Global teams using an employer of record (EOR) often reach a tipping point, where the number of EOR employees they have in a specific country—and their growing management fees—makes the service economically impractical. Eventually, the cost of opening and running your own legal entities in your target countries is more cost-effective.
Shifting from employer of record services to a global payroll (GP) model can bring about significant advantages for an enterprise company, as your workers become direct employees and you gain more ownership of your benefits, payroll, and HR processes.
Deel’s platform and support team provides the tools, frameworks, and guidance you need to transition from EOR to GP, without adding time-consuming tasks to your team’s workload. In this article, we provide a closer look at how easy the process can be.
What is global payroll?
Global payroll is a managed payroll solution that involves overseeing and distributing employee compensation on a multinational scale. As a global payroll provider, we run your organization’s payroll but we are not your international employees’ legal employer of record.
Our global payroll services are handled by 350+ in-house payroll managers dispersed across 100 countries. They handle:
- Compliantly onboarding and offboarding employees
- Employee benefits and deductions
- Tax filing with local tax authorities and governments
- Time off, expenses, and bonuses
- Localized employment contracts and documents
- Payslip creation and delivery
- Off-cycle payments
- Salary and tax payments (where applicable)
- Generate and analyze global payroll reports
Learn more about Deel’s Global Payroll.
Setting up a legal entity
To run global payroll, you need to register a legal entity (also known as a foreign subsidiary) in your target country and hire employees directly under that entity. In our Guide to Setting Up a Local Entity, we walk you through the three phases of the process: Research and preparation, registration, and building an international team. Here’s a quick overview of the steps:
Once you’ve registered your entity, it’s easy to onboard it to Deel’s Global Payroll platform:
1. Add your entity
Under Organization Settings on the Deel dashboard, click Entities and select Add Entity.
2. Input entity details
Add the required entity details and complete the onboarding tasks. Your entity will then be visible on the Entities page. You can continue by adding your team members, uploading necessary business documents, and submitting your first payroll report.
See also: How To Complete Entity Onboarding And Activate Global Payroll
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Transitioning with Deel: The client experience
Transitioning from one HR model to another is simplified with careful planning, expert guidance, and a robust infrastructure. At Deel, we make switching from the EOR model to Global Payroll effortless for our clients by providing end-to-end services, including:
- Creating employment contracts in compliance with local employment laws
- Migrating employees’ information from their EOR accounts to Direct Employee - Payroll accounts
- Transferring all compliance documents that are allowed to be transferred between entities
- Automatically sending employee onboarding emails
Transitioning with Deel: The employee experience
Shifting from EOR to running payroll for local entities can raise questions among your workforce, including concerns about switching to a new system. With Deel, your workforce stays within a platform they’re already familiar with, making the experience stress-free.
Deel ensures that historical documents, payslips, and tax records from the EOR era remain accessible to employees. They won’t have to re-upload all of their compliance documents, either, though there could be a few that need to be re-submitted upon change of employer.
Here’s a closer look at the process:
1. Deel sends a welcome email with an activation link
Once your entities are set up on Deel’s Global Payroll system, your current EOR employees will automatically receive an email to complete onboarding for their direct employee contracts. We send multiple email reminders to the employees before the onboarding due date to ensure their profiles are completed in time to run payroll.
2. Review account details
We will migrate as much data and onboarding documentation as possible, however, there may be some country-specific documentation that cannot be migrated between accounts. While employees won’t need to re-enter personal details or bank account information, we recommend they check their account details to confirm accuracy.
3. View historical EOR information
To view payslips and tax documents from their time as an EOR employee, users can toggle between their EOR profile and Direct Employee - Payroll profile.
Why make the switch from EOR to owned entities?
Switching from an EOR to establishing legal subsidiaries and running global payroll is a strategic move that enterprise companies might make to gain more control, flexibility, and efficiency in their international operations. Here’s why this transition could be appealing:
Enhanced control
Creating a legal subsidiary in a new country allows you to have full ownership and control over global entities. This enables greater decision-making authority, autonomy in hiring practices, and the ability to align subsidiary operations with the company’s overall strategy.
Tailored global employment practices
With direct subsidiaries, your company can implement HR policies and practices that are aligned with your corporate culture and values. By taking this step, you can ensure consistency in workforce management across all locations, fostering a cohesive and unified work environment.
Customized payroll management
Running direct global payroll offers the flexibility to tailor compensation and benefits packages to meet local laws, market demands, and employee preferences. This customization can enhance employee satisfaction and retention, as well as attract new employees in each region.
See also: 5 Payroll Optimization Tips for Global Enterprises
Strategic expansion
Having a physical presence in different countries can facilitate stronger relationships with local clients, partners, and local stakeholders. It demonstrates commitment to the new market and can lead to improved business opportunities for your enterprise.
Stay compliant and pay your entire global workforce right from your Deel platform.
Compliance and risk management
By directly managing your legal entities, your team gains a better understanding of local labor laws, tax regulations, and compliance requirements, reducing your risk of non-compliance and legal issues like permanent establishment.
Free resource: Global Payroll Compliance Checklist
Long-term scalability
Legal subsidiaries offer a scalable foundation for expansion. As your company grows, it can establish new subsidiaries in various locations with relative ease, ensuring a consistent approach to HR and payroll while adapting to local nuances.
Cost efficiency
While EOR services provide convenience, they also come with management fees that increase as your team and business needs grow. Establishing subsidiaries can lead to potential cost savings in the long run, as your team can negotiate contracts and vendor relationships without intermediary fees.
See also: How to Control Payroll Costs as an International Enterprise
Technology integrations
Running direct global payroll allows for centralized technology solutions and integrations that streamline payroll processing and reporting across subsidiaries. A centralized system like Deel enhances your data protection and accuracy, and provides better insights into workforce analytics, as you get a holistic view of global workforce data.
Establishing subsidiaries involves substantial legal, financial, and administrative tasks. Despite compliance challenges, varying labor regulations, and multiple tax jurisdictions, a smooth transition can be achieved through deliberate planning, professional guidance, and strong infrastructure.
Start the transition to Deel’s Global Payroll today
Transitioning from EOR to global payroll is often a necessary step in global expansion. With Deel, you get a scalable global HR solution that grows with your business—whether you need an employer of record, international payroll, or to hire independent contractors.
The best part? You won’t need to switch global HR providers. Everything stays in one centralized platform, making the process effortless for your HR team and remote employees.
It’s a hassle-free experience, and our onboarding team can guide you through the process. Learn more by booking a 30-minute demo with our experts. During the session, you can explore Deel's process and pricing, and have all your questions addressed in a dedicated Q&A session.
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