One of the most defiant issues in a company is to employ the right person, especially in these times when you can hire employees from all over the world. One of the best ways to do that is through an employer of record (EOR). These organizations not only can do this for you, but other many things linked to it.
In this article, you can see all the aspects related to the use of an EOR. For example, what it is, the advantages of having it, and other things you should know about these organizations. Let us observe:
- What is an employer of record?
- Which are the benefits of using an EOR?
- When can you use an EOR?
- Are EORs and PEOs the same?
- EOR or employment agency?
- How can we help you hire an EOR in the Middle East?
1. What is an employer of record?
It is an organization that can be hired to take care of all the procedures related to employment in another company. Some of the responsibilities that this organization has include administration, payroll, taxes, benefits, and the records of employees.
For example, if you want to expand your business to Abu Dhabi, you will need an employer of record in the UAE. In this way, you will have the appropriate EOR service.
Moreover, this helps your company contract employees in other countries without direct intervention, but with the confidence of hiring the best. Because the EOR is responsible for satisfying the tax law, assuring that your business is in the right hands.
The EOR is the employer to the worker but has no role in the supervision or management of the employee. The original company keeps most of the working relationship and the decisions related to compensation, projects, and end of contracts.
Specifically, an employer of record is a legal entity that can do the following things:
- Organize all visas and job permissions for the employee, evading delays and denials.
- Provides a legal organization to take care of a local payroll according to the local laws.
- Obey the labor laws according to local contracts and the protection of the workers.
- Give the client advice about earlier notifications, contract finalization norms, and layoffs.
- Act as an intermediary between the worker and the government authority, further legalizing the process.
Nevertheless, you should know that the services of an EOR are not necessary if you are hiring independent workers. You can do this yourself without using another organization, with just a few resources.
2. Which are the benefits of using an EOR?
There are many advantages of having an employer of record to do the job you need in your company. Next, you will see all of them.
2.1 The local incorporation is not needed
When a company wants to do this, it has to begin by establishing a local entity through incorporation and registration. Of course, it is expensive and takes too long, which is not ideal and also needs legal, as well as countable support.
There is something obvious when you try to start a company in various countries: you have to adjust to the local laws and rules. For example, an employer of record in Dubai has the obligation of dealing with the regulations in that country.
Also, in many places, your company can have compensation for the time and the cost of having an international subsidiary. Nonetheless, there are many cases in which you must have a local PEO (Professional Employment Organization) or an EOR.
And you can ask, is an employer of record legal? Of course, because the EOR acts as an intermediary between the corporation that hires it and the assigned. As well, it has the contacts and needed experience to do the job according to the local laws and procedures.
2.2 Immigration compliance
For foreign companies, it could be a challenge to achieve the norms of migration. This is because they are in constant change and becoming very severs about granting work or business permissions and visas. Besides, if a corporation skips these laws, the consequences can be terrible for it and its employees.
Thus, to prevent problems with immigration and local laws, many companies choose the solution of a global PEO or EOR. For example, an employer of record in the UAE will handle all about it in that region.
In this manner, the staff has legal permission to work in the hosting country. As well as getting rid of the remote payrolls problems, overuse of work visas, and multiple entrances to the foreign country. Also, the local business partner takes care of all the permissions avoiding the complications and observations of the immigration authorities.
2.3 Carrying a payroll in the host country
When a company is settling in a country (such as the UAE), it requires paying its employees according to local standards and with a registered organization. Hence, a “remote payroll” (the one from their origin country) is not permitted, especially in a long-term destination.
The calculation and retaining of the ruled discount, including retirement fund, health insurance, and taxes, are an important aspect of carrying a payroll in the host country. For that, the EOR takes care of these details making sure that the payments are exactly and ruled for every employee.
An employer of record in the UAE (in this case) is the solution to solve the problems related to this. Also, it is the perfect way to promote a good relationship with the government of the country your company is in and it is the more economical way to have foreign workers.
2.4 The EOR in the international HR
The benefits of using an EOR in an international destination (for example, an employer of record in Dubai) can be seen when you consider the time and money that can be saved, compared to doing it yourself. Of course, an employer of record contract gives your company the legal cover because can relives it from the elements required to hire the workers in another country.
