How to Tell an Employer of Record From an HR and Staffing Agency

Companies known as “employers of record” (EOR) started garnering attention a few years ago when corporations started to outsource human resource (HR)  work to them that was related to freelancers and project-based hires. According to CPA Practice Advisor, these EOR were given tasks to form and renew contracts with these part-time members of the workforce, including adding benefits usually assigned to full-time employees like medical treatment and bonuses.

On the global level, however, EOR drew in multinationals and other companies that were setting up shop in a foreign country or hiring talent from said country to base in another. In this kind of arrangement, the EOR acts as the HR middleman between the foreign country and the multinational. It handles all the foreign employee’s onboarding requirements such as immigration, payroll, and employment. However, it does not handle the day-to-day management of said employee who is still supervised by, and reports to, his designated manager in the multi-national.

Shield Geo articulates further on how EOR assumes the regulatory and legal burdens related to the assignee while leaving him free to work within the cultural zeitgeist and corporate structure of his new employer:

  • Acts as the intermediary between the government of the said country and the client company
  • Completes all required visas, work permits, and documentations without delay
  • Establishes itself as the organization that the government in the country should deal with, in terms of employment matters
  • Ensures all payroll demands are in compliance with the country’s laws
  • Advises the client of all legal laws and repercussions when it comes to hiring, assessments, and termination

EOR should not be confused with staffing agencies, though. As Innovative Employee Solutions puts it, staffing agencies’ main function is to find talent who can fill in short-term positions such as temps, per-project hires, or contractual agents. They are not involved with nor are specialized in handling the more complex issues such as compensation, taxation, immigration, and benefits.

However, global mobility specialists might consider hiring an EOR when it comes to dealing with the taxes, visas, and other onboarding-related paperwork after they had selected a new assignee.

EOR comes in handy in providing consultation to companies for new hires being transferred to work destinations like New York or Northern California. Both global mobility specialists and EOR can collaborate and work hand-in-hand in dealing with pressing issues like the recent suspension of the expedited processing of the U.S. H-1B visa.

However, while EOR can prove to be useful partners in these areas, global mobility specialists remain the close associates that their assignees will turn to when it comes to matters closer to their hearts, such as the welfare of their families and the relocation of their pets.

It is a distinction that global mobility specialists, who deal with EOR, must always keep in mind.