What is the role of an European Employer of Record?

If you are thinking about international expansion into Europe, you have probably heard of an Employer of Record (EOR). An EOR is a solution for companies expanding globally by hiring employees, but that do not have the time or resources to stay on top of complex local regulations regarding payroll, taxes, and benefits. A European EOR is a way to employ people without having your own company or entity in that specific country.

In this blog, insights are given on what an EOR does, the main benefits of it, and the added value an EOR can have to your European expansion.

What is an Employer of Record?

The acronym EOR stands for Employer of Record. An Employer of Record (EOR) is a third-party organization. The EOR provider is the legal employer of record of the hired employees. As a result, the EOR takes all the responsibilities and liabilities concerning employment in the specific country. The EOR hires and pays an employee on behalf of another company and, if necessary, takes care of termination.

What is a European Employer of Record?

A European Employer of Record is an EOR provider with a local entity or multiple entities throughout Europe. For example, EuroDev employs employees throughout Europe on behalf of North American SMEs throughout Europe that do not have an office in a specific European country.

What Does an Employer of Record Do?

The employer of record takes care of the legal and regulatory requirements that come with employment in a foreign country. Legally, your staff is employed by the EOR, but you are still responsible for the management of the employees. Activities of an EOR include:

• Payroll management
• Employment contract setup
• Tax advisory and management
• Benefits management
• Contact and agreements with local authorities
• Set up and registration of local entities for a compliant payroll
• Local insurances
• Termination and dismissal
  

Why Use an Employer of Record in Europe?

There are several reasons for businesses to use an Employer of Record in Europe. Hiring an EOR gives the company the opportunity to manage its time more efficiently and effectively. An Employer of Record allows companies to legally and efficiently engage with overseas employees in a new country without having to set up a local entity or risk violating local employment laws.

Every European country has different local employment and payroll regulations. The challenges of meeting the local rules and regulations can be a major obstacle to international business expansion.

What Are the Benefits of an Employer of Record?

• Expand without a local entity,
• Flexible and cost-effective solution to outsource payroll and HR functions for
  international expansion,
• In compliance with foreign local laws & regulations,
• Access to an international talent pool,
• Minimizes employment liabilities and risks,

• Let's you focus on your core business,

• You manage your employees,
• EOR takes care of registration and contact with local authorities,
• Reduced risk, as the risks of being an employer, fall almost completely on
  the employer of record.

EuroDev brings additional benefits as an EOR as we have over 28 nationalities within our company. Our European HR and Financial consultants are well aware of European cultures, languages and rules & regulations.

When not to Use an EOR

Using an EOR isn't the right solution if your company is committed on long-term expansion or plans to hire a large team abroad. In these cases, you're better off setting-up their own legal entity as it is typically more cost effective. Additionally, it is important to pay attention to local regulations, especially for financial trading and medical roles, where country-specific certifications may be required.

Finally, an EOR is not suitable if your aim is to outsource work instead of managing your own staff. An EOR's purpose is to support compliant employment to make things easier from an HR perspective rather than replace your workforce.

Who are EORs Most Useful to?

An EOR is often used for global expansion when a company plans to conduct business activity in a new country without a physical entity. Any business can find value in an EOR relationship. Mostly, SMEs use an EOR because they often lack the resources to do it themselves. EORs can add value for businesses in any industry, ranging from accounting firms to high-tech companies and small manufacturers. 

What to Look for When Choosing an EOR in Europe?

•   Meet the people who will be serving you and make sure the EOR is capable      of meeting your goals.
• Check the reputation of the Employer of Record:
  How long have they been in the business? Have they worked with similar clients to you? Ask for client and professional references.
• Check their servicing model:
  Can they provide the care and attention you need? Is their servicing model
  customizable?
  
  

What Are the Differences Between EORs in Different Countries?

• EOR in Germany
• EOR in France
• EOR in the United Kingdom
• EOR in Spain
• EOR in Italy
• EOR in Belgium
• EOR in the Netherlands
• EOR in Denmark

• EOR in Portugal
• EOR in Slovenia
• EOR in Poland
  
  

Conclusion

An EOR in essence is a simple solution that allows companies to hire abroad without having to deal with the hassle of establishing legal local entities and takes handling payroll, taxes, benefits, and contracts out your hands.

The main takeaways are:

• An EOR reduces risk when expanding internationally.
• EOR's can be cost-effective for companies that aren't big enough to employ abroad with a local legal entity of it's own.
• Companies still have control and manage their own employees when using an EOR.
  
  

In case you would like to have more information about Employer of Record in Europe, do not hesitate to contact our HR team.

For more information concerning our HRO services, have a look at HR Outsourcing.

Written by Sven Brands, International Account Manager at EuroDev. 

Disclaimer: While we strive to provide accurate and timely information, please note that HR policies and regulations can change frequently. It is recommended that you seek guidance from our HR consultants to ensure that the data presented here is current and accurate.