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Employer of Record Systems

Introduction

At Media Recruit, we like to go above and beyond the services of the average Recruitment Agency.  We recently helped one of our AdTech clients review Employer of Record Payroll systems for their remote hires and discovered at least 75 of these systems.  The good news is; this article is your shortcut to discovering the best one, so read on…..

What are Employer of Record Payroll Systems

Not a term that rolls of the tongue easily and often referred to as “simply” Employer of Record systems, it´s not immediately obvious what solution they offer or the problem they solve.

Their origins lie in classic payroll systems, and perhaps we can go as far back as 1949 when ADP was founded in the US.  Obviously, things have evolved a lot since then and most people wouldn´t know a punched card if it, well um, punched them in the face.

The EoR term is much more recent and is often associated with global hiring and employment, and remote teams.  With technology advancements, companies are now easily able to target their consumers and clients across the world, and the way we work has also changed significantly.   What´s less easy, or it was until relatively recently, is for those same companies to hire talent across the world to meet their business needs.  Now, the World Economic Forum projects that the EoR market will become a USD$6.795 billion industry by 2028, up from $4.236 billion in 2021, with an annual growth rate of 6-9%.  So this is big business – let´s look at why.

A company headquartered in one country may need to employee talent around the world, without necessarily wanting to establish a legal entity in every country in which they operate.  Without a legal presence though, how do you go about hiring people in another country?  Immigration, visa requirements and work permits don´t facilitate easy cross-border employment and someone living in Paris for example, will have very different employment rights and demands than someone living in New York, not to mention how you handle a local market payroll operation.  Add to that the need to keep on top of changes in laws and regulations, and the differences for permanent, temporary, freelance and contract workers in each country and it´s quite the headache for companies wanting to expand internationally on a smaller scale! 

Enter stage the EoR systems.  Over the last few years, EoR systems have been a massive help for SMEs scaling up internationally.  The EoR company deals with all the local employment laws, employer legal obligations, contracts, payroll, taxes and most offer add-on services to also manage expenses, annual leave and absences, and benefits such as pension, healthcare, company vehicle, etc.  A heavy load off the shoulders of a scale-up, needing boots on the ground overseas.

In practice, the EoR achieves this through being the legal employer of the employees on behalf of the other company, and normally “leases” them back to the client or original employer. Thus the EoR takes on all the legal, regulatory, and administrative  responsibilities of employment.

Do you Need an Employer of Record System

If you´re considering signing up to an EoR provider, and are unsure if it´s the right solution for you, here are a few key points to factor in your decision-making process:

 

Legal Entity vs Employer of Record?

This is the first question you will be asking yourself.  Whilst in some countries, establishing a new legal entity is unbelievably easy, the same is not true everywhere.  Establishing a legal entity can be a costly, lengthy and bureaucratic process, and in all cases then requires on-going regulatory reporting and tax-filing.  Establishing a legal entity will often be the long term goal for many companies, but an interim, short-medium solution is the EoR offering, where you are up and running within 24-72 hours at near zero setup cost.

 

New Territory Expansion

As mentioned above, a key reason for looking at setting your company up in a new country is expansion into that market.  If you´re looking to hire some local territory talent to grow your business, committing to the full-blown legal entity setup could be taking the sledgehammer to crack a nut approach.   An EoR helps you quickly and cost-effectively, establish a local market solution to on-board overseas hires, with minimal tie-ins.

 

Contractor Conversion

Hiring Contractors is becoming ever more complex in some countries, with local tax authorities classifying Contractors as Employees and significantly changing tax burdens on both the employer and employee.  If your company finds itself in this scenario, the EoR solution can be setup almost immediately to handle the legal requirements of transitioning the Contract to full Employee status, keeping your company on the right side of local jurisdictions.

 

HR Team Capacity

A start-up or scale-up may not even have an in-house HR Team established.  In fact, the EoR solution could also work in your HQ country, much like a Professional Employer Organisation (PEO), as well as overseas and can be a great solution to get things up and running for you, especially for example in the US, where different states have different requirements and you´re hiring remote workers across the country.  Or you have a fantastic HR team in place that serve your HQ country perfectly, but simply do not have the capacity or knowledge for doing the same in other markets.  If you´re looking to hire just a small number of overseas talent initially, it may make more sense to adopt the EoR solution than ramp up your internal HR team, at least in the short term.

Types of Employer of Record Systems

Not all EoR systems are the same, and it´s important to know the difference between what they offer.  Although these companies are typically classified as SaaS companies, in practice they fall into 2 main categories: self-service and full-service, with the latter offering a more expansive offering than just a SaaS platform.  Let´s look at the differences here:

Self-Service

The self-service offerings are where the EoR SaaS platform is provided and essentially you then run everything through it yourself, from on-boarding to off-boarding and all the processes in between.  The platform of course manages the local country compliance requirements, but human support is very light touch.  These EoR solutions are great for companies with an internal headquartered HR team, who have capacity to take on the workload of managing the remote workforce through the platform, and are willing to take on the risk for getting a local market process wrong.  With these types of EoR solutions, you would expect a lower price point, although strangely, this is not always the case.

Full-Service

Similar to the self-service model, the EoR SaaS platform is a fundamental part of the solution, but the key difference lies in the human support provided alongside the platform.  Typically, as well a dedicated, hands-on Account Manager in your country of HQ, you can expect to have local market experts, also managing the on-boarding through to off-boarding for you, as well as the daily processes and payroll runs in an employee lifecycle.

