We're leading the charge to help every business hire anyone, anywhere around the world.
Well you've come to the right place. I'm Matt from Panther, and we're leading the charge to help every business hire anyone, anywhere around the world.
So let's jump right into it. If you're trying to hire an employee in another country, chances are you'll need to set up an entity. That means you'll probably hear your CFO saying something like not another one, really? Or HR being like now we have to figure out all the local labor laws. It's not a super easy or fun thing to set up. It basically means you need to have a local office, an address registered as a subsidiary, a local bank account.
Having to do all this plus navigating regional benefits, payroll, taxes, compliance and HR laws. It can take a long time and costs a lot of money to do. Your business can also get into some trouble if you don't properly comply with the local labor laws. Think things like termination, parental leave, minimum wage. Have you ever tried to terminating someone in France or Brazil? Trust me, it's a headache and that's when the Employer of Record (EOR) comes in handy.
An EOR allows companies to quickly hire an employee anywhere in the world without having to set up a local entity. Essentially the EOR acts as a local foothold in a country where the business operates it. So they can seamlessly hire an employee on the business's behalf. Say you're a British business and you want to make a hire in Argentina. Well, with an EOR, you can.
So once you're onboard with an EOR, they'll take care of everything, hiring, onboarding, HR admin. So you're fully compliant to hire everywhere. So how does this all work? While an employee will be on the payroll of the EOR? They'll still technically work for the company using the EOR, just like any employee.
When the EOR onboards the employee, they'll sign a localized contract with explicit details of their role and their responsibilities at the company where they're working. So on the EORs end they handle everything related to hiring. That means creating the compliant contracts, making sure income taxes and salaries are paid and covering social contributions as well. Basically all statutory requirements in that country. Now, while the EOR takes care of all this, it's the company's responsibility to pay the employer costs. So what do employer class actually entail? Now, employer costs are the benefits, the taxes and the fees the government actually requires the employer to pay when hiring in their Country. These costs are based on the employee salary. They're different in every country and they can change year over year.
Let's talk about equity. The big question we always get asked, can the business provide employees with equity? The short answer is yes, but it really depends on the country. For example, in the U S companies can issue what's called non-qualified stock options. Also known as an NSOs. Since the company doesn't actually have a direct relationship with the employee. The NSO is actually the only viable option. So how do you handle benefits? Each country has its own set of laws with benefits they have to provide to employees. These range from health and unemployment insurance, to social security. The EOR exists to ensure every employee receives all the necessary localized benefits along with any optional benefits the employer would like to also provide.
How to deal with intellectual property and non-competes?
EOR services tend to have IP protection clauses built into their contracts. This means that any and all IP passes through to the customer. It's not the only way to do this, but it is the most enforceable. Also it's good to note that while in theory, a non-compete sounds ideal. They don't typically work internationally. And lastly, what about contract termination and severance? Handling these according to a country's local labor law is crucial. These laws often vary depending on the employee's location though typically you always need to pay attention to the proper termination notice, the severance payouts and managing any accrued benefits like unused holidays. The EOR manages the entire process to ensure everything goes super smoothly.
Luckily with Panther, you can use us as your EOR to hire seamlessly in over a hundred countries, worldwide its payroll compliance and full-time employment all in one dashboard.