Likewise, the common change of the tax policy and the immigration laws make useful the EOR in these times. For all these reasons, this type of organization is becoming the future of strategical business partners related to doing commerce in other countries, granting the hiring of local talent.
3. When can you use an EOR?
You have seen all the benefits that can give you an EOR for your company. Now, you must know when is the moment to make an employer of record contract, you can do it when:
- Your company is in the way of globalization and wants to hire local workers in a foreign country.
- You want to assure the fulfillment of all labor laws and rules on that nation.
- The reduction of the risks of compliance and wrong classification or the hiring of independent workers are priorities for you
- The internal investigation and operations are out of the capacities of your company.
- You want to hire long-term employees without establishing a subsidiary.
- Are EORs and PEOs the same?
Some characteristics make these two kinds of organizations differ from one of the other. However, some companies tend to think that they are the same. Here you can see the main differences between them to know specifically what you are looking for.
4.1 The liability of the client company is better with PEO
One of the most remarkable differences is that an EOR only hires a fragment of your company employees and puts them on payroll or just takes care of part of your business. Nevertheless, a PEO takes the responsibility of all the workers, providing also the services of human resources.
As well, in the case of a PEO, the client is in charge of signing or holding the contracts of employees. If you made an employer of record contract, they would do all this and you would just have to do an agreement of service with them.
Therefore, the client must know these differences, because can be substantial legal risks for the burden of liability is distributed differently.
This can be resumed as it follows: a PEO turns out to be the co-employer of the clients because the last one continues assuming all the responsibilities and liability. Instead, an EOR becomes the legal employer of the workers of the company of the client acquiring the liability load and covering all the issues that come up from the employment contract.
4.2 The managing of compliance is better with EORs
Full compliance with regional regulations is of obligation by the employer, and some PEOs cannot provide this kind of service. This is because they are not completely in charge of some situations as the hiring of workers in another country or jurisdiction.
On the other hand, as the EOR is more involved in legal aspects like tax regulations, compliance concerns, and other benefits; turning it into the best option when solving compliance issues is all about.
4.3 An EOR takes care of insurance
Another important difference that you must know, is that while hiring a PEO your company has to pay its insurance policy and theirs. But, the EORs offer complete coverage of the insurance policies of the employees of the client.
This is because this kind of organization is the best in complying with the regulations of this type of policy, especially when it comes to health care, as the employer of record in Dubai offers. Hence, this is a huge advantage of these organizations, easing this load off your company.
4.4 Easy business registrations
The registration of a company in a foreign country could be expensive and complicated, for reasons of legal fees and essentially because the company has to be an expert in corporate law in every location. This is not different for the company if they use a PEO, since they do not do this kind of work.
However, the majority of EORs are registered in the country or location they are operating (for example an employer of record in Dubai). This represents a big benefit in saving the business time and resources, which is one of the goals of any company.
4.4.1 EOR or employment agency?
In this case, an employment agency acts as an intermediary between the hiring company and the talent you want. Their responsibilities consist in finding the right candidate for the specific job. Of course, these services could include the necessary publicity to find the candidates, the registration of the legal documents, and the search of the precedents of the applicant.
On the other hand, an EOR does not include the search of the employees or the investigation of his records, but they start when the right candidate is selected.
6. How can we help you hire an EOR in the Middle East?
There is no doubt that globalization is here. The EOR is one of these organizations that can help your company turn into an international profitable one. Also, you can trust that they will do the best work managing legal issues.
In the case, you want the best employer of record services in the Middle East, and we are here to help you. We have years of experience and an extended path of success on satisfying the needs of companies, not only with EOR but with many other things. These include hiring contractors, global immigration, HR management, among others.
If you want to contact us to know more about Employer of Record or learn about our services, you can write us to our email address contact@peomiddleast.com, so we can answer all of your questions.
If you want to be part of our talented personnel, you can write us to the email contact@thetalentpoint.com. Another way is by going to thetalentpoint.com and leaving us your CV. We will answer as soon as possible. Do not lose the opportunity to have the ideal job, work with the best in the Middle East.
