Employer of Record (EOR) services have become increasingly popular for businesses that need to expand their global workforce without setting up subsidiaries in foreign countries. An EOR acts as the legal employer of the company’s international employees, handling payroll, benefits, and compliance matters. To understand how this service works, it’s essential to familiarize yourself with the key terms and concepts. Here are Employer of Record terms, simplified. 

Core Employer of Record Terms

• Client Company:
  The company that engages the EOR to handle their employment requirements for their remote employees, and help source talents when needed.
  
• Workforce Solutions:
  The various services provided by an EOR, include payroll, benefits, taxes, and legal compliance.
  
• Global Expansion:
  The process of expanding a business’s operations into new countries.
  
• Compliance:
  Adhering to local labor laws, tax regulations, and other legal requirements.
  
• Payroll:
  The process of calculating, withholding, and paying employee wages and salaries.
  
• Benefits:
  Various non-wage compensations are offered to employees, such as health insurance, retirement plans, and paid time off.
  
• Taxes:
  Government-imposed levies on income, payroll, and other activities.
  
• HR Administration:
  The management of human resources functions, including recruitment, onboarding, performance management, and offboarding.
  
• Contract of Employment:
  A legal agreement between an employer and an employee outlining the terms and conditions of employment.
  
• Independent Contractor:
  A self-employed individual who provides services to a client company without being an employee.

Compliance and Regulations

• Labor Laws:
  Laws that govern employment relationships, including minimum wage, overtime, and workplace safety.
  
• Tax Compliance:
  Ensuring that all necessary taxes are paid to the appropriate government agencies.
  
• Employment Contracts:
  Legal agreements that outline the terms and conditions of an employee’s employment.
  
• Work Permits:
  Government-issued documents that allow foreign workers to legally work in a particular country.

International Employment

• Global Mobility:
  The movement of employees across international borders.
  
• Local Hire:
  An employee who is a citizen of the country where they work.
  
• Remote Employee:
  Individuals who work from a location. This could be their home, a co-working space, or any other location that allows them to perform their job duties effectively. In the context of EOR, these are employees from other countries like the Philippines or Colombia, per se.

Benefits of Using an EOR:

1. EORs simplify global expansion by handling the complexities of international employment, allowing businesses to focus on core operations.
2. EORs ensure compliance with local labor laws and tax regulations, mitigating legal risks.
3. EORs can provide cost-effective HR solutions, especially for small and medium-sized businesses.
4. EORs can help businesses manage risks associated with international employment, such as employment disputes and tax audits.
5. EORs can easily scale up or down their workforce to meet the changing needs of a business.

Understanding these terms is crucial for businesses that are considering using EOR services.

Familiarizing yourself with the key concepts can help make informed decisions about your international workforce and ensure compliance with local laws and regulations.

To learn more about Employer of Record, check out www.filtaglobal.com for more resources.