Know here what types of employees are better for your business, EOR vs. Traditional Employment.
As companies progress, human resources can be somewhat challenging, primarily when the company is located in international markets. Employers may struggle with compliance issues, payment of wages and translating global practices to each countries’ standard.
Employers of Records (EOR) are one of the solutions that helps the business manage several of these tasks at once. Nevertheless, the vast majority of businesses continue to favor the traditional employment relationship.
So how to choose the right option for your business? Now let’s compare EOR with the traditional employment, to understand what option is better for you.
Employer of Record (EOR) refers to any external service provider that administers employment services for your organization. These may involve compensation structures including wages, employee insurance and compensation, declarations of taxes on employees’ wages as well as observing the existing national or state legislation regarding employees. The EOR serves as the legal employer, but your company maintains supervisory authority over the working process and personnel.
In this system of employment, the company has full authority and responsibility for employees and oversees all the aspects, from wages to following the law. It provides organizations with total control over the employment process, whilst promoting the direct connection between the employer as well as the employee.
An EOR helps firms to get people abroad without the requirement to set up subsidiary organizations; this makes the employment process easy.
Through the management of payroll, tax returns, and compliance with national labor legislation, the EOR helps businesses to focus on growth and business processes.
EOR services can be more favorable when it comes to short-term or project-based hiring compared to traditional HR hiring approaches.
Although an EOR is indeed convenient and saves the principal from being involved in the nitty gritty of contracts, this convenience has a price tag attached to it. The costs of EOR services can be relatively expensive as compared to handling employment in-house.
Because the EOR is legally the employer, companies may perceive that they have less influence over some of the processes involved in recruitment.
Conventional employment method involves a closer link between the employer and the employee this means the employee is likely to be more committed to their work.
Employment process is fully controlled by the businesses with regard to aspects like remuneration, employee privileges and other legal requirements.
It is frustrating and expensive for companies to keep track of their employees’ wages and tax laws in various locations, especially when expanding into new countries.
For the companies who wish to enter several countries rapidly, incorporation of subsidiaries in each country might take much time and money.
Both the EOR and the models based on traditional employment have their advantages. The decision of which employment model is most suitable for your strategy has to take its basis in your individual requirements, budget, and long-term business goals.
