How To Choose The Best Employer Of Record In 2024

There are many EOR providers on the market – and your choice will be pivotal to the success of your business and ability to scale globally. Here’s your detailed guide on assessing EOR providers in 2024.

Employer of Record

Marcelle van Niekerk

August 28, 2024

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Key Takeaways

As the world gets ever more interconnected, many business owners are choosing to look beyond their own country borders to employ top talent. However, if you are expanding internationally, there are several challenges to overcome. The barriers to entry are high when entering new markets on your own: there are the high set-up and operational costs associated with establishing a legal entity, compliance with ever-changing employment regulations, and setting up local payroll.

To mitigate these costs and compliance challenges, many businesses opt to partner with an EOR service instead. EORs have removed the traditional barriers to international employment, allowing businesses of any size to access the best talent the world has to offer. They handle the complex task of compliantly employing international team members on your behalf.

Since they play such an important role in scaling your team in new jurisdictions, you need to choose an EOR provider you can fully trust. With many Employer Of Record solutions available, choosing the right one can be challenging. Here, we will deep-dive into the key questions to ask when evaluating the best employer of record for your needs.

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What Is An Employer of Record?

An Employer Of Record (EOR) is a third-party service that handles employment responsibilities for your company, like payroll, taxes, benefits, and compliance with local labor laws. The EOR legally employs your global team on paper, while you manage the employee's daily activities.

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Questions To Ask When Evaluating The Best Employer Of Record

1. What Business Model Do They Follow to Employ Remote Workers?

EOR providers typically operate under these business models: using their own wholly-owned local entities, partnerships with local providers, or a combination of these two approaches. A wholly-owned EOR model means the provider sets up its own entities in each country and retains full control over hiring and payroll.

In contrast, some EORs partner with local vendors and outsource these tasks. While this can be cheaper for the EOR, it may lead to less reliable service for you. Wholly-owned entities has the following advantages:

It gives you more control and consistency, as the EOR has direct oversight of all operations.
This model often results in better compliance and reduced risks, since your data is shared with fewer third parties.
It’s likely that an EOR provider with many owned entities will have better support services, since they don’t have to exclusively liaise with other parties before responding to queries you might have.

Selecting an EOR partner with a robust network of wholly owned entities can give you advantages in all these areas.

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2. How Does The EOR's Pricing Work?

It's important to find an EOR with transparent pricing. Some providers may have hidden fees, like onboarding and offboarding charges, which can increase costs unexpectedly. Look for an EOR that clearly communicates all potential expenses upfront, is straightforward in their invoicing, cost effective and offers a clear breakdown of what’s included in their pricing.

Lastly, they should offer flexibility in their pricing models that suits the needs of your business: this includes offering monthly charges for full-time employees over requiring annual commitments for lower rates.

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3. What Level Of Support Can You Expect From The EOR?

The level of support an EOR provides can make or break your global employment strategy. Quick response times and hands-on support are essential, especially when dealing with complex issues like payroll queries or legal compliance in jurisdictions you might be unfamiliar with.

Before bringing an EOR provider on board, check their public reviews on platforms like G2 and Trustpilot. Additionally, ensure that the EOR offers dedicated support for your employees to ensure employee satisfaction and retention. Be sure to ask if dedicated support comes free of charge, as some EOR providers charge extra for this service.

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4. How Extensive Is The EOR Country Coverage?

Your EOR provider should have a strong presence in the countries where you wish to expand in the short-term and in the long run. In cases where they do not operate in your desired country, your growth might be hampered if you're locked into a contract you’re unhappy with. Some providers also charge fixed offboarding fees – it’s a good idea to ask whether this is the case before you commit to a provider.

Identify a company with comprehensive country coverage. For example, Playroll operates in over 180+ regions and offers the extensive coverage required to support your global ambitions.

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5. Do They Support Hiring Both Full-Time Employees and Contractors?

An ideal EOR should help you hire both full-time employees and contractors legally. This flexibility is essential as your workforce needs may evolve over time. It’s much easier to use one service provider that can cater for all potential needs, than having to choose different providers to hire full-time employees and contractors.

Additionally, the EOR provider should be able to assist with classifying your workers correctly to avoid the penalties associated with misclassifying employees as contractors, and convert contractors to full-time employees if needed.

Check that your chosen EOR provider will support hiring different types of workers, in all the regions you’re interested in.

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6. Do They Offer a Robust Portfolio of Local and Global Benefits?

Competitive employee benefits are a key component of attracting and retaining top talent. Your EOR should offer a comprehensive benefits package that includes both local benefits and global options.

