June 26, 2022
✨ NEW: Have multiple entities? Manage payroll for every country in one place
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✨ NEW: Have multiple entities? Manage payroll for every country in one place
Remote work has removed geographical boundaries in employment and opened up a formerly unknown access to a global talent pool. Companies are now in the position to find and hire the perfect candidate for their position based on skills and experience alone, without being restricted to locally available talent. Likewise, skilled workers can now apply for remote positions with any employer they want and find their dream job.
An easy way to enable employment across borders without having to establish a legal presence is to hire remote employees via an Employer of Record (short: EOR). While employers and HR leaders may be familiar with the concept of hiring talent abroad through a third party, most employees will definitely have a whole list of questions before they feel comfortable signing the employment agreement.
If you’re an employee, who has been offered a remote position with a foreign company, or an employer looking for information to share with potential EOR hires, then this blog post is for you. Here, we’ll answer all the questions employees may have about EOR and also tell you what it’s like for employees when getting hired through Lano’s Employer of Record solution.
In the era of remote work, employees are able to accept employment with whichever company they like, even if their potential new employer is based in a different country. In order to facilitate international employment, organizations can use an Employer of Record (short: EOR) service.
The employee, i.e. you, is then hired via the EOR who acts as a third party in the employment relationship, taking on the role as the legal employer. Since the Employer of Record provider owns a fully compliant entity in the country where the employee, i.e. you, is based, the contracting organization, i.e. the company you will work for, doesn’t need to go through the trouble of setting up a legal entity.
The major advantage of EOR solutions for you as an employee is that it basically allows you to work from wherever and for whomever you want. EOR services take down the legal hurdles that prevent talented workers from getting recruited by employers that are based abroad, thus enabling employment across borders. Using an Employer of Record also means that you can keep your job if you decide to relocate to a different country to enjoy the flexibility offered by remote work.
Check out our related blog post for a full rundown of the many benefits for employees when getting hired through an EOR.
EOR providers are experts in local employment law as well as in remote recruiting and onboarding. Their main business is hiring employees on behalf of their clients, and since they are fully incorporated in the countries where they offer their services, you’ll be able to start work a lot faster. For example, when getting hired through Lano’s EOR solution, employees are usually able to start working for their new employer in as little as 10 days.
If the company you work for decides to set up a legal entity in your country, the Employer of Record is no longer needed. As soon as the business has established a legal presence in the country where you are based, they will be able to act as your legal employer. For you as an employee, this means that your employment contract with the EOR will be replaced by a direct contract with the company you have been working for all along.
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The employment contract will be concluded directly between you and the Employer of Record. It will be a localized employment agreement that complies with all the laws and regulations that apply in the country where you are based and includes all the relevant information like job description, responsibilities, salary, benefits, employee rights and more.
Since the employment relationship involves two parties located in two different jurisdictions, it’s normal to wonder which legal framework will apply to the employment. When you get hired through an Employer of Record, it’s always the employment law of the country you work from that will govern the employment relationship. This means that the same rules apply as if you were to take a position with a local employer.
One of the great things about getting hired through an Employer of Record is the fact that you get a localized benefits package. This means that you receive all the mandatory statutory benefits as well as the customary benefits a local employer would provide. For instance, if you are based in the United Kingdom, you’ll receive at least 28 paid days off per year (incl. public holidays), as mandated by UK labor law.
Receiving local benefits also means that you will have paid days off on local public holidays and can hence enjoy the celebrations with your family and friends. On top of that, the foreign company you work for can include additional fringe benefits in your contract, such as flexible working hours, medical benefits or mental health programs.
Since you are legally employed in the country where you live, the termination procedures and rules are the ones dictated by local law. No matter whether you wish to resign or whether the company you work for wants to end the employment relationship, the legal notice periods have to be respected. Severance pay and other outstanding payments are also handled in line with local regulations.
That depends on the country and the kind of license the Employer of Record has. While some countries allow EOR providers to conclude indefinite employment contracts with employees on behalf of their clients, others impose limits on the duration of the EOR contract. This needs to be reviewed on a case-by-case basis.
As your legal employer, the EOR will handle all the administrative aspects of the employment. This includes registering you with the authorities, processing payroll, submitting tax and social security payments, paying your salary and providing you with a payslip. All of this is taken care of and you won’t notice any difference to being employed directly by your employer.
Your salary will be paid in local currency, so you don’t have to worry about exchange rates and potential fees. The payment frequency will also be in line with local regulations and customs. If it’s customary (or legally required) to pay employees on a weekly basis, then you’ll be paid once a week - regardless of whether the foreign company you work for usually pays their employees once a month.
Although the Employer of Record will be your legal employer, it’s the company who contracts the EOR service, i.e. the business you really work for, that will organize your workload and duties. Think about it this way: While the EOR provider takes care of the employment contract, payroll, benefits and taxes, the company you (de facto) work for manages your projects and tasks. They’re also in charge of career development programs and training, as well as organizing virtual team building activities and other company socials.
While working for your new employer, you may incur different expenses. This can be anything from buying an ergonomic chair for your home office to a software you need for a specific project. When it comes to getting reimbursed, it’s best to first check with the company you work for to see which expenses are covered - usually, organizations have internal policies that outline how expenses are managed. You then send the information and receipts for your expenses to the company you work for. Once they’ve approved your expenses, they will let the EOR partner know so that they can add the reimbursement to your next salary payment.
Time-off requests are handled similarly to expenses. Both the company you work for and the Employer of Record need to know when you are off - the company because they need to know who is available to work on tasks and projects, and the Employer of Record because they need the information to process payroll correctly. Whenever you want to request time off, the easiest way is to send an email to the Employer of Record and Cc your manager. Your manager will then approve your time-off request and inform the EOR about it so that the latter can take the vacation days into account for the payroll processing.
EOR providers usually operate an online platform where they store employment-related documents like payslips. During your onboarding with the Employer of Record, you will receive access to the platform so you can access all your documents online.
At Lano, we work with a global network of trusted Employer of Record partners through which international organizations can hire talented remote workers in 150+ countries. Once you (i.e. the future employee) accept the job offer, our EOR partner will immediately kick off the enrollment process, which (currently) includes the following steps:
Information validation: You will receive an email from the Employer of Record asking you for the information and documents needed for employment.
Employment contract review: The Employer of Record drafts up an employment contract containing all the necessary specifications and sends it to the company you will work for to get it approved. Once the contract is approved, it will be sent to you so you can review the terms.
Signing the employment contract: After reviewing the contract, you sign it and send it back to the Employer of Record.
Onboarding with the EOR: Once the formalities are dealt with, the Employer of Record will schedule a virtual onboarding meeting with you. During the call, they will show you how to use the platform where you can view your payslips, explain how and when you will get paid, and answer all the questions you may have concerning the administrative aspects of the employment - please note that training and job-related onboarding will be handled directly by the company you work for in a different session.
From there on, all you have to do is to settle into the role and enjoy your new remote position.
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