What is an Employer of Record?

Compliance
Panther
March 11, 2021

With companies hiring more remote talent abroad, you might have heard the term “Employer of Record” be thrown around more frequently than before.

While it might sound like an employer of record is a person’s official hiring company, that is actually not the case. An Employer of Record (EOR) is an entity that handles global employment and payroll for employees on behalf of another company.

To put it simply, the EOR takes full responsibility for employment-related tasks. While the company retains the work, the employees, the IP and the creative process, the employer of record takes on the admin part of the employment.

The main reason a company might engage one is that they allow companies to legally employ workers in other countries, without having to set up a local entity (a requisite otherwise) or risk violating local employment laws. 

Setting up a local entity can be costly in legal and resource fees, and violating local compliance laws can have serious consequences - including the loss of your ability to employ or conduct business in that country.

That’s why using an Employer of Record is a great option to save time and money while hiring top, remote talent in other parts of the world. 

What does an Employer of Record do? 

Specific tasks that an Employer of Record will handle for your business include: 

  • Ensure contract agreements are in compliance with country labor laws.
  • Provide the business entity needed to run a remote, compliant payroll.
  • Make sure your global employees get paid.
  • Provide access to benefits, including statutory benefits.
  • Handle salary and employment taxes.
  • Obtain employee visas and work permits, if necessary.
  • Handle employee resignations and terminations including ensuring all notice periods and termination rules are enforced. The employer of record will also distribute severance pay as indicated.
  • Serve as the liaison between the company and local government. 

You will still need to handle recruiting, interviewing, selecting, and onboarding your employees but the employer of record will handle the compliance aspects for you.

When would a company need to engage an Employer of Record? 

If you’re still feeling confused about when to engage an Employer of Record, we have a few examples of situations where they can be beneficial. 

A small company in Canada was designing a new mobile app and wanted to add a few product managers to the team. They found three product managers who would be great additions to the company. The challenge, though, was that the three potential employees were all located in different parts of the world. One was in Greece, one was in Prague and the third was located in France.

In order to hire all three of these team members, the company in Canada would have to spend a lot of time and money researching all of the laws they’d need to comply with and getting set up in these countries. They’d be looking at $80,000, minimum, for each, just to set up. And spending $240,000 plus salaries is a big investment for large companies, let alone small ones. In addition, the process would take months, probably years, due to the excessive bureaucracy. By using an Employer of Record, the Canadian company was able to save hundreds of thousands of dollars and build the product team they wanted in days.

Here’s another: A digital ad-tech agency in the US wanted to hire a development team, and they found the candidates they were looking for in Estonia. The talent there was superior to the talent they were discovering in other countries, for that position, and the price was lower due to the cost of living. By using an Employer of Record, the ad-tech company did not have to go through the process of setting up a local office in Estonia. The EOR handled all that on their behalf, for an affordable monthly cost. The company was easily able to hire and pay the team in Estonia, through the EOR, and the team was happy to work remotely in a great company. 

Using Panther as your Employer of Record.

With Panther, you can tap into a global talent pool from the comfort of your own desk.

We have the most complete network of global talent around the world, allowing you to hire employees in over 160 countries. We own local entities (without you having to) to ensure low costs, highly flexible contracts, bulletproof compliance and faster employment. You’ll get locally-compliant, bilingual agreements, through the platform, from our local HR and labor law experts. Besides that, we provide criminal background checks, credit inquiries or identity verification in case you need them.

This way, there will never be any need for you to set up your own entity, waste hundreds of thousands of dollars (or millions) employing abroad, and you get the freedom to work with incredible talent wherever it might be. And we make your teammates’ onboarding swift and easy, too, in just a few clicks, so you can get on with work like usual.

When it’s time to pay, our automated global payroll makes paying on time, every time, an easy task. You will get one invoice for your entire team and you can approve it in just one click. You won’t have to worry about conversion rates either - we handle that too!

See our platform in action and book a demo below, today.

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