Home > Blog

What is EOR? Definition, Benefits, Pricing, and More

Expanding operations globally is an exciting move for businesses. However, navigating the world of international employment can be challenging and confusing. This is where Employer of Record (EOR) services come in. Global EOR services serve as a strategic partner to help your business simplify the complexities of global expansion by serving as your local legal entity in new markets. This ensures seamless operations and easier compliance when building teams in new locations.

In this article, we will highlight the importance of EOR, the benefits of using a global EOR service, and the exact steps your business can use to choose the best EOR for your needs.

What Is a Global Employer of Record?

A Global Employer of Record (EOR) is an ally for businesses expanding globally. It’s a third party that handles critical operational tasks such as hiring, paying, and managing international employees and teams.

EOR services manage payroll, taxes, and benefits and ensure that your business complies with local laws and regulations. This will help your business confidently and easily navigate each country’s complex regulations. Whether you're starting with a small team in a new location or rapidly scaling up globally, an EOR provides the flexibility to adapt to your changing needs. This allows your business to expand without the administrative burdens that come with managing a dispersed international workforce.

What Does an Employer of Record Do?

An EOR helps businesses make international employment stress-free. As the legal employer for the international workforce, an EOR takes charge of all processes related to employment, such as compliance, payroll, taxation, benefits, and contracts.

Establishing and maintaining a legal entity across different countries can be challenging for businesses expanding internationally. Therefore, EOR services establish their own legal entity in various geographical locations, allowing them to take on various operational-related responsibilities while companies focus on strategic tasks.

What is The Difference Between an EOR and a PEO?

PEOs focus on handling shared employer responsibilities and collaborating closely with companies. On the other hand, EORs serve as the legal employers for international employees, managing various legal and administrative factors.

Understanding the difference between a Professional Employer Organization (PEO) and an EOR is crucial for successfully expanding your business globally.

Parameter PEO EOR
Shares employer responsibilities
Takes on the role of legal employer for international employees
HR tasks, payroll, and benefits
Legal and administrative aspects of employment
Shared risk with businesses
Assumes a significant portion of legal responsibility
Hiring Support
Limited hiring support
Comprehensive hiring and recruitment support

Benefits of Using an Employer of Record

Utilizing an EOR service can provide various advantages to businesses venturing into global markets.

1) Efficient Payroll Management

EORs specialize in providing businesses with efficient payroll services. This ensures that remote employees receive timely compensation, regardless of which country they work from. This enhances employee satisfaction and ensures that you comply with various local compliance regulations.

2) Compliance

EORs ensure that businesses expanding globally adhere to all laws and regulations that apply to them. By assuming full responsibility for compliance-related issues, EORs shield against potential legal problems and penalties. This allows companies to navigate global markets with confidence and ease.

3) Global Talent Pool

Leveraging EOR services opens up opportunities for exploring a diverse global talent pool. Businesses can tap into diverse skill sets and perspectives, allowing them to build a dynamic and diverse remote workforce.

When to Use an Employer of Record

Businesses may choose to employ an EOR when they wish to hire employees in various countries where they do not have a legal entity. This may be for the following reasons:

Who Can Use An EOR?

Small businesses that lack extensive HR infrastructure or knowledge can benefit greatly by outsourcing payroll, taxation and compliance tasks to an EOR.

Mid-sized companies can also use EOR solutions to expand their operations into new markets as they navigate local employment regulations.

Multinational corporations can leverage EORs to streamline global operations across different business areas.

Why Should You Use an Employer Of Record

Utilizing an EOR provides businesses with a strategic edge by outsourcing complex HR responsibilities. It ensures compliance with various labor laws, hence minimizing legal risk and liabilities. For companies expanding globally, EORs can provide more efficient entry into new markets.

How To Select An Employer of Record Partner

Choosing the right EOR partner is crucial for a successful and compliant global expansion. Your business should consider the following factors when navigating the EOR selection process:

1) Country-Wise Knowledge

Ensure that your EOR partner possesses in-depth knowledge of the target country you plan to expand into. A lack of country-wise expertise may lead to additional costs and delays in research, impacting your business’s expansion timeline. BGC Group , for instance, specializes in the APAC region with more than 18 years of experience.

2) Experience

Prioritize EOR services with a proven track record of hiring and managing employees in the target country and collaborating with organizations in your industry. Experience is a crucial indicator of proficiency in navigating local employment laws and regulations.

3) Communication

Gauge your EOR’s communication skills by testing their explanations of various employment laws and tax legislation. Make sure that they keep you updated at each step about the progress of your global workforce management. Effective communication between your company and the Employer of Record (EOR) is crucial to navigating legal complexities. An efficient EOR will also timely report on payroll processing, tax filings, and any other important aspects of workforce management.

What Is The Pricing of EOR

Understanding the fee structure is crucial if your business is considering using an EOR service for global expansion. EOR service feeds can vary widely, depending on the provider you choose. Some EOR services charge customers on a per-employee basis, typically ranging from $300 to $700 monthly. Other EOR partners charge a percentage of your employees’ salaries, providing a less variable pricing model.

Depending on the country, there may be additional costs associated with tax compliance, benefits administration, and more. Before entering into an agreement with an EOR, it's crucial to engage in open discussions about pricing, ensuring alignment with your budgetary constraints and business objectives. A well-structured pricing model, coupled with transparent communication, sets the foundation for a successful and mutually beneficial partnership.

Unlock Global Opportunities With BGC Group’s EOR Services:

Are you ready to tap into the power of global expansion? With 18 years of experience and a transparent pricing structure, BGC Group is the best and most affordable partner for businesses seeking seamless growth, with prices starting at just $300/month/employee.

Contact us today for a free EOR quotation.