Choosing the Right Employer of Record: Key Factors to Consider
When you hire developers from abroad, an EOR provider should be your trusted ally, reliable protector, and the right hand in relieving you of legal shenanigans and payroll headaches. Many providers on the market will present themselves that way, but only a small percentage of them will fulfill that promise. Everyone promises compliance in international employment, global payroll, taxing, and benefits administration, and it becomes hard to figure out who is the real deal, and who is just hiding behind big words.
However, after monitoring the market for some time, we have detected the main factors that clearly represent a difference between subpar and trustworthy providers. We are gladly sharing these insights with you here, hoping that they will help you connect with a partner who will always have your back when working with the global workforce.
Table of Content
The Factors to Evaluate EOR Providers You Might Not Consider Before
Client Involvement Level
One of the reasons why businesses use Employer-of-Record (EOR) services is to relieve themselves from the legal and HR burden of managing developers from other countries. Hiring employees from other countries means a lot to US companies, from difficulties with tax calculation within US legislation to the need to learn the laws of the country of hiring. Building your own team for that is too expensive, so if there is an option to write a check once a month for the experts who will masterfully handle this scope, you will do it.
So, that’s your expectation of the EOR vendor. Buuuut… here is the catch. The biggest in the industry are, in fact, self-service platforms. While they provide you with a lot of functionality besides simple payroll – healthcare plans, equity incentives, tax calculation – your involvement is still needed. First, you need time to figure out how the platforms work – where you need to put that piece of data, how to make the system consider specific inquiries for your global teams (e.g., when one of your employees takes paternal leave, and it affects the usual payroll cycle), and so on. Second, even after you manage to learn all of that, you still need someone to work with a system – and this demands an effort from your side. Despite the automation the EOR platforms offer, this still sounds like a chore you would want to avoid.
Flexibility in Catering to Your Requirements
Another important struggle with EOR providers is their lack of flexibility. Many vendors, especially the ones that provide their services as platforms, aren’t interested in preparing a unique offer for you – they have a ready-made solution you can take, and uncommon requests go out of their scope.
One significant limitation of EOR platforms is their inability to accommodate specific amendments to Master Service Agreements (MSAs). While these platforms offer standardized contracts, the lack of flexibility prevents customers from redlining or making unique updates to meet their individual needs.
Therefore, if your team needs some tailoring in EOR services, most probably you won’t get this from the EOR platform, and you will need to adjust or… just forget about your request. And this is definitely something you won’t want to do.
Customer Support System
The idea of EOR service is very compelling for businesses because it promises an exciting idea: the vendor is your personal know-it-all in global payroll and legal, so you can just delegate it and chill. Still, you may occasionally need to answer some questions from your employees, work with various concerns of stakeholders, or react appropriately in a unique, critical situation.
For that, you need to access specific expertise regarding legal, payroll, and other HR aspects of hiring developers from abroad. Ideally, your EOR provider will answer any of your questions and address any concerns you may have – whether they are about EOR service, the legislation of the developers’ country, the payroll process, or anything else.
However, the majority of EOR platforms won’t provide you with a dedicated team of specialists. You will get access to their platform, and well, that’s all. If you have any issues and need assistance, you will be connected to a customer support manager or a sales manager who use a database with template answers, but who does not possess any legal or HR expertise.
Employee Satisfaction
A great EOR vendor provides value for employees, though at first glance, it might be subtle. Timely payments, local currency support, proper tax withholding, and help with work permits and visas – this is the basis of the employer-of-record services, but it is key to building a positive employee experience. This is something essential for the productivity of your team – a satisfied developer who receives his salary on time will be a better performer than one whose compensation is always late.
That’s why we encourage you to look at the other side of EOR services. Explore if EOR provider thinks about the employees: if they offer payment methods that will be convenient for employees in their country, how they handle employees’ tax liabilities and legal issues, and if they propose competitive benefits packages. If something is off there, you will lose points in the eyes of your developers due to someone else’s fault, and that seems unfair.
Additional Services
Do you need external help solely to pay your international employees, or do you need more support in the whole cycle of global hiring? For some vendors, employer-of-record can be only a part of their services, and they can provide a multifaceted solution to your needs, e.g., find and hire employees you seek.
For example, we in TurnKey Tech Staffing do three main things for our clients: we find, pay, and retain top-tier developers from Eastern Europe and Latin America.
Our approach allowed us to build a pipeline that powers up excellent offshore staffing experience for companies and job seekers, where every experience in recruitment and EOR services is consistently excellent. Moreover, we also provide comprehensive support in the area of talent retention – so the developers we find are happy to work for our clients for years. The consistency of our involvement allows our clients to get more value from us than they would if they used separate vendors for recruitment and EOR.
