Table of Contents
- What is an Employer of Record (EOR)?
- How does an Employer of Record (EOR) Work?
- Why Do You Need to Use an Employer of Record (EOR) for Hiring Abroad?
- Pros & Cons of Using an Employer of Record (EOR) Company for Global Hiring
- Comparison: Employers of Record (EORs) vs. Professional Employer Organizations (PEOs)
When starting or managing a business, it’s easy to focus on scaling or customer acquisition and retention, and just as easy to forget about how to hire great people while still being cost-effective. Luckily for you, hiring great talent overseas is easier than ever. Companies like Rippling, Deel, Oyster and Papaya Global are popularizing Employers of Record (EOR), helping businesses hire abroad seamlessly and cost-effectively.
What is an Employer of Record (EOR)?
Simply put, an Employer of Record (EoR) is a third-party organization that enables organizations to hire and carry out employment-related activities on behalf of organizations in places where they do not have complete legal jurisdiction. By doing this, the Employer of Record acts as the legal employer for the organization, handling all legal risks and requirements so they can commence business operations without any issues.
Related: 6 Ways to Be More Efficient Using Automation | Entrepreneur
The Top EoR Companies – Rippling, Papaya, Deel, and Oyster
Featured EOR Companies
Rippling
A comprehensive cloud platform that extends outside of just EoR — with PEO, IT, and Finance Products, Rippling has very literally everything your business needs to operate well. With Rippling, you can hire in hundreds of countries and all of your data is secured because they are SOC 2 compliant.
Benefits of Rippling
- Wide global coverage for managing employees across multiple countries
- Complete set of features covering EOR, contract management, compliance, payroll, HR, benefits administration, and more
- Integration capabilities with various APIs and integrations with other systems
- Contractor management functionality
- Strong data security with SOC 2 compliance
- 24/7 customer support
Rippling
Global CoverageYes
Pricing$8 per user / mo.
ComplianceSOC-2 Compliant
Papaya Global
While less comprehensive than Rippling, Papaya focuses on being a best-in-class global payroll solution. Their immense reach of over 160 countries allows their EoR solution — while not their sole focus — to be one of the biggest on the market.
Benefits of Papaya Global
- Comprehensive global coverage for managing employees worldwide
- Full suite of features including EOR, contract management, compliance, payroll, HR, and benefits administration
- Integration capabilities with various APIs and existing systems
- ISO 27001 certified data security
- 24/7 customer support
Papaya Global
Global CoverageYes, 160+ countries
Pricing$770 per new hire
ComplianceISO 27001 Certified
Deel
Another global-first EoR solution, Deel specializes in scale and providing approach to managing your workforce, with fun Slack plugins and different ways to keep the culture, however spread out, healthy and engaged. Hire in over 150 countries with Deel, secured with SOC 2 compliance.
Benefits of Deel
- Extensive global coverage for managing international employees
- Robust features for contract management, compliance, payroll, HR, and benefits administration
- Integration capabilities with APIs, Zapier, and Slack
- Contractor management functionality
- Strong data security with SOC 2 compliance
- 24/7 customer support
Deel
Global Coverage150+ countries
Pricing$599 / month
ComplianceSOC 2 Compliant
Oyster HR
Oyster specializes in EoR automation and leverages large organizations in other countries that will be classified as a daughter company to yours. That organization conforms to the country’s regulatory landscape, lending it credibility. The parent company (your company) faces limited liability because the foreign subsidiary is held accountable for all local compliance. Meaning you aren’t financially responsible for legal issues or other penalties and if any issues do arise, it’s easy for you to sell the subsidiary.
Oyster
Global Coverage130+ countries
Pricing$499-$599 / employee
ComplianceGDPR & SOC 2
How does an Employer of Record (EOR) Work?
Let’s say you built an app and, to save costs because you’re a small but mighty organization, you want to hire great talent at a better rate — which typically means hiring abroad. However, hiring abroad is complicated but in order to retain the employee, you realize it’s smartest to onboard them as an actual employee so they are guaranteed employment long-term and they have the benefits they deserve. Managing all of that in a different country is next to impossible for a small organization like yours (or any organization, really) and that’s where EoRs come in.
An EoR allows you to hire the best talent almost anywhere in the world, with the actual payroll management outsourced to a local partner, who actually hires the talent on your behalf. The magic trick of an EoR is that the new hire doesn’t notice any difference because the process, while fully managed by a third party, is completely made to emulate your company brand and values.
The EoR assumes all responsibility around compliance, onboarding, benefits, and more. They are only not a partner, they do it all for you. That means a decrease in bottlenecks around setting up the legal entity for the employee, as well as deploying a smooth and easy onboarding process, giving the employer everything they need to get started. Most of all, as we said before, being able to hire an employee as opposed to contracting them as a freelancer allows you to retain them longer.
Why Do You Need to Use an Employer of Record (EOR) for Hiring Abroad?
EoRs help you, the employer, reduce legal risks and costs associated with international employment while providing a simpler and more streamlined experience for all parties involved so you can commence business operations without any issues. EoRs provide a range of services, including setting up employment contracts, managing work permits, handling immigration visas, managing benefits packages, and more.
Also, classifying overseas employees as full-time employees with benefits not only serves your business but also helps retain employees by instilling a sense of confidence since they won’t have to rely on finding their next gig every few weeks.
Pros & Cons of Using an Employer of Record (EOR) Company for Global Hiring
- An EOR is an All-in-One Solution – From hiring to onboarding to benefits, payroll, and culture, EoRs not only give you the tools for all of these, but they also do it all for you. That takes the responsibility and stress off of you to be accountable for the HR and hiring process.
- Easily expands your hiring globally – EoRs make it just as easy to expand hiring to South America or Europe or Asia as anywhere else they offer their services. That means you are never married to just one place to source the talent you need. You can have graphic designers in Costa Rica, app engineers in Belfast, and customer ops in North Macedonia without breaking a sweat (or breaking the bank)
- EoR takes care of local compliance – Perhaps the biggest benefit of an EoR, outside of establishing full-time employees wherever you’d like, is the fact that you will be compliant in other countries at every level. And since the EoR takes care of that for you, you’ll never have to worry about those issues.
- Culture changes might be difficult – The more you expand your hiring operations in other countries, it can become difficult to adjust your company culture from country to country. As long as you have a strong HR professional on your side, however, they can help make that process easier, it just takes some getting used to.
- You might feel like you have less control – Founders and CEOs can be control freaks — and that’s okay! This company is your passion, after all. By letting an EoR assume all responsibility in hiring and onboarding, you are taking stress off of you to figure out yet another process. However, it can leave you feeling like you don’t have full control over it either and for some people, that takes some adjusting. But don’t worry, you’ll get there!
Comparison: Employers of Record (EORs) vs. Professional Employer Organizations (PEOs)
PEOs, such as Paychex PEO or ADP Totalsource, partner with the employer to help keep them in compliance and assist in all matters of employee management. However, if you need a full-service solution that will navigate the complexities of hiring abroad, PEOs will not offer you that, whereas EoRs will.
To make things easy for you, here’s a comparison chart highlighting the differences between Employers of Record (EoR) and Professional Employer Organizations (PEOs):
As you can see, while PEOs offer more flexibility in managing employee benefits, scale, and industries they service, EoRs make the employer’s life much easier as their service takes care of all
It’s important to note that specific EoRs and PEOs may have different offerings and variations in their services so it’s recommended to evaluate individual providers based on your business needs and requirements.
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