eor hiring pros and cons

Hiring with Employer of Record: Benefits and Downsides

An employer of record can facilitate global expansion by letting you hire quickly and compliantly around the world. Dive into more details about the pros and cons of using EOR services.

Stefana Zaric
Written by Stefana Zaric
September 17, 2021
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Key takeaways

  1. An employer of record lets your business hire different types of workers worldwide, quickly and compliantly.
  2. Being a cost-effective international employment solution, EOR services can help you minimize expansion risks, retain global talent, and streamline HR and payroll for all your locations.
  3. Potential downsides of hiring through an EOR include data protection concerns and challenges in maintaining company culture across countries.

What is an employer of record?

An employer of record (EOR) is a company that acts as the legal employer for its clients' international employees. The EOR essentially assumes the role of a middleman and has complete legal responsibility regarding employment, such as contracts, salaries, benefits, and taxes. Its main task is to ensure that the clients can hire from different countries in full compliance with local labor and tax laws.

Why is the role of an employer of records so important in today's global world of work? Well, when you are hiring people from outside the country your business operates in, you would need to open a subsidiary in each country where you identify talent you'd like to hire.

For example, if your company is based in the US and you would like to hire someone in Australia, you must register your business there to hire this person.

However, setting up a company overseas entails a lot of complex, time-consuming, and expensive processes you must follow, from paying registration fees, account fees, documentation setup, licenses and permits, to hiring local legal counsels to help you set up policies, employment contracts, and other processes correctly.

Employer of record is an alternative to hiring employees globally without needing a subsidiary or triggering a permanent establishment.

What exactly does an employer of record do for you?

Employers of record typically offer the following services:

  • Take care of all administrative tasks regarding employment locally
  • Take care of onboarding
  • Set up the contract in accordance with the local employment laws
  • Manage the payroll and payroll taxes
  • Supply local benefits administration such as health insurance 
  • Handle most of the recruitment expenses, including employment arrangement
  • Manage timesheets for a number of employees
  • Supply all work permits and visas (if necessary)
  • Terminate contracts and dismisses employees

The benefits of hiring through an employer of record

Employer of record services help businesses overcome distance and go beyond national borders when recruiting new employees. This form of global employment has many advantages over in-house solutions. 


1. Easily expand your business to global markets

EOR services allow you to tap into other markets in different countries. Being able to instantly hire employees all over the world without a subsidiary registration simplifies your business’s expansion, letting you hire in days, not weeks or months. This makes the employer of record a great choice for small companies that are looking to cover various markets. It also works well with larger companies that want to find an experienced workforce that is already used to working on the local ground.

For most small business owners, it makes sense to avoid investing in a full-time HR division before your business gets established. Employer of records give you the use of their HR professionals at low costs, helping you resolve documentation and legal needs. EORs become extremely cost-effective ways of recruiting new full-time employees in other countries.

💡 Learn more about using EOR services to unlock and test a new market quickly and risk-free.

How SiteMinder confidently expanded in global markets while staying compliant with Deel

SiteMinder has become the world's leading open hotel commerce platform, designed for hotels and accommodation providers to sell, market, manage, and grow their businesses. Headquartered in Sydney, Australia, SiteMinder is a global company with offices in Bangkok, Barcelona, Berlin, Dallas, Galway, London, and Manila. 

With so many employees working around the world and new offices in the works, ensuring compliance with local employment and tax laws was a constant challenge for SiteMinder.

This is where Deel stepped in.

"Choosing Deel was an easy decision; the platform simplifies SiteMinder's global compliance and provides the scalability needed to be globally consistent with its HR operations around the world," said Bec Donnelly, Vice President of People at SiteMinder. “Transitioning to Deel has saved us approx 2-3 days per month in administration time and costs."

Read the full case study


2. Streamlined HR and payroll processes

Hiring an international employee through an EOR means you don't have to worry about entering their data into your system, running payroll, or administering employee benefits.

Employers of record manage all things HR and payroll for your foreign workers: onboard them, set them up with the correct employee benefits, manage (order and send) their equipment, pay their salary, withhold the appropriate taxes from their paychecks, distribute payslips, and more. This can save countless hours required for processing and submitting taxes in each specific country your business operates in. Not to mention any fines and penalties caused by missing or misfiling a tax report.

