Category: Human Resource Services
Written by Rivary Finan Hernawan on 20/05/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.
An Employer of Record (EOR) is a service in which the service provider employs and pays a worker on behalf of another company and takes responsibility for all formal employment tasks. Employer of Records service enables companies to engage with foreign workers legally and efficiently either in a new country or state, without having to set up a local entity or risk violating local employment laws.
Employer of Record company also known as the name of local employer, local partner, local EOR, back-office staffing, and FESCO (Foreign Enterprise Service Company).
Our employer of record service allows clients to be more cost-efficient especially during the preliminary market research stage before the client decides whether or not to invest in Indonesia.
Formally, an Employer of Record is a business or organization that is legally responsible for paying employees, as well as handling employee taxes, benefits, insurance, visa, and a variety of other human resource related activities. However, nowadays the term “Employer of Record” may also refer to the service itself.
Employer of Record is frequently used by businesses to minimize the complexities of human resources works, market access, market understanding, and market involvement, as well as managing payroll for overseas personnel.
When a business hires an Employer of Record, they formally become the boss of that business’ workers. This service ensures that a firm follows labor laws and other associated requirements. It also assists the organization with internationalization.
Benefits and tax legislation might differ and be overly complex in foreign circumstances. Employer of Record assists businesses in expanding into new markets, improving benefit systems, and even sponsoring work visas.
While Employer of Record is a registered employer, they have no management or supervisory responsibilities in your company. You still oversee hiring, remuneration, job descriptions, projects, and, of course, firing. However, they may also be able to assist you international business planning depending on their range of services.
In essence, the EOR serves as the worker’s registered employer, but it does not have any supervisory or managerial responsibilities. Those responsibilities are still maintained by the original employer, who makes all choices on compensation, position responsibilities, projects, and termination.
To put it simply, an Employer of Record is a legal entity that:
The law on labor, payroll, and tax are increasingly complicated. This is a big hurdle for Human Resource Department to be tasked with handling so many things. Now imagine the struggle for a small business with seasonal contract workers but not enough Human Resource manpower.
Due to those problems, partnering with an Employer of Record may mitigate them. Hiring an Employee of Record allows the client’s business to manage its time more effectively and efficiently.
Some of the reasons for using Employee of Record are as follows:
Cost structures, human resource operations, employee benefits, payroll, and overall compensation are all affected immediately, not to mention compliance concerns with domestic and international standards. The same services can be provided by an International Employer of Records, also known as a Global Employer of Records, in multiple nations throughout the world. They restructure the company’s cost dynamics, cash flow, increased savings, and a rise in marginal expenses. These savings can be used to fuel corporate expansion in other areas or to assist the company to meet its strategic mid-and long-term goals more quickly.
To summarize, there are three major advantages to using an Employer of Records:
An Employer of Record is more than a staffing agency; they can hire skillful people nearly instantly, allowing client organizations to ramp up their staffing plans quickly.
Employer of Record is ideal for companies that:
Even though Employer of Record usually engages with staffing firms to find personnel, they oversee everything else. The reason for this is that many of these staffing firms lack human resource training as well as payroll and accounting expertise. Furthermore, many staffing firms lack the necessary skills and understanding in the areas of compliance, risk, insurance, and benefits. They are unable to meet the demands of being an employer in most circumstances.
From here, it is clear that an Employer of Record acts as your workforce’s legal hiring entity. They are in charge of payroll compensation, benefits, taxes, and everything else related to hiring. Hence, the Human Resource function’s efficiencies are increased and risks are reduced. By using Employer of Records you can also manage a contractor workforce or other non-standard labor pool. Furthermore, you can outsource some or all of your HR functions to free up internal resources for other projects.
If you plan to expand into additional states, an Employer of Records can be especially beneficial. They can help you register your business in other states and handle all of the legal aspects of recruiting. Employer of Record hires and pays employees on your behalf while also taking on all of the accompanying responsibilities. If you’re expanding but don’t have a legal local business in place, an Employer of Record can help you get around this problem and reduce the risk of unwittingly breaking local employment rules.
You need a way to legally hire your employees and that is when our Employer of Record service comes in. With our expertise, we can help you find and recruit people while you can still freely make the hiring decisions. We will take care of the worker’s contracts, payroll, and taxes.
Choose whom you want to hire. Contact us for more information regarding the Employer of Record service.
Even though they seem similar and many companies tend to confuse them, Professional Employer Organization (PEO) and Employers of Record (EOR) are different. Strictly speaking, Employee of Record is more specific than Professional Employer Organization. A Professional Employer Organization works with small and medium companies to provide comprehensive human resource services and acts as the company’s outsourced human resource department.
When paying a worker as a contractor, there is a risk of employee misclassification that may result in severe fines and penalties, if the regulation of the country considers the true nature of the staff’s engagement to be employment. Asking for Employer of Record service ensures that the worker and their status comply with the regulations.
When it comes to employment and work practices, HR compliance means ensuring that your policies and procedures comply with all applicable laws and regulations. Complying with local employment laws is critical for the smooth operation of your business, not only because these laws exist to protect employees and ensure that their rights are protected, but also to reduce your risk of liability as an employer.
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