When it comes to staffing solutions, there is often a lot of confusion between EOR (Employment of Record) and payroll. Although both mechanisms may address similar issues people may face for staffing, they accomplish that using two very different ways.
Understanding the subtle but important differences between both concepts can help companies and their HR departments decide which mechanism suits their company and operations better.
This article will provide a brief overview of EOR and payroll, their differences, benefits, and which option may be the better option for you.
What Is an Employer of Record (EOR)?
Let us begin from the basics, understanding the meaning of EOR and payroll.
First off, what is EOR?
EOR is a mechanism that puts an employer in charge of the company (generally in another country) but relieves them of many time-consuming HR services such as:
- Payroll processing
- Benefits management
- Employee onboarding
- Compliance and risk management
With EOR, companies can hire third-party organizations that specialize in HR operations, while also ensuring that the company abides by local laws.
What Are Payroll Services?
Let us dive into the meaning of payroll services. Simply put, payroll services are solutions utilized by companies that have already hired their team of employees but require assistance with payroll tasks such as:
- Payroll processing
- Payroll reporting
- Automated payroll
- Payroll reporting
In such cases, companies often approach payroll vendors or software companies that provide cloud-based HRMS software that is equipped to manage all kinds of employee information and analytics.
EOR vs Payroll: What Sets Them Apart?
Having understood EOR and payroll, let us understand what sets both concepts apart.
The primary difference between EOR and payroll is that while one concept focuses on administrative tasks such as processing paychecks in a timely manner, the other mechanism handles the entire spectrum of human resources operations for both employers and their employees.
With an EOR mechanism, employers do not have to worry about HR operations such as managing employee registrations, filing taxes and tracking attendance. On the other hand, payroll solutions have sophisticated mechanisms in place – but only for payroll-related operations.
When it comes to EOR and payroll, companies that want to delve into employee benefits plans such as health insurance and retirement savings would opt for EOR – as it provides a more comprehensive suite of services.
Payroll is the perfect option for simplifying back-office administration tasks – specifically pertaining to the payment of employees.
Why Choose EOR for Payroll Management?
Having understood both EOR and payroll meaning, many companies often opt for EOR – even for payroll management operations. Why so? Simply because companies can secure a wider array of solutions and services for the entire length and breadth of HR activities.
This is especially useful in big companies that employ many people and require a more sophisticated solution for their HR operations.
Benefits of Standalone Payroll Services
Do not underestimate the many benefits standalone payroll services can bring about for your company. Payroll services can give your company benefits such as:
- Increased data security over your payroll data – which will greatly minimize the chances of any data breaches.
- Cost-efficient software and payment plans that complete your payroll operations without costing a pretty penny.
- Payroll solution providers constantly update you with regulatory changes and notify you with regard to changes in wage and tax laws, so that your company is always compliant.
- Detailed and proper information management as important information such as salary data, employment terms and working hours are efficiently stored and managed.
- Tax filing services – which are available through certain full-service payroll providers
- Employee self-service portals that allow them to access payroll information quickly and conveniently.
How to Choose Between EOR and Payroll Services
So, EOR or payroll – which is the better solution for your company?
Here are some factors you could consider while making a decision:
- If your company has a branch in other countries in which you want to hire, you may prefer using payroll services as you already have an entity in the country.
- If your business does not have an entity in another country where you wish to hire employees, perhaps EOR will be a better option as it will reduce the time and cost of your operations. The EOR will also be a legal employer of employees in the third country.
- If your business has entities in one or more countries, you could integrate either solution depending on the laws, business scope and setup in the particular companies.
Conclusion
Whether it is EOR or payroll services you are looking into – or a completely different hiring solution, BGC Group is here to alleviate your company of any hiring and HR worries.
A growing organization cannot do without efficient management of its payrolls. But let’s be honest, managing payrolls or EOR services, especially when you’re hiring internationally, can be a hassle. This is where payroll outsourcing services come to your rescue.
By outsourcing payroll management and EOR to BGC Group, you can stay assured that every aspect of your HR operations will be handled with precision and expertise. Moreover, comprehensive payroll management and EOR can also reduce costs and manual efforts within your organization.
Our EOR services include:
- HR administration
- Payroll
- Compliance
BGC Group brings to you trusty payroll management and EOR services that handle transactional work in recruitment, payroll, and compliance. Contact us now to get started on your global journey.
