Global Payroll and EOR: How Do They Relate?


Remote work is here to stay! Currently, most professional positions globally are remote. And the opportunities for remote work will only continue to increase in the future. As remote work increases, local labour and tax laws and accurate reporting are among many aspects that influence global payroll for workers.

Companies focusing on remote work, hire employees from different countries globally. And since they don’t have local legal entities in those foreign countries, they look for a way that’ll enable them to hire global talent seamlessly and compliantly and process payments correctly and timely. That is how they find themselves partnering with some of the leading international payroll employer of record service providers.

Let’s discover more about the relationship between an employer of record and global payroll.

What is an Employer of Record?

An employer of record, usually abbreviated as EOR, is a third-party organisation lawfully responsible for recruiting, onboarding and processing payrolls for international employees.

The workers complete all tasks their employers assign to them, while the employer of record handles the legal and administrative responsibilities linked to employing them, including the following:

  • Tax withholding and payroll processing
  • Employee benefits
  • Workers’ compensation coverage
  • Compliance with labour and tax laws and regulations
  • Unemployment insurance

How Does an Employer of Record Work?

If you’re new to the world of EORs, you must be wondering how it works. From the moment your company partners with a global employer of record, a series of processes are triggered to ensure you have a smooth journey to compliant employment.

The key action points in the entire onboarding process and beyond that you activate once you start working with a top-rated EOR service provider include the following:

  • Pre-onboarding
  • Onboarding process
  • Introductions to your new EOR contacts
  • Local employment contracts raised
  • Your business is registered on the local payroll
  • Your business receives a confirmed start-date

When you use an EOR service provider, a three-sided contract needs to be signed by the employer of record, your business and the employees. They include the following:

  • Your business and the workers maintain a close and direct relationship – the company assigns tasks and manages performance and anything associated with the work.
  • The EOR is the lawful employer of the employees in question – handles the legal and administrative responsibilities, including compliance, benefits, taxes, processing payrolls, etc.
  • The employees are responsible for executing their duties and obligations described in the job description.

The Benefits of the Global Payroll and Employer of Record Relationship

When you work with a global payroll employer of record service provider, you’ll enjoy numerous benefits, which include but not limited to the following:

Stay Compliant on a Worldwide Scale

It’s challenging to get your mind around local tax and labour laws. And it only gets increasingly challenging when you start tapping into new markets, hiring workers and processing their payrolls. With a competent employer of record service provider, your business can enrol employees in dozens of jurisdictions with minimal effort.

Your global payroll EOR partner will ensure you comply with legal obligations and process payrolls as required while at the same time updating you on any payroll, tax and labour rules and regulations changes.

Reduced Payroll-Associated Expenses

If you work closely with a global payroll EOR company, you can be sure to save a significant amount of money. With a global payroll employer of record company, you’ll not need to recruit in-house personnel to handle the following for you:

  • Endless paperwork
  • Benefits administration
  • Salary and tax computations
  • Payment processing
  • Legal counsel

An EOR service provider will manage all these tasks as it’s in charge of all payroll obligations. As a result, your HR team can focus on creating a positive atmosphere for your international workforce.

Reduce Payroll Mistakes and Enhance Employee Satisfaction

No employee can be patient with a payroll mistake. Every worker across the world expects to receive timely and correct payment. With a global payroll employer of record service provider, your company can be able to minimise payroll mistakes and offer the experience your workers deserve.

Robust Data Security

Any disparities associated with HR, finance and payroll are instantly resolved when a trusted third-party company manages end-to-end procedures. An outsourced global payroll EOR solution might be beneficial if your company strives to standardise operations across different countries or boost internal controls.

When you’re after a global payroll EOR service provider, be sure to choose an industry leader with a proven track record. You’ll enjoy all of the benefits discussed in this article.

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