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  • Writer's pictureRuan Venter

Choose Your EOR Wisely

Companies looking to employ people in foreign countries are often tempted to do so on the basis of the convenience of using only one operator, or are lured by dazzling technologies provided by many modern EOR suppliers. However, convenience is only but one of the considerations when making a choice of operators. Some of the other factors that need to be considered are:

· Compliance Risk: the perceived and actual risk exposure arising out of the unique regulations and laws prevailing in the country of destination for the deployment of workers. Laws governing company operations, accounting and reporting practices, withholding of taxation, and the management of workers vary substantially from country to country.

· Domain Expertise: it is best to choose an operator that has deep knowledge and expertise of the host country. EOR service providers that are based in the host country are more likely to have an intimate understanding of the prevailing laws and practices in that country.

· The Host Country itself: there are many extraneous factors that need to be considered such as the level of political and economic stability in the destination country, the availability and reliability of technology infrastructure, and the degree to which there is unfettered access to the regulators.

· Cultural Factors: in many countries, knowledge of local customs and access to reliable networks may be the key differentiator in the choice of EOR service provider.

· Special Regulations: not all countries allow the use of an EOR for the employment of foreign and local workers. In some countries there are limitations on the duration for which and EOR may be utilised. In other countries, there are deeming provisions that make the users of EOR services jointly and severally responsible for labour and taxation contraventions.

· Data Privacy and Security: how the EOR is set up for GDPR and similar regulations that govern data security and employee privacy.

· Pricing Model: the extent to which the EOR provider is fully transparent in the pricing of their services and which model they offer. Do they disclose up-front the employer deductions required by law in the host country and does their fee cover these? Typically, there are two main models in operation – fixed price which means that services are charged at a fixed price per employee, or the percentage method that sees fees being levied at a percentage of the employee’s earnings. Both are valid but are more advantageous given the levels of certainty in employee salaries payable.

· Global versus Local: there is always the temptation for multi-national companies to prefer EOR operators that over the widest range of host country services, but under certain circumstances specialist EOR service providers in the host country or region may be able to offer a more compliant and affordable service.

· Customised or Standard: many clients prefer a service that is tailored to their specific needs and the degree to which the EOR service provider is able to shape the service to their particular circumstances is vital for the success of their operations.

· Generalist or Specialist: don’t be fooled by operators that promise to be all things to all people. Many EOR operators purport to be able to offer the same level of service across all countries, and across the full spectrum of the employment life cycle. The truth of the matter is, given the complexity of in-country laws and the many variations on in-country laws, it is highly unlikely that a uniform, quality service is possible. Sometimes, it may be pore prudent to choose a specialist provider over a generalist so as to ensure a quality, consistent service to eliminate those nasty compliance surprises.

If you need assistance in choosing the right EOR service provider contact OUTprof at info@outprof.com

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