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So, you’re looking for an Employer of Record (EOR) to help you hire a global team or expand your operations into new markets. Did you know that there are two main types of EOR to choose from?
The first type — like Remofirst — forms relationships with existing in-country partners to handle employment contracts, compliance, payroll, and employee benefits in a specific country. The second opens and owns entities in other countries instead of working with third parties.Â
So which one is best for your business? While we can’t answer that question for you, what we can do is explain why we believe the local partner model is more effective for ensuring compliance, employee experience, and accuracy of invoicing.Â
For starters, all of Remofirst’s local partners have been operating for 15 to 20 years and have a wealth of experience and local expertise. Plus, rather than spending millions of dollars building out local entities, we’ve invested in developing best-in-class service teams and an easy-to-use tech platform so that you and your employees have a consistent experience — regardless of where you’re hiring around the world.
But don’t just take our word for it. Today, we’ll walk you through all the benefits of an EOR that works with local partners so you can make the right decision for your business.Â
The reality of an owned-entity EOR is that it likely won’t be able to offer the extensive global coverage you get with local partners. Depending on the country of operation, chances are you’ll end up working with a third-party service provider anyway.Â
Even if the EOR decides to set up a full-stack legal entity, the process will require time and resources, and you would have to wait for its services to be available. After that, you’d be dealing with a new company and all the teething problems that come with it.Â
And besides, owning an entity in a country is one thing — having local staff and expertise is an entirely different level of capabilities and customer experience. In fact, most EOR's that tout their owned entities have employees in very few locations. A well-known EOR (that shall remain unnamed) that promotes its owned-entity model has local staff in fewer than 20 countries. What local support can you expect in the other 100+ countries?
By contrast, an EOR that works with global partners allows for greater flexibility and scalability. The local partner model provides greater reach, tailored solutions, and adaptable services to meet the needs of businesses and international employees in different countries. It also ensures our clients receive a quality of service, since we only work with partners who have the highest standards.
Every country has its own employment laws, and ensuring compliance in every country where you hire employees is essential — failure to do so can lead to hefty fines and even jail time.Â
Some countries even have local laws and restrictions around EORs. For example, in Germany, companies are only permitted to hire someone on behalf of another company under the AĂśG (“ArbeitnehmerĂĽberlassungsgesetz”), which limits employee contracts to 18 months.Â
This means that if an EOR owns the entity they are using to hire your employees, you would need to re-hire your local employees under a totally different vendor after 18 months. Additionally, there must be a three-month break between contracts, so your employees would be out of work during that period, and your company would be short-staffed.
Whether it’s the AÜG license in Germany or the State of California’s employee misclassification laws, we trust local experts to ensure Remofirst and our clients are kept in compliance. If our local partner operates solely in Germany, or solely in the United States, you can imagine how important it is to them to remain compliant with local laws.
Even though Remofirst relies on the local partners for advice on local regulatory compliance, the EOR retains control over compliance and employee management — for example, Remofirst holds regular check-ins with local partners to ensure we are aligned on customer needs, our service-level agreements, and any legislative or regulatory challenges that may be impacting the local employment landscape.
Relying solely on one owned-entity provider can expose your business to potential risks if something goes wrong. By contrast, partner-dependent providers are more flexible and can leverage alternative options if a particular partner fails to meet expectations or experiences difficulties.
For instance, Remofirst has a preferred partner in each country but maintains relationships with multiple partners as a contingency. Additionally, if a business has a complex or custom need, we’ll work with our team of local experts to find a solution. If they can’t find one, we can reach out to another partner capable of creating one.Â
One of the biggest arguments for owned-entity EORs is that they are less expensive, but that is simply not true. Remofirst is often 30-50% cheaper than competitors who have established their own entities. In fact, establishing entities and putting local infrastructure in place is incredibly expensive and those costs are passed on to clients. Remofirst is able to extend savings to its customers and can invest more in its technology platform and customer success efforts because we haven’t spent millions establishing local entities.
While owned-entity providers may have expertise in a specific jurisdiction where they have established entities, they may lack the same breadth of knowledge and resources in other regions. For instance, the EOR may have a large team in Spain but no team in Turkey — just a legal entity. In this case, compliance expertise and knowledge of the nuances of the local market, regulations, business customs, and cultural practices may be strong in one country but weak in another.
Working with a partner model provides access to local teams and gives employees the option to communicate with them in their own language and access local expertise and support.
You might think that an entity-owned EOR automatically means more streamlined operations with a single point of contact, but this is not always the case. Some owned-entity providers may have a centralized customer support team, while others may not. Ultimately, the best way to ensure that you have a single point of contact for all your needs is to select an EOR that has a clear and well-defined customer support process.
Remofirst ensures that every client has a centralized dashboard and one point of contact for all of their global employment so that working with our network of global partners is streamlined and efficient.Â
Working with local partners enables Remofirst to offer its clients flexible, tailored solutions according to their needs. Their expertise in all aspects of compliance, such as local tax laws, allows them to offer tailored solutions upon request and allows our clients to offer bespoke employment packages that attract the best talent through contracts, benefits, and other perks.Â
Our network of local partners is made up of well-established but small, locally-owned businesses. We choose these local experts because they care deeply about every new client and local employee we support.Â
Think about it — would you rather work with an EOR that spends their days on podcasts and posting rocketship emojis on LinkedIn or one that’s embedded in the local culture of the amazing remote talent you’re looking to hire?
Ultimately, working with a network of local partners gives Remofirst access to the most up-to-date local expertise and allows us to invest in robust services and support, offering a dedicated account management team and an easy-to-use platform to ensure timely responses and quick resolution. Learn more about the benefits of partnering with Remofirst as your EOR provider.
