When a company wants to expand beyond its borders, it faces the challenge of managing employees in different countries. This is where the concept of the Employer of Record (EoR), also known as the legal or local employer, comes in. The EoR has become an essential figure for companies that decide to grow in countries in which they have no headquarters.
Table of contents:
- What is an Employer of Record (EoR)?
What can an Employer of Record do for your business?
The benefits of an Employer of Record for your business
When might you need an Employer of Record?
Why choose Advantia Assessors as your EoR in Andorra?
What is an Employer of Record (EoR)?
The Employer of Record (EoR) is a local employer that acts as an intermediary to facilitate the employment and fiscal formalities of another company that is not based in the country where it wishes to operate. The EoR undertakes the formalities on behalf of another company. This means that it attends to the legal formalities relating to the employment of all that company’s employees in that country, for example, recruitment, payment of salaries and bonuses, and social security, always in compliance with the regulations of the host country.
The employee remains accountable to the company that originally employed him or her. That company is responsible for the tasks, functions or projects that it assigns to the employee, as well as for the salary that he or she receives. As a result, the original employer is not obliged to have a head office or to set up a new company in the host country.
What can an Employer of Record do for your business?
The company that you choose as your EoR has to be legally established in the host country. It needs to have knowledge of legal, employment, fiscal and immigration aspects, as well as the ability to implement such expertise.
Steps taken by the Employer of Record:
• Recruitment and payroll management of employees in the host country.
• Management of employment, fiscal and social security obligations.
• Invoicing the company for the costs of the employee and for the EoR’s own commission.
The benefits of an Employer of Record for your business
Having the expertise of a local company at your service is the best investment you can make when doing business in another country.
• Easier expansion
Through an EoR, companies can recruit talent in new markets without having to set up their own company in each country. This streamlines the process of global expansion.
• Guaranteed legal compliance
The legal employer must be aware of, and ensure compliance with, local employment laws. This minimises the legal risk for the company when recruiting outside its usual geographical area.
• Efficient payroll and benefits management
Payment of salaries and benefits can be complex, especially if you are unfamiliar with the laws of the host country and have to involve banks in different countries. Payments can be delayed, causing inconvenience for both parties. With an EoR, this is quickly resolved as it is present in the same location as the employee.
• Flexibility in recruitment
Companies are able to employ employees more flexibly as they can adapt more quickly to the laws of the host country.
• Cost reduction
A company that contracts an Employer of Record avoids the need to open an office in the host country, with all the associated costs and paperwork.
The Employer of Record is an effective solution for companies seeking to expand and have access to international talent without legal and administrative complications. Businesses can focus on growth and strategy, leaving HR management in expert hands.
When might you need an Employer of Record?
Contracting an EoR may be of interest to you if you need to relocate an employee who will be working remotely for your company on a project for an Andorran company, or if you need to employ someone who is based in another country, or if you need the work to be carried out in the same companies located in other countries.
• Recruiting a remote worker
With the growth of teleworking, more and more companies are choosing to recruit remotely. This gives them access to a much wider pool of professional talent located in different countries. It also makes it easier to manage remote teams without the need to establish physical offices in other locations, while opening up business opportunities through the presence of employees in different regions.
• The initiative can come from the employees themselves
Proposals to relocate can also come from the employees themselves. For example, when an employee needs to move to a new country for family reasons (for example, because his or her partner has been offered an on-site job there). If the home company does not want to lose the services of that employee, it can make an agreement whereby the employee works remotely from that country, and it can also make all the arrangements through an EoR.
• Exploring new markets
If a company is thinking about expanding into another country, it can start by testing the viability of its product or service without having to fully establish its business there. It will save costs in the early stages, and will be able to assess the profitability of the product or service. The EoR will attend to the legal arrangements for your employees, and the company will avoid having to set up a new company or headquarters in the host country. It will be a quicker and less costly process.
• The Law on the Digital Economy in Andorra
The adoption of Law 42/2022 on the Digital Economy, Entrepreneurship and Innovation has opened the door to new business opportunities. This new framework regulates digital activities, start-ups, remote working and ‘digital nomads’.
In all these cases, foreign companies wishing to work with Andorran talent or to contact an Andorran company that can carry out all the formalities will have to do so through an EoR.
Why choose Advantia Assessors as your EoR in Andorra?
We are a company with a long history in the country. We are up to date with the laws and procedures for dealing with the local administration. Our clients include both local and foreign companies, whom we assist in a variety of areas, from company formation and incorporation to aspects connected with taxation and residence. Other services that we offer in the field of employment include the outsourcing of procedures related to the payment of social security contributions and salaries.
We also collaborate with Andorran organisations, such as the Andorran Business Confederation, on fiscal and employment matters and, at international level, we have been part of the Geneva Group International (GGI) since 2019.
If you decide to expand your activities in Andorra, we would be your best partner.
If you are considering contracting the services of an Employer of Record, please do not hesitate to contact us.