The Portrait of Ideal EOR Provider
So what does the ideal EOR provider look like?
- They are your caretakers: they relieve you from the concerns and burdens of international payroll, tax management, and HR, and they do it fully – your involvement in these operations is zero.
- They are your advisers: they are always there to consult you in the domains of legal and HR and answer your questions in detail, no matter how intricate they are.
- They are your supporters: they always put your interest first and can be flexible if it is something you need and want.
Why Choose TurnKey Staffing?
We won’t say that we are the best – it is hard to know when there are hundreds of EOR providers. We only know that we do the best job we can, and it brings value to our clients – the 95% satisfaction rate is proof of that. In the EOR services, we achieve that in the following way:
- we cater to your and tailor contracts ensuring that the contractual terms align with your specific needs;
- we do everything you need in the EOR domain, your involvement in operational processes is minimal;
- we provide you with a dedicated team of legal counsels and HR specialists available for communication whenever you need;
- we provide numerous payment methods to the developers, so they can get their salaries in a comfortable way;
- we do one of the most thorough background checks on the market, so nothing slips through our fingers;
- we help your developers get US visas if you need them to travel on-site.
Leverage boutique-like EOR services from TurnKey for your offshore development teams
How Can You Check the Potential EOR Partner?
So, we have described the not-so-obvious traits of a great EOR provider. Now you might have a question: how can I find out if the EOR vendor matches these traits if everyone advertises the same things?
Well, that’s a reasonable question. Ads can mislead, and website copy might be too generic. However, here are a few tricks you can use to check the vendor’s reliability before starting to work with them.
- Check reviews and testimonials. This is obvious, but we can’t skip this essential step. Go through everything you can find: social media, Google reviews, Clutch and GoodFirms accounts, other directories, thematic forums, etc. Eventually, you will find unbiased reviews that will show the real picture.
- Ask for references. You can ask a vendor to connect you with their current clients, so they can share their minds and describe their experience. A provider who does a great job won’t hide their client from you, so a positive response would be a great flag.
- Review pricing. Analyze the pricing model to find out if there are hidden fees – a trustworthy provider will be transparent and explain how they will charge you and what they will provide for your money.
- Check Master Service Agreements (MSAs). Review the vendor’s MSAs for clarity on service expectations, response times, and penalties for non-compliance. A reliable provider will have clear terms and the ability to accommodate specific amendments.
Summing Up on Choosing an EOR Provider
Finding a great EOR partner is a challenge, considering the growing number of such vendors and the volumes of their promotional efforts. A lot of EOR providers promote themselves as the best of the best, but only a few can truly meet the highest standards. Hopefully, our insights will help you to navigate this market effectively and find the vendor who will be a great match for you.
FAQ
To verify financial stability, review the EOR's financial statements, and credit ratings from agencies like Moody’s or Standard & Poor’s, check for any independent financial reviews or audits, and assess their history of financial performance compared to industry benchmarks.
When reviewing SLAs, look for clear definitions of service expectations, response times, and performance metrics. Ensure there are provisions for penalties or remedies if the EOR fails to meet the agreed-upon standards. Additionally, verify the terms related to data security, compliance with local regulations, and any customization options available.
To ensure global compliance, verify that the EOR has expertise and a proven track record in the countries where you plan to operate. Check for relevant certifications and memberships in industry associations, and review their process for staying updated with local labor laws. Additionally, ask for references from companies operating in the same regions and consider consulting with legal experts to assess the EOR's compliance practices.
It is important for an EOR provider to have a local entity because it ensures their presence in the country and local labor law compliance. A local entity allows the EOR to manage payroll, taxes, and employee benefits accurately and efficiently while providing a better understanding of the cultural and regulatory nuances of the specific country, thereby reducing the risk of legal issues and enhancing the overall employment experience for your employees.
An Employer of Record (EOR) is the legal employer of workers, handling HR functions like payroll, tax compliance, and benefits administration, while the client company manages daily tasks. In contrast, a Professional Employer Organization (PEO) enters a co-employment arrangement, sharing HR responsibilities with the client company, which retains control over employee work duties. Thus, an EOR fully assumes legal employer duties, whereas a PEO shares them with the client.
TurnKey Staffing provides information for general guidance only and does not offer legal, tax, or accounting advice. We encourage you to consult with professional advisors before making any decision or taking any action that may affect your business or legal rights.
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