According to Business Research Insights, the Asia Pacific region has played a key role in driving the remarkable growth of the Employer of Record (EOR) market, contributing to its global value of USD 4.9 billion in 2023. The region is also expected to experience the highest growth during the forecast period.
It makes sense, as the Asia Pacific region is a popular destination for business expansion due to its rapid economic growth. On top of that, its diverse and complicated labor laws make it crucial for organizations to work with an EOR to ensure compliance.
With so many options out there, it can be difficult to choose the right EOR for your company. In this employer of record guide, we’ll go through how to use an EOR, the employer of record benefits, and best practices on maximizing value.
What is an employer of record?
An employer of record is a third-party employer that acts as the official or registered employer for the employees that you hire in a different country. As such, they eliminate the need for establishing a legal entity in that country.
More specifically, an EOR is legally responsible for hiring, recruitment, payment, benefits, taxes, management, and HR processes. That’s because they’re well-versed in local labor laws and regulations and understand the local market, its resources, and practices.
EORs augment your HR team (not replace it) and manage the recruits. If you learn how to use an EOR properly, you’ll be able to devote your time and resources to core business operations and empower your company to expand globally, fully knowing that your HR processes are in good hands.
Read next: Key Differences Between PEO vs EOR: Which Is Best for Your Organization?
What are the employer of record benefits?
Learning about employers of record benefits shows you what you can gain from learning how to use an EOR. The benefits are as follows:
- Less compliance risks: You can trust that your business remains fully compliant with labor, tax, and other regulations, reducing the risk of fines, penalties, or legal disputes. In the unlikely event of any issues, the legal employer or EOR will handle any associated responsibilities.
- Bigger talent pool: By learning how to use an EOR, you can hire employees from anywhere in the world without having to set up a legal entity. This convenience gives you the much-needed flexibility when you are building a global team.
- Time saving: Save the time of setting up your entity in another country and hire foreign workers immediately. Also, an EOR helps you navigate the country’s employment laws and HR compliance regulations efficiently and saves you time from dealing with administrative tasks.
- Cost saving: You can cut costs associated with establishing a legal entity if you learn how to use an EOR. Not to mention, their services mean you can save on operations costs, as EORs handle administrative tasks for foreign recruits.
- Streamlined payroll processing: If you learn how to use an EOR, you can have a centralized and streamlined payroll process, including salary calculations, withholdings, and issuance. This way, your recruits can enjoy timely and accurate payroll processes.
Tips on Maximizing Employer of Record Benefits
By learning how to use an EOR effectively, you can unlock all the benefits mentioned above. Here are some additional tips and best practices for optimal business expansion results:
Understand your needs
Identify your unique business needs for employment and after. What do you expect from an EOR? Are there certain job requirements? Are you looking for a service provider to handle particular aspects of global HR compliance or provide access to certain resources?
With that, your EOR can find the right candidates from the remote talent pool and give you a curated service and features that fit your needs.
Monitor performance metrics
Another good tip on how to use an EOR is to rely on performance metrics to ensure that the service provider is handling compliance, employment responsibilities, and employee management properly.
Look at predetermined key performance indicators (KPIs), such as their speed of onboarding, employee satisfaction levels, compliance rates, payroll accuracy, and cost savings.
Also, conduct regular EOR performance reviews, including a comprehensive evaluation of the services, a thorough examination of their performance data, and a conversation with the EOR. This way, you can assess their services and make necessary changes accordingly.
Utilize data analytics tools
With data analytics tools, you can gain the necessary insights and make informed decisions. Use mind maps, charts, and diagrams to optimize talent management strategies for higher employee engagement and increased efficiency levels. This way, you can better grasp your expansion progress.
Plan for scalability
When choosing an EOR, think about long-term scalability. Consider the changes that your organization will go through, such as increased headcounts and more complicated payroll processes. It’s important to hire an EOR partner that can support all your expansion goals and needs.
For instance, do they offer services other than what you currently require, have access to other markets, and can adapt to changes in regulations, service ranges, and market demands? Also, is their pricing model suitable for a scaling business? A pay-per-employee system could be a better choice if you have a relatively small headcount or are in the midst of expansion.
