What Is The Employer Of Record And Its Features?

A registered employer is a legal entity or individual entrepreneur who conducts labor relations with employees and fulfills certain obligations to them, the state, and other organizations. Enter the employer of record service.

What is the employer of record service? In the last few years, the employer of record service has become popular, which allows you to optimize business operations and ensure many work processes significantly.

What is the employer of record?

An employer of record (EOR) is a third-party organization that legally employs workers on behalf of another company. They act as the legal employer, accepting all responsibilities associated with employment, including:

• Payroll and tax compliance.
• Benefits administration.
• Personnel management and compliance with labor laws.
• Risk management and liability minimization.

Specialists in this area have a high level of knowledge and professional training, which allows them to perform all assigned tasks at the highest level with minimal costs for any business.

Features and Benefits of EOR

Among the key features of a registered employer, you should pay attention to the following:

• Obligations to employees. A registered employer must comply with labor legislation and other regulatory legal acts containing labor law norms, as well as collective agreements, agreements, and local regulations having labor law norms.
• Obligations to the state. Registered employers must pay taxes and fees provided for by law and insurance contributions to state extra-budgetary funds and budgets of various levels. In addition, a registered employer is obliged to keep records of employees' working hours and wages and provide government bodies and organizations with the necessary information about its activities and the activities of its employees.
• Obligations to other organizations. The specialist is obliged to fulfill the obligations stipulated by employment contracts, collective agreements, agreements, local regulations, and agreements with other organizations.

Experienced specialists carry out all their actions according to current legislative norms and requirements, which allows us to ensure high-quality services with minimal costs and risks. 

The principle of hiring through the employer of record mechanism

The operating principle of this mechanism is based on several key concepts. Among the main participants, the following should be highlighted:

• Client company. A company seeking to hire talented employees maintains a working relationship with the employee. It defines roles, responsibilities, and tasks and manages day-to-day work and productivity.
• Employer of Record (EOR). The EOR becomes the employee's legal employer on paper. They handle all legal and administrative aspects of employment
• Worker. He reports directly to your company on work assignments and performance goals but receives his salary, benefits, and tax forms from the EOR. For legal purposes, they are considered employees.

The idea is that specialists can use their experience and professional knowledge to improve business performance in a particular industry.

When is the best time to use EOR?

Setting up a local organization can take time and money if you are looking for talent in new countries or regions, especially on a short-term or project basis. During rapid growth or temporary project peaks, EOR can help you increase or decrease your workforce without taking on ongoing commitments.

Suppose your HR team is overwhelmed or lacks in-house expertise. In that case, an EOR can take over payroll, taxes, benefits, and compliance administrative tasks, freeing up your resources for core business operations.

EOR allows you to find new talent, test markets, and adapt your workforce to changing needs without wasting time on complex employment regulations.

FAQ: What is the Employer of Record and Its Features?

1. What is the Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party organization that legally employs workers on behalf of another company. This service involves the EOR taking on the responsibilities associated with employment, including payroll, tax compliance, benefits administration, personnel management, and compliance with labor laws.

2. What are the key responsibilities of an Employer of Record?

An EOR assumes various responsibilities, including:

• Payroll and tax compliance.
• Benefits administration.
• Personnel management and compliance with labor laws.
• Risk management and liability minimization.

3. What expertise do EOR specialists possess?

EOR specialists have a high level of knowledge and professional training. Their expertise allows them to perform tasks at the highest level while minimizing costs for businesses.

4. What are the key features of a registered employer?

Registered employers must adhere to legal obligations, including compliance with labor legislation, tax payments, insurance contributions, and record-keeping of employees' working hours and wages. They also have obligations to fulfill employment contracts, collective agreements, and agreements with other organizations.

5. What is the principle of hiring through the Employer of Record mechanism?

The hiring process involves:

• Client Company: The company seeking to hire employees defines roles, responsibilities, and tasks, managing day-to-day work.
• Employer of Record (EOR): Acts as the legal employer on paper, handling all legal and administrative aspects of employment.
• Worker: Reports directly to the client company on work assignments but receives salary, benefits, and tax forms from the EOR.

6. When is the best time to use an Employer of Record?

EOR is particularly beneficial when:

• Setting up a local organization is time-consuming or expensive.
• Rapid growth or temporary project peaks require workforce adjustments.
• HR teams are overwhelmed or lack in-house expertise, allowing EOR to handle administrative tasks.

7. How can EOR help during talent acquisition in new countries or regions?

EOR enables businesses to find new talent, test markets, and adapt their workforce to changing needs without the complexities of establishing a local presence and navigating employment regulations.

8. What advantages does EOR offer during rapid growth or temporary project peaks?

EOR provides flexibility in increasing or decreasing the workforce without the long-term commitments associated with traditional hiring, making it suitable for temporary or project-based needs.

9. How does EOR support businesses with overwhelmed or resource-limited HR teams?

EOR takes over tasks such as payroll, taxes, benefits, and compliance administrative tasks, allowing HR teams to focus on core business operations and strategic initiatives.