum wage laws, overtime rules, leave policies, and other labour-related regulations in every region where you have staff.
EORs help companies stay up to date and compliant with these evolving regulations, minimising any potential legal problems.
Related Reading
- Payroll and Compliance Challenges
- Payroll Outsourcing Costs
- Payroll Internal Controls Best Practices
- Employer of Record vs PEO
7 Key Considerations for Choosing a Global EOR
1. Does the EOR Have a Local Presence?
Different countries have different laws that govern the employer-employee relationship. Without a local presence, an EOR may not be up-to-date on the latest changes to relevant legislation.
They might also lack expertise in key areas of workforce management, such as local salary expectations, dispute resolution, and compliance. A local EOR will either have offices in the country where you are hiring or partner with an established in-country organisation to help with compliant workforce management.
2. Is There a Limit to How Long a Country Allows Companies to Work Through a Global EOR?
Working with a global EOR is often a temporary solution, and some countries have strict time limits in place. Some countries, like Germany, place restrictions on how long companies can use EOR arrangements under labour leasing laws, typically limiting them to 18 months unless exceptions apply.
EOR as a Strategic Bridge: Knowing When to Establish a Local Entity
Most global EOR solutions range in duration from a few months to a few years, after which it becomes more advantageous for companies to establish a permanent presence and open a legal entity. When they reach a certain threshold of employees, typically in the range of 15 to 20, the fees they pay for each employee usually exceed what they would pay as the outright employer.
At that point, they may also want to engage in contracts with partners that require a permanent presence to complete. The key to planning, however, starts with knowing in advance about any legal limits imposed by the country in question.
3. How Does the EOR Ensure Data Privacy and Security?
When it comes to payroll, companies collect and store some of the most sensitive data available about their employees. Before choosing a global EOR, it is essential to learn more about how the data of your workers will be protected. You want to know that web transfers, when necessary, are done through the secure HTTPS protocol, and that nothing is sent through standard emails, a major red flag in data protection.
Access to data should be limited to the minimum number of people possible. It is not just a matter of protecting your employees. The fines for mishandling data can be extremely severe, and yet it is not guaranteed that every company handles data with proper care.
4. What Pricing Model Does the EOR Use?
When it comes to pricing, a global EOR has two approaches to choose from. It can offer a flat fee for each employee, known as the fixed-price model, or charge a percentage of the employee’s salary. While both approaches may be equally valid, workforce spending is more easily predicted and planned with a fixed-price model.
When fees are based on how much an employee earns, the numbers are likely to fluctuate from:
- Person to person
- Country to country
- Job to job
Therefore, it becomes difficult to predict how much your company will pay the global EOR for the service. If there is a standard fee for each employee, your company will know how much it is paying based on the number of people hired in each location.
5. How Much Flexibility Does the EOR Show in Employment Contracts?
Every company and global EOR has its policies. The question, however, is what happens when the two sets of policies run in different directions. Will the EOR be willing to compromise, without violating compliance regulations or local standards, to allow your company to maintain its values and principles?
Evaluating EOR Flexibility: Aligning Your Global Standards with Local Contracts
For example, will the EOR allow you to offer additional benefits in keeping with your global standards, even if it does not already offer such benefits? In reality, some EORs are flexible, while others are adamant about adhering to their standard contracts.
Companies from abroad are often intimidated into accepting the EOR standards under the belief that the local partner knows best. Those standards are typically just preferences by the EOR, rather than local standards, and there is no reason for companies to accept them. Your company is better off working with an EOR that wants to work with you rather than imposing its terms on you.
6. What Is Their Track Record on Paying Global Talent on Time?
Late payment can cause a wide range of headaches, from employee frustration to hurt morale and even legal trouble. Finding an EOR with reliable global payroll capabilities is a must. They will ensure that your employees are paid on time, every time, so you can maintain a positive work environment and avoid disruptions to your operations. This also helps keep your business compliant with local labour laws, which often have strict regulations regarding payment deadlines.
Rigorous Vetting: Ensuring Your EOR's Global Payroll Reliability and Compliance
To vet an EOR’s global payroll capabilities, ask for references and case studies that show they consistently meet payroll deadlines.
- Review their service level agreements (SLAs) to ensure they have clear commitments around payment timelines.
- It is also worth investigating any certifications or third-party audits they have, which can provide confidence in their processes.
- Inquire about the technology they utilise to manage global payroll.
- Ensure they have robust systems in place for accuracy and efficiency.
- Research their history with local authorities to confirm they have a reliable compliance record in the countries you want to hire.
By taking these steps, you can ensure that your EOR handles payroll efficiently, helping you avoid potential disruptions or issues down the line.
7. Can Their Solutions and Services Scale With Your Business?
Your business is dynamic, and your needs will evolve. You may need to manage and pay international contractors, convert contractors to employees, or relocate talent from one country to another. Instead of searching for and managing multiple HR providers, use a global EOR partner built to scale with you.
Look for a partner that offers an advanced platform backed by in-country experts, ready to meet all your global workforce needs. Check for services beyond EOR and global payroll. Can they handle global benefits, immigration, international pensions, and equity management? Asking these questions will help you start effectively today and prepare your business for future growth.
Related Reading
Book a Demonstration to Speak with Our Team about Our Global HR System
Cercli is an employer of record designed for companies in the Middle East. It helps businesses onboard, pay, and manage employees and contractors, regardless of their location.
With Cercli, MENA companies can streamline their HR and payroll operations to ensure compliance with local labour laws and regulations.
Global EOR Services for the Middle East
Cercli helps companies across the Middle East manage their entire workforce, whether local or spread across more than 150 countries, all on one platform. Run fully compliant payroll across the UAE, Saudi Arabia, and the wider MENA region, manage leave, onboard employees, track assets, and handle global contractor payments in multiple currencies with ease.
Whether you’re managing 25 employees or scaling to 500+ across multiple markets, Cercli combines deep local expertise with global capabilities, providing your HR team with a single, compliant system to run operations and pay your workforce anywhere.
