We live in an increasingly globalized world. Thanks to the rise of freelancing and remote work, a small business based out of Kansas could employ individuals from across the country — or even outside the country.
For larger enterprises, the likelihood of expanding operations into overseas markets or hiring individuals from outside their home country is even greater. Pay disclosure laws reveal that major brands like Kellogg Co. and Fresh Del Monte Produce Inc. employ anywhere from 59 to 80 percent of their workforces outside the United States.
Going global — even when hiring remotely, rather than expanding business operations to a new country — can help increase your organization’s productivity while still keeping expenses at a manageable level.
But this type of international expansion is also rife with potential pitfalls. Employment is one of the most intensely regulated areas of business, and laws can vary significantly from country to country. A major misstep could make it significantly harder to onboard talent from desired areas. To ensure your organization’s success when expanding globally, few things can prove more important than bringing an employer of record (EOR) onboard.
What Can a Global EOR Do?
A global EOR fulfills the same basic needs as a standard employer of record — only this time, on an international scale.
EORs are third-party organizations that take on the responsibilities and liabilities of employment. They serve as the legal employer for the workers they hire, even though these employees will be performing work for your company. Global EORs are even responsible for setting up a legal business entity in the countries where workers will be employed.
This means that instead of paying workers hired through an EOR directly, you would instead pay a service fee to the EOR. The EOR itself is then responsible for administering payroll, benefits and so on to the workers that it onboarded for your organization.
This is especially important in a landscape where employment law is becoming increasingly complicated, with changes frequently occurring on state and local levels — not just federal or national levels. Remaining fully compliant with all applicable employee laws for your employees is essential for avoiding fines and other penalties.
When sourcing international talent, compliance with employment laws can become even more complex. Not only must businesses comply with tax and worker classification requirements for each area where they hire workers, but they must also be able to navigate the use of different currencies.
The global EOR handles all aspects of managing international employees — from onboarding to off-boarding — in a manner that is compliant with local laws. For example, the EOR will generate compliant contracts that help define the worker-employee relationship in a manner that follows the country’s contract rules and employment classification standards. When necessary, a global EOR could even facilitate visas, immigration and work permits for workers who will need to work on-site for your organization.
The EOR is critically responsible for making payments to the workers it hires on-time and in a compliant manner — including fulfilling tax withholdings or other deductions. They will also ensure that employees are paid at an appropriate rate in the correct currency, and administer benefits in accordance with local requirements.
The Top Benefits of Using a Global EOR
In its broadest sense, the biggest benefit of using a global EOR as part of your plans for hiring overseas workers is that it allows you to essentially outsource several key employment responsibilities and liabilities. While you still have the ability to direct which tasks workers will perform for you, the EOR is ultimately considered their legal employer.
This means that the only thing your own business needs to focus on is getting positive results from the employees who are now doing work for your organization through the EOR. You don’t have to worry about staying up-to-date on international employment compliance laws. This falls entirely under the purview of the EOR, whose own compliance team is relentlessly dedicated to keeping all employment practices fully compliant with local standards.
This provides much-needed legal protection, as the EOR takes on all responsibilities and liabilities associated with employment. The EOR ensures that your business won’t run afoul of compliance laws in a way that could disrupt your operations. Of course, a strong global EOR should have adequate knowledge of the labor laws of the countries you wish to hire from.
Remaining compliant with local laws doesn’t just protect your organization from potential liabilities — it also improves the employee experience. Not having to deal with payment delays or other employment issues will go a long way in improving worker satisfaction, maximizing their productivity and increasing retention.
Working with a global EOR greatly streamlines the onboarding process. The EOR handles all aspects of onboarding, such as background checks and contract development. This allows your business to save time and money on the hiring process. Your team can focus more on other aspects related to global expansion, including providing a high-quality work experience for the employees hired by the EOR.
Your business will still maintain control over its internal policies and strategies for how international talent will be used. In this sense, you get the best of both worlds, utilizing global talent without having to worry about potential compliance mishaps. Partnering with a global EOR firm with expertise in the countries you wish to target will make a significant difference in helping you maximize those markets’ potential.
Make the Most of Global Opportunities With an EOR
The ability to tap into top talent form outside your home country is an exciting proposition — but you need to go about it the right way. Without knowledge of and compliance with a location’s employment laws, trying to source talent from overseas could result in serious legal and financial difficulties.
By using an EOR such as myBasePay, you can have peace of mind knowing that your operations are fully compliant. Our global EOR and payroll services will help you reduce spend and time to fill through streamlined contingent staff management, worker classification assurance and an optimized candidate experience.
With a strong global EOR like myBasePay, you can scale with confidence and take full advantage of the world’s top talent.
Author: Cesar Jimenez, myBasePay CEO
Cesar A. Jimenez is an entrepreneur, investor, and military veteran with over 25 years of staffing industry expertise successfully leading technology staffing organizations. His expertise in the IT industry allows him to use his experience as a thought leader for talent acquisition, staffing, IT, and recruitment technologies with a passion for contingent workforce solutions. Cesar has held various leadership roles for both a global staffing organization and technology solutions companies. This expertise has enabled him to develop alternative workforce models that provide the agility for organizations to be competitive in today’s marketplace. In his spare time, he enjoys spending time with hisfamily, working out, and coaching high school baseball players.