With remote work here to stay, businesses are looking to have the right solutions in place to hire remote employees and contractors. Hiring remotely allows companies to have more flexibility, reduced overhead costs, and even access to global talent pools. However, hiring remotely, especially when doing so abroad, doesn’t come without its challenges.
Companies have to make sure they’re hiring employees legally and cost-effectively. Otherwise, they can quickly run into issues. This is why many businesses outsource remote hiring to an Employer of Record (EOR) to carry out hiring, legal compliance, payroll, and more for their remote teams.
Keep reading to learn how to hire with an EOR, how it compares to other options, and the top countries to hire remote talent from.
What is employer of record hiring?
An employer of record (EOR) is an employment services provider that allows companies to legally hire domestic and international employees and independent contractors. An EOR like Skuad allows businesses to hire employees through an all-in-one platform that makes onboarding, negotiations, payroll, taxes, and legal compliance a breeze.
With every country having its own laws regarding employee protections, benefits, minimum wages, taxes, and more, hiring on one’s own can be difficult. Working with an EOR, however, takes care of legal compliance for businesses, ensuring that employees are hired and paid in accordance with their local labor laws.
An EOR is able to legally hire employees for your company by acting as the legal employer of your employees, hence the name "employer of record." With a third party between you and your employees, the stress of complying with local labor laws and setting up foreign subsidiaries is taken off your hands.
Although an EOR is the on-paper employer of your team members, new hires still operate as any other employee. Your company still controls the management of employee work, tasks, communication, meetings, etc. An EOR simply carries out the legal processes and paperwork that come with the employment cycle.
Hiring with an employer of record like Skuad makes global hiring easy and affordable. Skuad allows businesses to hire independent contractors and employees from over 160 countries. To complete the hiring process, Skuad then produces local employment contracts, creates benefits packages, manages tax contributions and forms, and sets up legal payroll.
Using an EOR takes care of the complexities of remote hiring, so you can focus on growing your businesses and doing spectacular work.
EOR hiring vs. direct hiring
When figuring out whether to hire directly or outsource hiring to an EOR, it’s important to assess if your business has the resources to hire internationally on your own.
Hiring abroad requires establishing a foreign subsidiary in your employee’s country of residency. A foreign subsidiary acts as a sub-company of its parent company that carries out operations abroad. To set up a subsidiary and hire abroad, one needs to:
- Register one’s business with the authorities
- Obtain necessary work or business visas
- Establish a legal entity
- Hire a local legal team
- Hire local accounting and HR teams
- Comply with local labor, payroll, and tax laws
Setting up a subsidiary can take up to one year and cost tens of thousands of dollars. The reality is that most companies don’t have the time or resources to carry out this lengthy process on their own.
Aside from high costs, hiring directly also comes with the risks of legal issues from failing to comply with local laws and misclassifying independent contractors. Running into legal issues can also lead to expensive fines and revocation of work visas. The accumulation of legal responsibilities from direct hiring is often not worth it for companies looking to hire abroad.
Working with an EOR, on the other hand, allows for a fast, cost-effective, and legal international hiring process. EOR hiring means you don’t have to set up foreign subsidiaries or legal entities to hire employees. An EOR acts as the legal employer for your employees, removing the traditional constraints of hiring abroad.
Skuad is a leading employer of record with legal expertise in over 160 countries. Skuad takes care of all legal compliance and correct classification, making for a much simpler solution than direct hiring. An EOR like Skuad also allows companies to start hiring abroad today, while direct hiring can take up to a year to set up legally.
Outsourcing hiring to an EOR like Skuad is often the safest, easiest, fastest, and most affordable option for companies looking to expand globally.
EOR hiring benefits
Hiring international employees and independent contractors through an EOR comes with many benefits. One of the largest benefits of hiring with an EOR is protection from legal risk. As an EOR operates as the on-paper employer for your employees, they are fully responsible for complying with labor, tax, benefits, and payroll laws in each country of hiring. This protects your company from legal liability and the accumulation of fines that come with legal issues.
Hiring with an EOR also protects your business from the legal risks of misclassification. Misclassification occurs when independent contractors are classified incorrectly as employees and vice versa. Misclassification is one of the most costly mistakes an employer can make, as it can lead to legal issues, fines, back payments of benefits and wages, investigations, and revocation of business permits. An EOR like Skuad ensures your employees and contractors are classified correctly.
In addition, an EOR manages the full HR process for foreign employees. This removes the need to hire foreign HR, accounting, and legal teams to manage your employees. An EOR like Skuad provides the HR services of:
- Onboarding
- Payroll
- Tax deductions
- Benefits
- Social security and retirement contributions
- Managing employment documents and costs
- Terminating employees
- Severance packages
The requirements of these HR functions vary from country to country, but it is the responsibility of the EOR to comply with those requirements. For example, every country has its own social security, healthcare, and retirement systems, not to mention the different requirements for employer contributions toward these benefits. Rather than becoming an expert on foreign laws yourself, it’s often best to hire an expert EOR that can handle these ever-changing laws with ease.
In terms of payroll, an EOR like Skuad carries out the entire process of tax deductions, contributions, and currency exchange for every pay period. All your company has to do is pay the calculated amount. Not only is this a much more simplified process, but not having to hire internal payroll and HR teams helps your business save money in the long run.
The comprehensive benefits of working with an employer of record like Skuad are unmatched. By outsourcing the complexities of hiring abroad to an EOR, you get to focus on choosing the perfect candidates and growing your business.
EOR vs. AOR
Another solution some companies look to for remote hiring is an Agent of Record (AOR). An AOR provides legal services to companies by acting as a third party between companies and insurance organizations. A common use of an AOR is to outsource purchasing and maintaining insurance policies for one’s company. An AOR is also used to ensure compliance when hiring independent contractors.
Hiring independent contractors comes with the risks of misclassification, intellectual property loss, and more. To ensure legal compliance when hiring contractors, companies may outsource these roles to an expert like an AOR. An agent of record typically provides the services of:
- Independent contractor classification
- Background checks
- Onboarding
- Employment contract management
- Legal compliance
- IC invoices and payments
- IC documents and paperwork management
- Insurance policy purchasing and switching
The difference between an AOR and an EOR is that an AOR is only for hiring independent contractors. An EOR may only allow for hiring employees, but an EOR like Skuad allows companies to hire both employees and independent contractors, along with the elimination of misclassification risks.
Unlike an AOR, an EOR allows companies to hire employees and independent contractors in foreign countries. Skuad is a leading employer of record that also provides typical AOR services, allowing companies to hire both employees and independent contractors, domestically and abroad, with ease.
Top 10 remote hiring locations
When working with an EOR like Skuad, hiring top global talent is as easy as it gets. The growth of remote work in recent years expanded the horizons for businesses in terms of sourcing talent, and it brought remote opportunities to people around the world. With less geographical restrictions, there are thousands of global professionals seeking remote employment.
Here are the top ten remote hiring locations for sourcing the best global talent to join your team:
Each of these countries are home to some of the world’s top workforces, working cultures, education rates, English proficiencies, and business opportunities. Each also has unique labor laws, tax requirements, work cultures, currencies, and more that employers must be aware of.
Employer of record hiring with Skuad allows businesses to expand to these global talent pools with ease. Learn more about how Skuad can help your business expand globally and request a demo today.
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