Global Hiring Made Easy: Choosing the Best International EoR

Expanding into global markets opens exciting growth opportunities, but it also introduces complexities around labor laws, payroll, costs, and international compliance.  An international payrolling provider or Employer of Record (EOR) can be a lifeline, streamlining the process and mitigating risks.

Choosing the right partner is key to achieving your international business goals. Here are essential things to look for:

• Classification and Payment Transparency
• Knowledge of Local Employment Norms
• Remove the Middle Person
• Clear Communication and Timelines
• Contract Negotiation Assistance
• Questions to Ask Potential Providers
• Pricing - Key Questions to Ask

Classification and Payment Transparency

When hiring internationally, there are generally two classifications for workers:

• Independent Contractors (like 1099 in the US): Freelancers with more control over their work but responsible for their own taxes and benefits.
• Employees (like W-2 in the US): Traditional employees entitled to company benefits with taxes withheld by their employer.

The right international payrolling or EOR provider will provide total transparency on:

• How they classify workers in different countries: Understand their process and how it aligns with your needs and the laws of the countries where you'll have workers.
• Pay structures for all worker types: Get details on gross pay, withholdings, the provider's fees, and final net pay amounts.

Ask for sample calculations, invoice, and contracts to ensure you agree with the classification, compensation approaches, and have a clear picture of your costs.

Deep Knowledge of Local Employment Norms

Laws regarding hiring, benefits, payroll, termination, and more vary wildly between countries. Your provider must be an expert within your target market. Ask them to explain:

• Mandatory Benefits: Required benefits packages often include vacation time, healthcare, retirement contributions, etc.
• Payroll Frequency: Understand how often workers are paid and the standards in your target country.
• Termination Requirements: Laws on notice periods, severance, and rules governing layoffs are crucial.
• Cultural Nuances: Beyond laws, a good provider will advise on work culture customs like typical bonus structures, workweek norms, etc.

This in-depth local expertise translates to reduced compliance risk, successful recruitment due to competitive offers, and  a satisfied international workforce.

The Middle Person Problem: Verify the Actual AOR/EOR

In the EOR industry, many companies operate as a bridge who simply resell other providers' services, adding no real value and potentially exposing you to compliance risks. Here's how to know if you're dealing with a legitimate EOR:

• They Have Their Own Entity in Target Countries: True EORs maintain a legal presence where you're hiring (not just partnerships).
• Their Contracts Are Direct: Your contracts are with their in-country entity, not with a third-party or US-based company.
• You Have Direct Contact: You should interact with in-country HR/payroll representatives from your chosen EOR.

By working directly with the actual EOR, you get better accountability, lower costs, fewer communication breakdowns, and more responsive support.

Clear Communication Timelines and Support Availability

Timely, direct communication is essential when navigating the complexities of international employment. Look for a provider that:

• Sets Response Expectations: Asks about your preferred communication channels and establish a Service Level Agreement (SLA) outlining response times.
• Proactive Updates: Providers should furnish regular payroll reports, onboarding updates, or flag any relevant changes in local legislation.
• Multi-Channel Accessibility: Ensure their support model includes phone, email, and online portals, ideally with extended hours if you have a global team.

Communication breakdowns can damage your relationship with international contractors or, worse, lead to costly non-compliance issues.

Contract Negotiation Assistance

Hiring in unfamiliar territories is ripe for misunderstandings. It's paramount to have someone on your side to advocate for your interests and explain local market standards:

• Review of Standard Contracts: Your provider should meticulously review your standard contract templates for potential red flags in the target country.
• Compensation Alignment: They should advise on what competitive compensation packages look like locally to attract top talent.
• Clarity on Your Obligations: Some countries have complex worker protections. Get clear guidance on contractual clauses that minimize your risk.
• Cultural Sensitivities: Good providers help bridge cultural gaps by alerting you to clauses that might seem normal in the US but be off-putting elsewhere.

Additional factors to consider when choosing an international payrolling or EOR provider:

• Technology Platform: A robust platform streamlines onboarding, timesheet submission, payroll management, and reporting. Look for user-friendly interfaces for both your team and contractors.
• Data Security Standards: Given the sensitive nature of payroll data and GDPR, confirm their security certifications (like SOC 2) and inquire about data encryption and privacy protocols.
• Scalability: If you foresee significant growth, ensure the provider can comfortably scale operations to accommodate new countries and a larger workforce.
• Industry Specialization: Some providers excel in particular sectors like tech or manufacturing. Look for one with experience in your specific industry.
• Reputation and Client References: Research their online reputation, reviews, and request client references to confirm a track record of success.

Due Diligence:  Questions to Ask Potential Providers

Asking the right questions helps you shortlist providers and get a detailed picture of their services. Here are some key questions:

• Countries of Expertise: In which countries do you have your own legal entity and provide full EOR services?
• Compliance Expertise: How do you stay current on employment law changes in the countries we operate in? What compliance certifications do you have?
• Employee Benefits: What types of benefits packages can you offer, and how do you design competitive packages within local norms?
• Data Security: What specific measures do you take to protect our payroll and employee data?
• Onboarding Timelines: How long does the average onboarding take from the initial contract signing to the first payroll run for an employee?
• Reference Checks: Can you provide client references, particularly in industries or countries similar to our operations?
  
  

Pricing Transparency: Key Questions to Ask

Pricing models for international payroll/EOR providers can vary significantly. Here are essential questions to get crystal-clear upfront answers about costs:

• Minimum Monthly Fee: Is there a base fee per employee, regardless of their salary? If so, how much is it?
• Markup Rate:
  • What percentage markup does the provider apply to the employee's gross salary?
  • Is this markup only on gross pay, or does the markup base also include payroll taxes, benefits, sales tax, etc.? (This makes a huge cost difference!)
• Additional Fees: Are there onboarding fees, termination fees, or any other charges beyond the markup? Get a full list.
• VAT/GST: Is VAT, GST, or any equivalent sales tax included in the quoted figures, or is it added separately?

Why This Matters:

Understanding the total cost of each employee is crucial for accurate budgeting and comparing providers. Some may seem cheaper initially due to a low markup, but their fee structure could lead to unexpected costs.

Tip: Ask for a sample pricing breakdown for an employee in your target country as well as the specific payroll tax rates. This makes comparing multiple providers much easier.

The Value of Partnership

Choosing the right international payrolling or EOR provider is more than just outsourcing a task; it's about establishing a true partnership.  A great provider acts as an extension of your HR team, ensuring these key outcomes:

• Seamless global expansion: Focus on growth without being bogged down by complex compliance and administrative burdens.
• Competitive edge in hiring: Attract and retain top talent with benefits and compensation packages that meet local expectations.
• Legal peace of mind: Rest assured that you're operating within the law, mitigating the risk of fines or penalties.
• Satisfied and motivated workforce: Provide a positive employee experience, regardless of workers' locations, by ensuring timely, accurate pay and reliable support.

Finding the right fit takes time and research, but it's an investment with high returns for your global aspirations. Take a look at our international services and overview.