Best Practices on How To Use an EOR
When it comes to how to use an EOR effectively, here are some best practices to truly maximize the value you get out of it:
1. Choose the right EOR partner
Compare the service offerings to your company's needs to figure out how to use an EOR. Look for services such as global HR solutions, local tax withholding, benefits issuance, payroll approvals, the onboarding process, and data protection procedures. Perform the necessary due diligence to assess each potential EOR by reading through case studies, customer reviews, and more. This way, you can find the right EOR partner.
2. Clearly define roles and responsibilities
Typically, the main responsibilities of EORs include onboarding, payroll processing, and ensuring HR compliance. However, there are some EORs that offer additional services that can be useful for your organization.
As a result, it’s crucial to clearly define the EOR’s roles and responsibilities. This allows the EOR to efficiently take care of the HR responsibilities assigned and gives you peace of mind as you focus on your operational goals and strategic initiatives.
3. Understand local labor laws
An EOR primarily takes on the responsibility of ensuring legal compliance with payroll processing and local labor laws.
However, it’s valuable to understand these processes yourself so you can stay informed. This knowledge may also prove useful if you decide to establish a separate legal entity in the future, at which point you’d assume responsibility for compliance.
4. Implement comprehensive onboarding processes
When it comes to how to use an EOR effectively, give the EOR the green light to implement a comprehensive onboarding process and integrate new hires into the company efficiently and compliantly.
This process includes documentation (such as employment contracts, tax forms, and employee data), payroll setup, and eligibility checks. Communicate any added specific onboarding preferences or requirements to the EOR service provider.
5. Customize employee benefits packages
Another best practice on how to use an EOR effectively is to utilize their knowledge of the local market to create a customized benefits package for your new hires. This includes health insurance, retirement plans, and other fringe benefits, which is key to attracting top international talents.
Also, the EOR should ensure that the benefits meet country-specific standards and align with your company’s framework.
6. Conduct audits to monitor and maintain compliance
Conduct regular checks or audits on your EOR. It can reveal gaps, areas for improvement, and any compliance issues to ensure you maximize the employer of record benefits.
7. Foster a positive work environment
Another best practice on how to use an EOR is fostering a positive work environment, which ensures that your efforts to attract and retain international talents pay off. Think employee recognition, fulfilling employee needs, supporting two-way communication, and providing resources, training, and other opportunities.
8. Leverage technology for efficiency
Choose platforms that provide complete payroll solutions and accounting for year-end taxes—many EOR agencies rely on these tools to automate their processes, ensuring 100% accuracy. Be sure to understand an EOR's technology infrastructure before hiring them.
9. Be prepared to adapt policies and practices
A major aspect of how to use an EOR service is trusting that a third-party agency has a deeper understanding of local labor market trends and employment laws. As a result, you can expect them to recommend adjustments to your company's existing policies and practices.
For example, they may introduce new leave or anti-discrimination policies for recruits to ensure compliance with statutory requirements.
10. Invest in continuous learning
Another good practice on how to use an EOR is to focus on continuous learning to enhance skills and broaden knowledge. Partner with an EOR that provides training programs, workshops, seminars, and activities that foster the professional growth of your recruits, helping to build a culture of ongoing development.
11. Evaluate EOR performance regularly
Last but not least, assess your EOR’s performance to ensure they’re delivering results through the use of EOR performance metrics.
As mentioned earlier, evaluate factors such as the speed of employee hiring, payroll accuracy, timely payroll processing, cost savings on business expenses, response time to queries, employee satisfaction, and the compliance of their processes. These metrics are a good indication on whether you are maximizing the employer of record benefits as you should.
Driving Business Success with EOR
Omni makes it easy to support employees across multiple countries, time zones, and currencies.
Our centralized document management solution makes gathering the necessary data required to apply for employment passes, rental schemes, and other country-specific initiatives seamless and timely. With customized workflows and automated reminders, HR can help empower employees to manage the deadlines and documentation requirements for applications. And centralized documents and real-time data make it easy for employees to access salary information and produce reports and documents necessary for verification.
Offering a comprehensive payroll solution tailored to various countries specific requirements with features like support for HKD, SGD, and MYR, automated tax calculations, and managed contributions, Omni can help HR teams simplify their payroll processing and ensure compliance with ease.
Additionally, Omni’s customizable dashboard allows your teams to set and manage calendars pre-loaded with country- or region-specific holidays and timezones, seamlessly onboarding individuals in various locations.
With plans starting at just USD $3 per month per employee, discover how Omni's all-in-one HR software can support your international workforce. Book your product tour with our team today to learn more!
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