However, there is a major point of differentiation in how the various EoR companies provide their full-service offering.  Some of the EoR companies offer an aggregator model,  working entirely with local market partners, whilst some offer a wholly owned infrastructure model, hiring local market permanent employees or in some cases freelancers.  In practice, most EoR companies are working a hybrid of these set-ups, for example, hiring their own local market team to handle the daily processes and account management and support type activities, but working with local market legal and finance partners to ensure compliance.

The full-service offering is typically the preferred option for many, as it reduces workload and mitigates risk.  But these solutions are not cheap and can add a significant overhead to the per capita hire cost, overtime.

The Full List of 75 Employer of Record Systems

Unsurprisingly, with remote workers and global expansion becoming more common, the rise of EoR systems has exploded, as seen above in the World Economic Forum statistics.

Where there were a few major players not so long ago, recent years have seen an explosion of EoR providers entering the market.  Whilst that´s great for competition, it makes the selection process a whole lot harder.  Let´s look at who is out there in 2024, from the well-known to the new-comers, in alphabetical order:

1. ADP

2. ADT Solution

3. AgileHero

4. Airswift

5. Asanify

6. Atlas

7. AYP Group

8. Bambee

9. Blueback Global

10. Borderless AI

11. Boundless

12. Deel

13. eDev

14. Emerald Technology

15. Employment Hero

16. Engage Anywhere

17. Express Global Employment by Acumen International

18. FoxHire

19. Global Expansion

20. Global PEO Services

21. Globalization Partners (G-P)

22. Gloroots

23. GoGlobal

24. GTS Nordic

25. Gusto

26. Headcount Management

27. Headway Workforce

28. HireArt

29. Horizons

30. Innovative Employee Solutions (IES)

31. INS Global

32. JustWorks

33. Lano

34. Magnit

35. Mercans

36. Mulitplier

37. Native Teams

38. Neeyamo

39. Omnipresent Platform

40. Ontop

41. Outstaffer

42. Oyster

43. PamGro

44. Papaya Global

45. Paychex

46. PayInOne

47. People 2.0

48. Pilot

49. Plane

50. Playroll

51. Procloz

52. Rapid

53. RecruitGo

54. RemoFirst

55. Remote

56. RemotePass

57. Rippling

58. Rivermate

59. Safeguard Global

60. Serviap

61. Shield GEO

62. Skuad

63. Talent500

64. TalentDesk

65. TCWGlobal

66. Teamed

67. TopSource Worldwide

68. Truss

69. Veloctiy Global

70. Via Work

71. Vremote

72. Wisemonk

73. WorkMotion

74. Worksome

75. Worksuite

 

How To Choose? 

We get it; no-one wants to be doing an RFP on that list.  Whilst some of these EoRs focus on certain niches and verticals, such as contractors or tech talent, even so, the list of mainstream players is overwhelming. 

Here are a couple of pointers:

Country Operations

Most of the EoRs are operating in a 100+ countries, but some have a stronger global presence than others.  Check the EoR is operating in your main HQ country and the countries you want to hire talent in.  Following on from that, check currencies and languages offered, as well as the legal, regulatory, and tax compliances etc.

 

Service Offering

Check whether the EoR offers the type of service you need; remember we talked about self-service or full-service models.  Check what their lead time is to on-board you as a client, SLAs for dealing with queries, etc, on-boarding times for new employees, does the platform offer an employee portal, will you have a dedicated Account Manager, etc.  And of course, look at the pricing.  Pricing for the major players is typically around USD$600 per employee per month, but there are some great alternatives at lower price points, and many are offering country/region-based pricing and volume discounts.

 

Stability

Look at how long the EoR company has been established and their annual revenues, P&L, ownership, client list, number of own employees.  Get a guage of whether you will be in safe hands with the provider.

 

Ask Us

Here at Media Recruit, we´ve done the hard work for you.  We can´t hand-on-heart say we´ve looked at all 75 EoR providers in the above list, but we have looked at the big players like Deel, Papaya Global, Remote, RemoFirst, as well as some of the lesser-known and newer solutions.

Our choice pick is                          . Here´s why:

  • Established in 2020, with initial seed funding of $2 million 2022, Native Teams are a joint UK – Macedonian founded EoR solution, with a firm commitment to improving and expanding their solutions. As such, they recently secured a further €6.275 million in a new investment round. They are already operating in over 65 countries through a combination of local employment solutions, account management and customer support. Their solutions also ensure full legal and accounting compliance when hiring across borders.

  • Their SLAs match those of the industry giants, yet their pricing remains highly competitive. Native Teams offers tiered, salary-based pricing and volume discounts. Typically, their full-service EoR solution is comparable to competitors but saves an average of $5,000 per employee per year. Additionally, there are no hidden onboarding or offboarding fees.

  • Their solutions also features a suite of payment tools designed to facilitate smooth global transactions. These include a multi-currency digital wallet for storing and managing assets, an invoicing tool to collect payments without needing a legal entity, and Native Teams Cards, which are accepted worldwide and can be used for both online and in-store purchases.

  • Native Teams also offers travel bookings, work permits, and visa assistance for individuals and global teams. They handle all necessary documentation, navigate international regulations, and offer comprehensive support throughout the entire relocation process.

 

So, now we´ve done the hard work for you, get in touch with Native Teams today, if you´re looking for a full-service EoR system at a seriously affordable price, allowing you to invest more in your people over platform.

 

Click here to book a Native Teams demo:

 

Click here to check out the company: 

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