Employer of Record (EOR): What is it and why do you need to get one?

Choosing to use an EoR provider to hire the best talent for your team can be the key to helping you grow your workforce across borders. Here's why.

If you’re looking to scale up your business and grow across borders, you’ll want to learn (in detail) all about Employer of Record (EoR).

It’s not a secret that the tech recruiting scenario nowadays is tough. The IT recruiting industry has transformed itself in the past few years due (mainly!) to remote work. With remote work and cross-border recruiting being the norm, companies now have access to a wider tech talent pool, leading companies to look for solutions that enable them to simultaneously stay competitive and meet their business needs. 

While there’s no secret that the job market is increasingly competitive, and getting the most skilled professionals is challenging, one cannot forget that, however, with a new work paradigm, new challenges arise, and new procedures need to be adopted. 

Right now, the dynamic and fast-paced landscape of tech recruitment has forced companies to turn to flexible and remote workforce solutions to stay competitive, the EoR being one of them and, in fact, one of the most popular ones. 

EoR: understanding the concept 

computer on top of a desk in an office

Photo by Alesia Kazantceva on Unsplash

First thing first. To work with it, you must first understand the concept. 

An Employer of Record, often abbreviated as EoR, is a third-party service provider that acts as the official employer for a worker on behalf of a client company, or in other words, it takes on the responsibility of being the legal employer for a specific group of workers. 

The EoR assumes several administrative tasks associated with employment, thus managing HR and payroll functions, namely: payroll processing, tax withholdings, benefits administration, and compliance with employment laws and regulations. 

Essentially, the EoR acts as a bridge between companies and their contingent workers, offering a seamless and compliant employment solution. It can be seen as a solution to finding streamlined workforce management, as it enables companies to expand their business globally without needing to establish a legal entity in foreign countries.

Simply put, while the EoR provider becomes the legal employer of across-border professionals for a certain business, the client company is in charge of the day-to-day supervision and control over the employees’ work. 

7 benefits of working with an EoR provider 

By now, you already understand that there companies wanting to expand their business internationally can access plenty of advantages by working with an EoR provider, such as Softlanding, which is both an EoR and a Professional Employer Organization (PEO), and that can help your business to expand to Portugal

Here’s a comprehensive list of the benefits of partnering with an EoR provider: 

1. Global expansion made easier

For businesses intending to expand internationally, navigating complex employment laws and regulations in foreign countries can be daunting. An EoR provider can help you out with this, as it acts as a bridge, simplifying the process of hiring employees in multiple locations around the world. By partnering with an EoR provider, companies can in an easier way set up operations in new countries, gain a competitive edge and access new markets.

2. Access to a global talent pool

Partnering with an EoR provider allows companies to expand the talent pool considerably, allowing businesses to access a skilled and wider pool of global tech talent. When companies expand their operations internationally, tapping into local talent becomes essential for understanding these markets and meeting customer needs effectively. However, this is a tough task. 

Through an EoR provider companies can now hire top talent locally (in the destination country), enhancing their team’s expertise and fostering innovation within the organisation. This flexibility in talent acquisition can significantly enhance the quality of the workforce.

3. Compliance and risk mitigation

Going international means way more than just growing and having an international team. It also means having a deep understanding of the local employment laws and tax regulations, which vary significantly across different countries. 

Compliance with employment laws and regulations is crucial to avoid legal entanglements and potential fines, as non-compliance with these regulations can lead to severe penalties and reputational damage. 

An EoR provider assumes this responsibility, staying up-to-date with ever-changing laws and ensuring that all employment practices are fully compliant with all local labour laws, tax regulations, and statutory requirements, thus mitigating potential risks. 

4. Streamlined onboarding and offboarding processes

This is another big plus on the list of benefits of working with an Employer of Record. As the burdensome tasks of onboarding and offboarding employees are taken away from the employer and passed on to the EoR provider, which ensures this is taken care of efficiently. 

This means: handling employment contracts and documentation or managing exit procedures. The EoR provider ensures a smooth transition for both workers and businesses.

5. Speed and agility in workforce management

The current fast-paced business environment requires agility (which is crucial for success). An EoR provider enables companies to access a flexible and efficient way to hire and onboard employees, reducing the time to market for your products or services. This is particularly valuable for short-term projects or seasonal demand fluctuations, enabling you to scale your workforce up or down as needed per business requirements. 

6. Payroll and benefits administration 

It’s up to the EoR provider to manage the payroll processing and benefits administration (such as health insurance, retirement plans, and more), guaranteeing timely and accurate payments to employees. It’s no secret that currently, providing comprehensive benefits enhances employee satisfaction, improves retention rates, and contributes to a positive work culture. 

7. Focus on core business functions

By delegating employment-related tasks to an EoR provider, companies can focus their time and resources on their core business functions, driving growth and innovation and fostering greater productivity and efficiency in achieving organisational objectives.

EoR: the step by step to work with one 

open office with people working on their computers

Photo by
Israel Andrade on Unsplash

Now that you’re aware of the benefits of working with an EoR provider, you’ll probably wonder what it takes to work with one. Here’s the process to follow: 

  1. Initial consultation: 

The EoR provider starts by conducting an in-depth consultation to understand your business requirements, expansion plans, and workforce needs, thus ensuring a tailor-made solution that aligns with your objectives.

  1. Employment contracting: 

After finalising the terms of engagement, the EoR provider drafts the employment contracts and takes care of all legal formalities required to onboard employees in the target country.

  1. The work per se

Recruiting in the destination country, payroll and benefits administration, compliance management, risk management and insurance, onboarding, termination and offboarding. All administrative tasks are ensured by the EoR provider daily. 

Ready, set, go! 

Are you ready to move on and go big? If so, don’t waste any more time. You can learn more about this here or contact us at Softlanding as we can set you up with a full EoR service in Portugal. Are you ready for this? We are waiting for you!




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July 25, 2023
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