With the rise of remote work we've seen an increase in companies utilizing Employer of Record (EOR) services. This is becoming more important for mobility professionals so we wanted to get the inside track from Steve Hoffman with Deel. Read more below for an overview of what mobility professionals should know about EOR.
What is EOR?
An Employer of Record (EOR) can employ workers on another organization's behalf where they may not have a legal entity to employ workers in that particular country.
EOR is a total employment solution that outsources the HR function (payroll, benefits, etc.) and is generally designed for companies with a smaller presence in a particular country - one where it would be very expensive to hire support staff to manage the HR function.
Why would companies use EOR? How can mobility teams use EOR?
Most common use case is to employ remote workers in other countries where the employer may not have an employing entity. This can dramatically expand access to talent globally for pretty much any company.
But there are many other use cases:
- Expatriates going on assignment who need an entity not just to employ them but also to sponsor a work visa.
- Testing out new markets and speed to new markets - Before establishing an entity, companies looking to expand globally can utilize EOR as a way into new markets quickly without the initial need to set up a new entity (provided there isn't any permanent establishment risk). Setting up a new entity can be costly and time consuming, additionally if it doesn't work out you'll have to close that entity which can present many other challenges.
- Managing small numbers of employees in other countries - It can be challenging and expensive to manage offices in other countries with smaller headcounts.
- Private Equity Carveouts or Mergers/Acquisitions with international exposure - EORs can be strategically utilized to shorten TSAs (transitional services agreements) where EORs can bridge the gap of employment for when one entity is dissolved and the other is getting set up.
- Localizing expatriates: When an expat decides to make their assignment permanent and there isn’t an employing entity there – EOR’s can provide that legal employment (assuming there is no permanent establishment risk)
- Voluntary relocations: This can happen for any number of reasons. An employee may want to return to their home country to take care of a sick or aging parent while working remotely or someone who decides that they want to embrace that "work anywhere" lifestyle. If there is no employing entity, an EOR can potentially be a solution.
- Delayed assignments: Some relocations take time for a variety of reasons (immigration, housing needs, pandemic, etc.). The candidate may want to work remotely until the move happens. If they are working in a country where their employer does not have an entity, they can be employed on an EOR until the relocation happens.
- Stealth Expats - In cases where employers learn that an employee is working remotely in a country where they do not have an entity, shifting their employment to an EOR can potentially get them compliant with local labor laws and paying the appropriate local taxes.
- Parking: This is a way organizations can use EOR as a work around to some difficult immigration issues. For example: A US based company may want to hire a bunch of IT workers for an extended period of time and want them in the U.S. It may be challenging to get them to the US in a timely fashion or even at all. The company could choose to relocate these IT workers to a Canadian EOR where they would be in the same time zone and travel much easier between US/Canada as opposed to India/US.
Why should mobility professionals learn about EOR?
I see more and more often job postings with mobility managers also being asked to manage the remote work function. It's even showing up in their titles. I believe this is happening because most mobility managers already have the skills needed to manage these employees.
Also, for reasons stated above - there are a lot of ways EOR can help mobility (work visa sponsorship, parking, stealth expats, delayed assignments and more).
Steve, you used to work in the mobility world, now you're in EOR…how has that transition been? What do you see for mobility looking from the outside? What lessons can Mobility teams learn from your transition?
Speaking for myself, I believe it was the right transition at the right time. This business is exploding and I find that much of my experience and knowledge in global mobility/benefits is very helpful in the remote work space.
I think it's more important than ever for mobility professionals to embrace remote work, learn more about it and how to get more involved. It's a valuable skill to have that uniquely supplements global mobility and inevitably makes you more valuable & marketable as an employee or consultant.
Blog Authored by Jordan Blue and Steve Hoffman
Jordan Blue
Director, Product Management & Innovation - AIRINC
Jordan joined AIRINC as the Director of the West Coast in the summer of 2017. Prior to joining AIRINC he worked for Deloitte, Mercer, and CareerBuilder. He and his team support client engagement from Denver to the Pacific by advising on data use, policy questions, assignment strategy, and more. Jordan works with companies of all types but lives in San Francisco and primarily focuses on the Technology industry. He specializes in helping companies develop and administer host-based assignments, short-term assignments, and permanent moves. He also leads our Engineering & Construction industry benchmark group. Jordan earned his Bachelor’s degree in Organizational Leadership from Miami University in 2003 and his MBA with concentrations in Applied Economics and Change Management from DePaul University in 2010.
Stephen J Hoffman
Strategic Partnerships - Deel
Steve Hoffman is a Strategic Partnership Lead at Deel, where he fosters mutually-beneficial relationships with organizations in the global workforce management space that can utilize Deel's global hiring and payroll solutions. He has over 25 years of professional work experience, most of it insurance as well as international pension plans, global mobility, expatriate benefits, mobility tax and now employer of record/global payroll. Steve is a serial networker and is widely known for organizing and hosting events for the global HR industry. He is a proud father of two young boys, David and Brendan, and lives in the South Shore of Massachusetts. He enjoys spending time with his sons, music, golfing, playing tennis, swimming, and craft beer.
