What is an Employer-of-Record?

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Employers of Records allow companies to legally and efficiently interact with foreign workers in any country or city without the need to establish a local entity or to violate local employment laws. An Employer of Record is a third party organization that employs, pays and manages all statutory Payments and taxes. You can also add staff you hire yourself to our Employer of record service.

What does an Employer of Record do?

An Employer of Record can be described as a local entity that acts as an intermediary between an employee and employer relationship. While the EOR is responsible for ensuring compliance with legal and regulatory requirements regarding immigration, employment, and payroll, they are not involved in daily work activities.

The EOR is the registered employer of the worker. However, it does not have any management or supervisory role vis-a-vis the employee. The original employer retains the substantive relationship and makes all decisions regarding compensation, job duties, projects, and termination.

In particular, the employer of record refers to the legal entity that:

  • This registered entity allows you to run a local compliant payroll within the country
  • All labor laws applicable to worker protections and local contracts in the host country are met
  • Informs client about the required notice periods, termination rules, and severance payments
  • Does the host country act as an interface between the government and the employee?

Why use an employer of record?

Employers of Record can be used to help overcome regulatory and financial hurdles in remote locations. Each country, as well as some states and regions, has its own employment, payroll, and work permit requirements. These rules can prove to be a significant obstacle to international business expansion.

Why Hire In A Different Country Like South Africa?

 Your company might want to employ workers in another country for many reasons. In your own country there might be a shortage of skills, high cost of employment or lack of regional know- how.

 A DIY approach to incorporation, registration, and managing a local payroll might be worth it if a company is committed to a country. An EOR is a good alternative for smaller companies or those with limited HR resources.

Employer of Record: Benefits

Employer of Record have many benefits to a company. The EOR is often the most beneficial when doing business abroad, as local employment can be costly, complex, and risky.

  • They employ your staff in South Africa on your company’s behalf
  • They fulfil all the statutory requirements on your behalf
  • The EOR is registered as a South African company – no need for you to do so
  • They draw up employment contracts and run a dedicated EOR payroll system
  • Their local labour legislation knowledge helps you navigate the local HR environment
  • They will assist with terminations, or refer you to specialized labour law practitioners
  • They advise on medical schemes and retirement provision

Skilled South Africans Are Often Appointed By Foreign Companies For:

  • High level skills
  • Tech savvy
  • Affordable salary rates
  • A need for local know-how in Southern African or AMEA markets
  • Capitalizing on the work-from-home movement
  • Corresponding time zones – UTC+2 correlates with Europe and the Middle East
  • Good neutral business English

Immigration Compliance

Foreign governments are increasingly scrutinizing work permits, visas, and other business activities to ensure that immigration policies and rules change. Compliance is the top challenge for multinationals. Immigrant violations can have long-lasting consequences for companies and their employees.

Many companies opt to use an Employer of Record instead of risking non-compliance of immigration laws. This method allows staff on assignment to legally work in the host country. It eliminates issues such as remote payroll, excessive use of business visas, and multiple entry into the country. EOR manages all visa and work permit requirements. This avoids any problems or scrutiny by immigration authorities.

In the case of Work Permits we refer companies to Immigration Specialists

In the Host Country, running a local payroll

Many countries require that a company with workers on assignment run the payroll in accordance with local standards with a registered entity. It is rare to allow’remote pay’ (remitting from the home country’s payroll), especially when it comes to long-term assignments.

The calculation and withholding from pay of all statutory deductions, including taxes and pensions, is a key part of managing a host country payroll. To ensure that each employee is compliant and accurate, the EOR handles all these important details.

EOR is the ideal employment solution. It provides the entity required to manage payroll and has expertise in tax and withholding rules. This allows for quick deployment of employees overseas and avoids any issues with local authorities.

Record Employer History

As global mobility programs have become more flexible and expanded, the use of Employer of Records is changing. Instead of a multi-year assignment abroad, which was traditional and long-lasting, there are now shorter postings that are flexible and can be extended to include multiple countries within a single year.

This trend rendered the DIY approach to incorporating in every market unsustainable and a demand grew for local jobs. To ease some of the regulatory burden, companies began to look into outsourcing payroll and hiring immigration lawyers. However, there was a better solution. A single-source service could be developed that would manage all local employment criteria.

A EOR is the Future of International Employment

When a company looks at the time and cost involved in a DIY approach to international assignments, it becomes clear that using a Employer of Record for international assignments is a better option. Companies can use the EOR to provide legal protection and take responsibility for all elements of hiring workers abroad.

The future of the EOR solution looks certain as more countries change their local immigration and employment regulations to avoid tax revenue loss and prevent abuses. The EOR has become a key strategy to help companies do business abroad. It allows them to employ both local residents and expats.

We provide detailed salary reports:

  1. Remuneration List Report
  2. Variance Report
  3. Pay Register
  4. EMP 201 Detail  Report
  5. Payslips
  6. SAARS annul reports
  7. COIDA annul reports

 What Will An EOR Service Cost?

An EOR will charge a percentage of salaries as service fees. The monthly service fee covers:

  • Employing South African employees on your behalf
  • Drawing up employment contracts
  • Paying salaries, deduct and pay over tax on behalf of workers
  • Monthly payroll and pay slips to workers
  • Monthly and annual statutory responsibilities on your behalf
  • Local expertise, payroll, statutory and labour relations advice

How Do EOR Workers Get Paid?

EOR workers gets paid in local South African Rand. Your company will stand in for cost-to-company and statutory costs.

A once off refundable deposit guarantees continuation of operations in event of unforeseen circumstances.

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