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Advancements in technology and changes to the way we work mean it’s never been easier to collaborate with employees overseas. Today, even the practical challenges of compliantly engaging workers in another country can be overcome by partnering with an employer of record (EoR).
However, the boom in remote work has resulted in an explosion of EoR providers — and choosing the right one to meet your needs can be challenging. In this article, we’ll share 10 key factors you should consider when selecting an EoR so you can make the right choice for your business.
How to select an employer of record: 10 key considerations
When you work with an EoR, they become your workers’ legal employer. That means the experience your employees have with your company is largely down to the EoR. They’re also responsible for ensuring that workers are engaged compliantly and complying with local labour laws.
In other words, choosing an employer of record is a big deal. You must ensure the provider you select has the resources, coverage and expertise to meet your needs and give your workers a positive employee experience. With that in mind, here are ten factors to consider when selecting an EoR partner.
Geographical coverage
When selecting an employer of record, the most critical question to ask is whether they can provide coverage in the countries you want to expand into. That means considering not just your current needs but also your plans for the future.
It’s also worth noting the EoR model any given provider uses. Generally speaking, there are direct EoRs, which hire through their own network of legal entities, and indirect EoRs, which work with partner entities in each country. There are also hybrid EoRs, which use a combined approach.
Each approach has pros and cons, but understanding how your EoR operates can give you a clearer picture of what working with them will be like.
Legal and compliance expertise
Whether you opt for a direct, indirect or hybrid EoR, you need to be sure that they have the necessary expertise and local knowledge to help you expand into your chosen market. After all, labour laws and tax legislation are different in every country and always subject to change.
The right EoR partner will thoroughly understand the rules and regulations in each country. That means they’ll be able to compliantly handle things like:
- Employment contracts
- Statutory pay and benefits
- Privacy and data protection
- Working hours and overtime
- Termination procedures
However, it’s not just about following the law. Your global expansion will also be much smoother if your EoR (or their partners) have a solid understanding of the business culture, norms and employee expectations of your chosen location.
Responsiveness and flexibility
In the global business environment, things can change quickly — and delays cost money. How quickly your chosen EoR can adapt to changes in your business or the broader market can have a hefty impact on your operations. To get an idea of your EoR’s responsiveness, you could consider asking them about how quickly they would be able to help you enter a new market, for example.
Finding a partner with flexible services is also a good idea. After all, your needs are unlikely to be the same in the future as they are now, and it’s essential to understand what any change would mean for your EoR partnership. Asking your EoR how they would handle a substantial increase (or decrease) in headcount could give you an idea of their flexibility.
Pricing model and transparency
As with any business relationship, it’s essential to fully understand the financial commitment you’re making before you sign an agreement with an EoR. Generally, EoRs operate using one of two pricing models: a percentage of total payroll or a set fee per employee engaged.
There may also be additional charges, including:
- Banking fees
- Benefits management fees
- Termination fees
- Onboarding/offboarding fees
- Foreign exchange fees
You should ask an EoR provider for a full breakdown of the cost of their services. And if they’re shady about this or try to dodge the question, they’re probably not the right provider!
Track record and references
Before working with an EoR, you should assess whether they have a proven track record of helping clients with their global expansion projects. You can do this by looking at case studies and testimonials from past clients, focusing on those whose needs are most similar to yours.
For example, you might want to look at success stories about clients in your industry—especially if it’s a heavily regulated one with many compliance requirements. You could also look at companies of similar size with similar expansion goals.
Lastly, you should also look for reviews of the EoR by employees. When you work with an EoR, they become the middleman between you and your workers. Since you want your workers to have a good experience, it’s vital to consider their side of things while you’re assessing providers.
Scope of services
Some EoR companies provide additional services in addition to compliantly hiring workers. For example, at CXC, we offer a full suite of workforce solutions, including direct sourcing, recruitment process outsourcing, contractor management and consulting.
While you may not need any additional services at the moment, it’s always worth considering what an EoR can offer. That way, if your needs change in the future, you may be able to access additional services without having to onboard a whole new provider.
Benefits portfolio
To attract and retain talent, you must ensure your benefits package is competitive in the local market. It also needs to comply with local regulations, which might stipulate that employers must provide certain benefits. In some countries, there are benefits that are not required by law but which employees expect — and not providing these could negatively affect your business.
You should look for an EoR partner with both a robust benefits portfolio and a strong understanding of local laws and customs. Again, you can do your research by looking for testimonials and case studies from clients and employees that mention benefits. You should also talk to the EoR provider about the benefits they offer in the countries you’re interested in.
Focus on employee experience
When you engage an EoR, they become your workers’ legal employer. But if those workers have a bad experience, it’s likely to reflect back on you, not the EoR. That’s why selecting an EoR with a strong focus on the employee experience is crucial.
When assessing EoR partners, you should ask them questions about how they support and communicate with the workers they engage on behalf of their clients. For example, it’s important to know whether employees will be able to get timely answers to their questions about onboarding, payslips, benefits and more.
Cultural fit and shared values
When you choose the right EoR, you could end up working closely with them for a long time. And you’ll be jointly responsible for ensuring each employee you hire through their services has a positive experience that reflects well on your business. That is why it’s key to select an employer of record whose overall culture aligns with yours.
While it’s not impossible to work with a partner who has different core beliefs and values than yours, it’s certainly more difficult. Miscommunications and misalignments can cause problems, and working relationships can suffer. Cultivating a true partnership where everyone works together towards a common goal results in a much more pleasant experience for everyone.
Longevity and stability
Lastly, finding out how long an EoR partner you’re considering has been in business is a good idea. While this isn’t a perfect indicator of what their service will be like, a long track record of successful work is a reassuring sign. Ideally, you should look for an EoR that has been in business for a long time and whose services have grown and adapted as times have changed.
Remember, working with an EoR is not a short-term project — it’s a long-term partnership that could be in place for years to come. When you choose a stable partner with a strong understanding of their work, it’s likely that they’ll be able to continue serving your business long into the future.
Making the right choice for your business
Selecting an employer of record shouldn’t be a quick decision. After all, if everything goes well, it could be the beginning of a long and fruitful partnership. That means taking the time to research before committing to a provider is well worth the effort.
Above all, the right choice comes down to whether a provider can adequately meet your organisation’s needs, even as they evolve in the future. Considering things like the EoR’s geographical coverage, expertise, scope of service, and track record can help you make the right decision.
About CXC
At CXC, we’ve been helping businesses like yours to compliantly engage workers for over 30 years. That means we have the knowledge, experience and expertise needed to support your global expansion — wherever you want to go.
We offer our EoR services in more than 100 countries worldwide through a hybrid model that combines our entities with a network of trusted partners and experts in each location.
Our extensive compliance knowledge and HR experience mean we’re well-equipped to keep your business safe and your employees happy as your company evolves.
Want to learn more about CXC? Speak to our team to get started.
