What is an Employer of Record? Here is everything you need to know
Do you want to hire your dream remote team without all the hassle? Organizations like EORs can do all the work for you! They will help you meet your global growth objectives while minimizing legal complications. Read on to learn everything you need to know about Employer of Record.
What is EOR?
The term EOR is an acronym for Employer of Record. An EOR is a third-party company that takes over all the employment tasks on behalf of another company. This allows overseas companies to create offshore teams without setting up locally while minimizing the liabilities and risks associated with local employment laws.
What are Employer of Record (EOR) functions and responsibilities?
The EOR acts as the intermediary in an existing relationship between an employee and an employer. The Employee of Record carries out the regulatory and legal requirements of employment, payment, and payroll. However, it does not necessarily engage in day-to-day work.
The Employer of Record is the registered employer of the employees in paper, hence the name Employer of Record. Nonetheless, the EOR does not have management or supervisory roles. The original employer or the client still makes all the decisions regarding projects, position duties, compensation, and termination.
The service scope of the Employer of Record is broad, therefore the client can customize it according to their needs. Generally, the EOR is responsible for the personnel functions assigned by the client. They will also ensure that the client has ultimate control over the business operations.
The EOR service will provide an end-to-end solution for the business needs of the client and is the legal entity tasked to carry out the following duties.
- Process the payroll of workers
- Arrange the work permits and visas for the client
- Provide consolidated invoicing
- Study the labor laws of the host country regarding worker
- Protections and local contracts
- Assess legal benefits for the client
- Act as a channel between government authorities and the client
- Onboarding of the workers
- Creating timesheets and implementing incentive schemes
- Terminate workers on behalf of the client
What are the Benefits of Employer of Record (EOR)?
The EOR is an effective and efficient solution for the outsourcing needs of your business. As a client, you can save time and resources that you can redirect to more significant functions. Proceed to the section below to know more about the numerous distinct benefits of hiring an EOR.
REDUCED EMPLOYEE ACCOUNTABILITY
They are responsible for taking care of the welfare of the employees. The EOR carries out numerous tasks mandated by the government and health maintenance organizations. These tasks include processing the payroll and insurance coverage.
COMPLIANCE MONITORING
One does not need to be knowledgeable on the labor and tax laws of the country a client is hiring from. This benefit comes in handy, especially if the client owns an overseas business. The EOR will ensure that your business complies with all applicable laws. It also ensures that your payroll processing adheres to employment regulations in the country. The Employer of Record is responsible for staying informed about local laws, saving you the hassle of monitoring compliance.
TIME AND INDIRECT COST SAVINGS
Partnering with an EOR will allow business owners to have more time on your hands. Since you would not have to deal with HR and payroll matters anymore, you can save hours. Furthermore, the EOR will help you save costs since you will pay them a set rate for every hour the employee works.
UNNECESSARY LOCAL INCORPORATION
Local incorporation and registration are necessary if you choose to skip hiring a third party. These processes are costly and time-consuming since you would need skilled accounting and legal support. Hiring an EOR will let you ensure compliance without the hassle of local incorporation.
When to Use an Employer of Record (EOR)
Hiring an EOR will be very helpful to organizations that plan to expand globally. The client company will then rely on the EOR for local expertise and expediting the process. Hiring an EOR is the most convenient way for a company to meet its global growth objectives. To elaborate, here are some situations wherein partnering with an EOR will be most helpful.
A company may hire an EOR to help them explore new markets.
An EOR will hire employees in target countries and assess the readiness of an international market. They let the company test the waters by starting operations with the new employees. The company will not need to spend money and time establishing an entity since the EOR will take care of it.
A company may hire an EOR to guard them against the non-compliance of independent contractors.
Hiring independent international contractors will put you at risk of tax and employment violations. An EOR will do all processes following all the requirements of your host country. Doing so will prevent you from incurring penalties due to non-compliance.
A company may hire an EOR to act as an entity stopgap.
Hiring an EOR is best for a company that wants to begin its operations quickly but is yet to establish an entity. The EOR will take charge of the company’s services while the company sets up the entity simultaneously.
A company may hire an EOR to facilitate an acquisition.
The EOR will help a company compliantly pay its new employees. They will take charge of the payroll on behalf of a company that does not have a legal business entity. By doing so, this facilitates the acquisition for the client company.
How KMC Employer of Record (EOR) Services Works
As the EOR, KMC provides human resource and payroll management for its client companies. Our team of experts can manage these crucial aspects of your business for you. We are familiar with the local tax systems and laws that you must follow. With that, you can focus your time on revenue-generating activities. Here are the specific services that we offer.
Human Resources Management
- Recruitment, selection, and deployment of employees
- The orientation of new hires and training
- Termination and redundancy control for your business
- Compensation programs and benefits for workers
- Writing management and legal reports
Payroll Services
- Employee time and attendance monitoring
- Payslip generation for workers
- Complying with government-mandated remittances and reports
- Reports regarding payroll and tax
- Fixing issues on labor-management
- Provide access to the employee time record to the employer
Free Initial Consultation
Calibration meeting with Client and KMC HR Team to discuss specific talent needs, goals, and job descriptions for your future team in the Philippines. During this initial meeting, we will also outline potential costs and salaries for your intended positions.
Sourcing & Initial Interview
We leverage our excellent employer branding and reputation to attract the best possible talent in the Philippines. We tap multiple job portals and social media platforms, engage executive search techniques, and roll out Employee Referral programs to gather resumes.
Contract Signing
Once successful candidates are identified, KMC prepares the employment offer and contract, then extends them as soon as approval is received. The compensation and benefits packages, as well as KPIs, are clearly defined, and the start date is agreed upon with the candidates.
Employee Onboarding & Set Up
Upon employee signing, we provide the facilities, IT, and all the tools and equipment your offshore team requires to deliver the results you need. We can place your team at any of our fully equipped and flexible office spaces in Metro Manila, Cebu, Clark, or Iloilo.
Continuous KMC Support and Partnership
The HR, Admin, and IT teams at KMC will be at the disposal of you and your new employees, allowing you to focus on core objectives and manage your offshore team directly.
We work with over 400+ businesses across multiple industries with diverse size and staff requirements
Stories of Growth
If you need an Employer of Record in the Philippines, work with us!
KMC is ISO-certified and is the largest Employer of Record service provider in the Philippines. Our team takes pride in providing customer-centric solutions for our clients. We commit our time and effort to build our partners’ trust. Contact our experts today, and we look forward to taking part in your company’s growth and success