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How to Choose an Employer of Record: 8 Questions to Consider

By December 1, 2022No Comments
World globe sitting in the middle of a book.

When it comes to global expansion, having a streamlined and compliant HR process is key to success. Whether you’re looking to branch into a new market, hire international talent, or expand your remote workforce, understanding how to stay compliant with unfamiliar, foreign labor laws can feel like a daunting and overwhelming task.

While an employer of record (EoR) partner will help address these needs for you and your distributed workforce, selecting the right partner is easier said than done. This guide helps you choose a global employer of record that best fits your business.

What Is an Employer of Record?

An employer of record is a global employment organization that legally hires, pays, and manages a company’s international employees on its behalf, allowing the company to enter into new markets with peace of mind. Operating in multiple markets means navigating various tax requirements and HR tasks. An EoR handles all risk mitigation and ensures ongoing compliance with local labor laws and regulations.

8 Questions to Compare and Choose an Employer of Record

1. Does the EoR Have Knowledge in the Right Countries?

A valuable EoR partner has a well-versed team with the expertise and knowledge in the markets where you want to expand or engage talent. An inexperienced partner may require extra time and costs to research unfamiliar labor laws and regulations, putting you at risk of non-compliance, fines, legal fees, and reputational damage. Partnering with an employer of record that knows the ins and outs helps you stay compliant in your desired markets.

2. Is the Employer of Record Transparent About Pricing?

When deciding between global EoR providers, choose an employer of record that is transparent about its pricing. They may have setup fees, taxes, or termination fees on top of their initial quotes. Additionally, they may introduce hidden fees and markups later on, which can change your budget and affect multiple departments within your business. Ask your prospective EoR to present every element of their pricing upfront.

3. How Supportive Is the Employer of Record?

Regardless of the size of your international workforce, you deserve an EoR partner that quickly responds and supports your teams. Look for a global EoR that provides a dedicated account manager, not an EoR that will redirect you to a chatbox or guidebook. Ensure you have a responsive partner with the expertise and availability to answer your questions and provide timely support to your workforce in their local languages and time zones.

4. Do They Have a Proven Track Record of Success?

When you find an employer of record that promises expert knowledge, transparent pricing, and quick support, make sure they deliver on their word.

Read testimonials on unbiased sites and speak with references to ensure existing clients are happy with the EoR’s services. It also helps to ask a potential partner for references with similar goals and qualities as your business, such as budget, industry, and the types of talent they work with.

5. Does the EoR Operate in Countries You Need to Hire In?

You want to partner with a global EoR that covers the countries you plan to hire talent or could potentially operate in. You don’t want to be in the position of having to engage with an additional EoR or service in order to target a specific country. Find an EoR partner with a broad reach and coverage across the globe.

6. How Does the EoR Handle Foreign Exchange Rates?

The volatility of foreign exchange markets means unforeseen costs for your growing business. You can mitigate this risk by selecting a global EoR partner that provides a clear, transparent, and fixed-rate structure for foreign exchange transactions.

7. Do They Provide Accurate Employer Burden Calculations and Quotes?

Foreign market labor requirements vary significantly, especially when it comes to your employer burden, social contributions, and value-added tax (VAT) requirements. Your global EoR is responsible for providing you with accurate quotes on additional employer costs in your markets and if done incorrectly, your business will face legal and financial risks. Consider partnering with an EoR that has been pre-vetted by third-party auditors and has a proven track record of accurate employer burden calculations.

8. Does This Partner Provide Other Workforce Solutions?

Your business is dynamic and your needs evolve over time. You may need to pay and manage international contractors or decide to establish your own foreign entity and require a multi-country payroll service. Instead of searching for and managing multiple HR providers, find a global EoR partner who offers one seamless platform for all of your distributed workforce needs.

9. Are They Ranked as an Industry Leader by Third-Party Sources?

Selecting a global EoR partner requires extensive vetting to ensure you choose a partner that meets your business’s evolving needs. You can expedite this process by reviewing third-party validation reports to quickly identify and verify EoR leaders in the industry.

Third-party analysts help employers evaluate EoR partners by positioning them based on their ability to deliver immediate benefits to clients and meet future requirements as clients’ needs change. According to the latest reports, recognized leaders offer full-suite solutions that help businesses at every stage of their global expansion venture. Their solutions are backed by local expertise and unmatched global scale, so businesses can confidently grow their workforce anywhere with speed and compliance.

Download the latest Everest Group PEAK Matrix and NelsonHall NEAT reports to compare global EoR leaders and expedite your search for the right partner.

Confidently Partner With a Global EoR Leader

Velocity Global is a trusted global EoR partner with personalized expertise and unmatched scale in over 185 countries. Compliantly hire, pay, and offer benefits to your international team with a dedicated account manager and legal expertise from Velocity Global. Our full suite of solutions, including Employer of Record, Contractor Management, and Multi-Country Payroll offer a one-stop shop to grow your business and engage with international talent.

Contact us to learn how we can simplify your employer and talent experience.