Streamlined and automated HR processes mean you can be more efficient and focus on strategic tasks instead of admin, always get access to accurate, real-time data about your global team, and rest assured you're managing your workers compliantly no matter where they reside.


3. No co-employment arrangement

Even though co-employment isn’t necessarily bad, most business owners tend to avoid it as it creates unnecessary legal complications.

Unlike Professional Employer Organizations that offer to be co-employers with your business, an employer of records keeps things simple. They are the full legal employer (on your behalf) and, as we mentioned, they take care of all the legal compliance requirements.

💡 Read more: 5 Employer of Record Use Cases for Enterprise Companies


4. A consolidated employee experience

With localized benefits, in-house expertise, and easy-to-use, self-service platforms, employers of record can help you create an inclusive, consolidated employee experience for all your workers, regardless of their type of contract or location.

Employees in different countries can get frustrated with a fragmented workplace experience because inconsistencies in processes negatively affect their productivity, with frustration harming employee engagement and morale. A fragmented employee experience also leads to communication gaps and a lack of visibility, costing your company money and other valuable resources.

When you hire through an EOR, you gain an ally that can help you bridge this gap and create a unified experience for all.

For example, Deel goes beyond providing a self-service platform and localized benefits. We have dedicated, in-house employee experience teams that respond to employee queries and help them solve any issues that may come up, in employees' own languages and corresponding time zones.

In a world where many companies overlook the human element, our HR Experience team stands out. We bring a personalized, empathetic approach to every interaction, ensuring that our employees' concerns are not just heard, but genuinely addressed.

Mohamed Tantawy, Global Lead for HR Experience, Deel

5. Broader talent pool

When you hire through an EOR, you're not limited to local talent. You don't have to settle for workers who are available in a specific physical location, but hire the truly best talent out there, one that has the skills you need, shares your values, and can contribute to your company's mission.

Without an EOR, your options would be limited: you could hire independent contractors, whose scope of work would be limited and they'd work on their own schedule. Another way to hire a full-time employee would be to sponsor their visa and relocate them to where your headquarters are, which could be expensive and time-consuming.

An EOR allows you to act fast and never again risk a great candidate accepting another offer because you're taking too long to figure out how to hire them.

Cons of hiring through the employer of record

While using EOR services can benefit your business greatly, it may not be the ideal solution in every situation and for every company. Here are some downsides when hiring through an employer of record.

1. It may feel like you have less control

Hiring another organization to take care of the hiring process can make you feel like you have less influence over the workforce management, even though it's you who calls the shots.

It's critical to understand that hiring with an EOR is more of a partnership. For instance, Deel has dedicated Customer Success Managers for every customer, no matter how small. Also, more complex onboardings are completed with the help of Client Onboarding Managers who are there to answer every question, provide clarification on processes, and set you up for success.

2. It may affect your company culture

Having someone else manage the legal side of global hiring may affect the way you would like to develop your company.

Even though the EOR is the legal employer, their behavior towards employees will still reflect on you in a way. Additionally, using EOR can affect your company culture in general, adding a little bit of friction into your daily workflow. It's critical to inform yourself of how your potential EOR partner approaches employee experience before you make a final decision.

3. It may limit your operations in some countries

Depending on local labor laws, you may face some employment constraints in some countries. For example, in many locations, there's a time limit during which you can hire a person as a contractor. After that specific time period passes, you have to hire them as an employee to continue working with them.

Also, your hiring options may depend on the coverage an EOR provider offers. For example, Deel covers over 100 countries (and counting) with its own entities and allows you to hire independent contractors in over 150 countries.

Hire internationally with Deel

With Deel’s vast in-house expertise, self-serve and easy-to-use platform, 24/7 in-app support, flat-rate pricing without hidden costs, and incredible flexibility to cater to your business needs, we can help you hire talent compliantly and streamline HR and payroll regardless of location.

Learn why 20,000+ businesses trust us to support their global expansion; book a demo to discover how Deel works.

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