Enquire about additional services like benefits management and visa support. The more robust and flexible the benefits, the better equipped you’ll be to support your international team no matter any curveballs that might come your way.

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7. How Will Payroll Work for Your Remote Employees?

Timely and accurate payroll is a non-negotiable part of your day-to-day operations when managing a global workforce. Having delayed and faulty payroll can result in great reputational harm to your business and potential legal fallout. Ensure the EOR has a proven track record of paying employees on time and offers a user-friendly payroll system.

Before committing, ask for a demonstration of how their payroll system works and whether it provides a clear view of all transactions in one place. Ask how their invoicing system works, as some providers can make this needlessly complex.

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8. How Do They Keep Your Data Safe?

Your data should always be safe, and data security is an important consideration while choosing an EOR. Ensure this by checking the certifications the EOR holds, such as GDPR and SOC2, and inquire about the measures they take to protect your Intellectual Property. An EOR provider should guarantee that all contracts are compliantly set up to ensure your IP will belong to you.

Be wary of EORs that rely heavily on third-party partners since this can increase the risk of data security issues.

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9. What Is Their Approach to Mitigating Compliance Risks?

Compliance with local labor laws is one of the main reasons to partner with an EOR. The right EOR should have a team of experts on hand to help you navigate challenges such as employee misclassification risk, and meeting all compliance requirements in new markets. Again, be sure to check if the EOR provider has a track record of quick response times, as you might need fast support when it comes to questions of compliance.

Ask about their legal expertise in the specific countries you’re interested in and how they help you stay compliant with local regulations.

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10. How Flexible Are They When It Comes to Employment Contracts?

Employment contracts can vary across different regions and your EOR should be flexible to your specific needs and can create customized agreements if needed. Ask about their process for amending contracts and how long it typically takes.

Flexibility in this area ensures your contracts are aligned with both local laws and your business objectives.

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11. How Will the EOR Help with Employment Terminations?

Employee terminations can be difficult and complicated, making it a matter that should be handled carefully. Ensure the EOR has a clear and compliant process for managing terminations, including support for both the employer and the employee during the offboarding process. Understand this process thoroughly before entering into a partnership to prevent legal issues in the future.

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12. Do They Support the Transfer Between EOR Entities and Client-Owned Entities?

If you're considering moving an employee from an EOR to one of your own entities, many EOR providers require a ‘resign and rehire’ process. During this process, the employee resigns from the EOR and is rehired by your entity. This approach can complicate the businesses’ relationship with the employee.

Clarify with the EOR if they offer a flexible transfer process.

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Your Checklist Of Questions For EOR Services

Questions To Ask When Assessing EOR Services
Feature	Questions To Ask
Business Model	Does the EOR use wholly-owned entities, partner with local vendors or use a combination of these approaches?
Pricing	Are there any hidden fees? Is the pricing transparent and flexible? Does the provider offer monthly charges or require annual commitments?
Support	What level of dedicated support is provided for employers and employees? Do they offer multi-channel support? Do they have a track record of quick response times?
Country Coverage	How many countries does the EOR cover? Do they charge fixed offboarding fees?
Hiring Full-Time Employees and Contractors	Does the EOR support both full-time employees and contractors, in all the regions you’re interested in? Can they help convert contractors to full-time employees?
Benefits Portfolio	What local and global benefits are offered? Does the EOR manage benefits and provide visa support services?
Payroll	How reliable is the payroll system? Does it provide transparency and accuracy in payments? How will invoicing work? Can you see all transactions in one place?
Data Security	What certifications does the EOR hold (e.g., GDPR, SOC2)?
Compliance Risk	How does the EOR manage compliance with local labor laws? Will they help you assess misclassification risk?
Employment Contract Flexibility	Is the EOR flexible in creating customized employment contracts? How quickly can they amend contracts?
Employment Terminations	What is the process for managing employee terminations? Is it compliant and supportive of both employer and employee?
Transfer Between EOR and Client-Owned Entities	Does the EOR offer a flexible transfer process or require a 'resign and rehire' procedure? How might this affect employee relationships?

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Grow Your Global Team Confidently With Playroll

Choosing the right EOR partner is fundamental for your business’s global expansion. Playroll stands out by meeting the criteria mentioned above, offering extensive country coverage at 180+ regions with a robust network of wholly owned entities.

Enjoy transparent, best-in-class pricing, dedicated support for employees and employees, and a flexible approach to employment contracts – with a team of HR, finance and legal experts on hand every step of the way.

Compare EOR providers and book a demo with Playroll today to explore how we can support your international growth.