The Employer of Records solution has several advantages, particularly for multinational and international companies looking to expand into other markets without the added burden of having to set-up a physical presence in the territory. However, there can be certain drawbacks, and this article discusses tried-and-tested methods to prevent these pitfalls of the Employer of Records solution
Get an Employer of Records with Enough Experience
Employer of Records solutions are a fantastic choice for multinational and international companies looking to grow into new markets. Undoubtedly, an Employer of Records service provider will lighten the load and assume employer responsibilities associated with starting a business in a foreign nation. Working with an EOR who is new to the industry of offering Employer of Records services, however, may be a drawback.
These service providers might not always be subpar at what they do, but any new business will always learn as it develops, and mistakes are sometimes the best way to do so. Misclassification of personnel and disorder during the onboarding of new employees are two examples of errors a new business could make. For inexperienced companies, such mistakes may be harmless, but working with international or multinational companies as an EOR, such mistakes may cost a heavy loss in valuable time and possible financial losses. Your business is safer with an EOR with years of experience under their belt and local content experience; such EOR service providers are less likely to make mistakes that might affect your business adversely.
Consider Signing a Tripartite Contract
In using an Employer of Records service, there may be moments of friction between the actual employer and the hired staff. This is possible since the EOR takes on certain employer responsibilities, including the responsibility of on boarding new hires. A hired staff may feel more accountable to the Employer of Records than the actual employer since they were hired by the EOR. This is a downside of EOR, which could lead to the actual employer experiencing the uncomfortable feeling of having limited power over their staff. The best solution in this case is for the three relating parties (Employer of Records, staff, and actual employer) to enter into a tripartite contract. This contract should clearly spell out the duties, rights, and limits of each party. This goes a long way toward freeing the parties to act within their agreed-upon rights and limitations.
Be Safe; Check For Credibility
Businesses expanding into new countries with new laws should conduct the necessary research on the Employer of Records with whom they choose to engage. Any company is bound to highlight its strengths in a bid to attract quality clients. However, a company identified by other institutions as an industry leader proves to be one that can be said to be credible. Thus, Employers should consider getting third-party opinions on a prospective EOR. Additionally, it is prudent to analyze the quality of the EOR services by requesting for a demo of the EOR’s system. You may compare their listed offers with actual work done and then determine if they are a company that delivers on their promises. You may also discover reviews of past performances and check out their website and other social media presences for credibility. Basically, you are safer working with an Employer of Records with a reputation to guard.
Brace Yourself for Possible Changes in Your Company's Culture
The culture of your company will be influenced by the culture of your Employer of Records service provider. This is quite inevitable, as your Employer of Records may be the one to handle the onboarding of your new staff and might even play the role of Human Resource manager for your new staff. This may or may not be a pitfall of the EOR solution. An Employer of Record with a great company culture of its own will impact your company positively. One with an unimpressive company culture might negatively affect your new staff. The solution to this possible problem is to ensure the EOR you choose for your company is aligned with your values and principles, as well as your company culture, as far as possible. A company with a great culture can easily be distinguished from the others. You may want to pay attention to how promptly they respond to you, how well organized and professional their workspace or online presence appears, and other values that align with the culture of your company.
Find a Service Provider Which Does Not Outsource Their Human Resource Management
An Employer of Records service provider whose human resource (HR) management is outsourced to another organization may cause delays in your operations. You need one with all of the necessary expertise to complete the task, and especially one with a human resources team in place and hired by their firm. Human resource professionals play vital roles in the execution of Employer of Records duties by handling administrative HR activities. These duties include ensuring compliance with national and internal laws and hiring new staff for your business. These are duties that you cannot afford to have delayed if you need a job well done.
Find an EOR with Human Capital Knowledge in Your Line of Business
Your Employer of Records should know about the dynamics of your particular industry and what it takes to set up a business like yours. Ideally, they should have experience working with businesses in your industry. That way, they could pull up old connections and get your business up and running in no time. You do not want to employ an EOR who will take extra time trying to research your line of business. Going into a field of business for the first time will likely come with some unforeseen failures, which could have easily been avoided by an EOR already familiar with what to do and what not to do. To avoid this pitfall, it is best to ensure that your chosen EOR has human capital knowledge in your line of business, in addition to knowledge of the ideal type of staffing your business needs.
Check Their Online Platforms for Safety and Compliance with Local Laws
EORs normally use certain platforms to conduct their operations. Consider having a demonstration done on the platforms being used by the EOR you intend to work with. During the demonstration, you should look out for the ease of use of the platform and how the EOR provider’s operations are in compliance with their local laws and global safety standards. This will give you an idea of how well they could help your new business comply with both local content practices and local laws and regulations.
Request for Proof of Payment and Other Relevant Records
When working with an Employer of Record for the first time, it is best to be vigilant in ensuring that all payments to be made on your behalf have been made. It also helps to check the records of transactions done on your behalf. This will help build trust and confidence in the service being delivered. This can be done by requesting original scanned copies of statutory payment receipts, pay slips, statements, and so forth.
Do not fall for the cliché that the higher the price, the better the service
Great services usually come at great costs. However, it is not necessarily true that the most expensive EOR on the market will be the one to offer the best services. Focus on the services your EOR offers, their experience, reputation, professionalism, and other factors that will help them serve you with diligence. After all, transparent and reasonable pricing will be offered by a company with great principles; this is a green flag to look out for.
Find an EOR with global market coverage or one with at least market coverage in the market you need
An EOR with global market coverage solves the future problem of expansion into any market when you are ready for it. This would be the ideal EOR for any expanding business; however, if that proves difficult to find, it is okay to take your expansion goals one at a time. Find an EOR with expertise in the particular market you plan to expand into. This will save much more time and money than an EOR not already familiar with your target market.
Employer of Records offers a solution to supporting a company’s expansion into new markets. Thus, the barriers to expansion for multinational and international companies are essentially gone. Nevertheless, in order to have a successful business expansion, it is crucial to be ready for the drawbacks, understand how to avoid them, and take action.
OML Africa is an Employer of Records service provider working with foreign companies coming into Africa, with over thirteen years of experience and a track record of diligent services delivered to clients in Africa and around the world. OML Africa is a core human resource management consultancy with extensive experience in the labor laws of Africa, taxation, and local practices.
OML Africa uses an EOR platform that offers great benefits to our clients, such as multi-currency payroll solutions for cross-border payroll needs, statutory compliance support for over 100 countries, and treasury management, which enables businesses to save on FX costs and manage various currencies from a central source. All these and more are available on our EOR platform at competitive pricing, and we work with an experienced team of HR, tax, and payroll specialists in the territories where we operate.
References
https://www.deel.com/blog/pros-and-cons-of-employer-of-record-hiring
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