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What is an Employer of Record?

What is an Employer of Record?

Employer of Record (EOR) is a third-party organization or an individual who is accountable for making agreements between you and the potential employee. In addition, an EOR takes responsibility for all the employment tasks, and doing so; they became the legal employer of your workforce.

In this article, you will learn everything regarding Employer of Record in the UAE and why is a good option. Likewise, here you will find important information about how it works and why is the best choice for some businesses. However, the advantages of the Employer of Records may vary from company to company. Let’s observe:

  1. What does an Employer of Record do?
  2. Why Use an Employer of Record?
  3. Benefits of Using an Employer of Record
  4. No Need for Local Incorporation
  5. Immigration Compliance
  6. Local Payroll in the UAE
  7. How to Choose an EOR Service
  8. What is the Difference Between GEO and an EOR?
  9. What is the Difference Between an EOR and PEO?
  10. The Future of International Employment Using an EOR
  11. History of Employer of Records
  12. How can ConnectGroup provide your company with an EOR?

1. What does an Employer of Record do?

What does an Employer of Record do?

Like we mentioned earlier, an Employer of Record is an intermediary in an employee-employer relationship. In addition, the EOR carries the legal activities of the company, such as immigration requirements, employment, payroll, etc. But the EOR does not participate in regular work activities.

For instance, the EOR entity is legally the registered employer of your employee, but it does not have any role in the workspace. The workplace relationship stays the same for the original employer on decisions like termination, position in the company, compensation, and projects.

In other words, the Employer of Record is the organization that:

  • Hires your new employee in compliance with regulations and local laws in Dubai and the UAE.
  • Is responsible for all employment contracts, and any HR process like taxes and payroll.
  • Provides and arranges required visas or work permits for the employees.
  • Complies on national laws such as benefits, holiday arrangements, or reforms on labor laws.
  • Process payrolls of the company’s employees. In addition, they process payments and execute deductions and other additional fees on their salary. The employer of Record also keeps a record and makes sure to pay salaries on time.
  • Let you control the daily responsibilities and activities of your employees.

There are plenty of situations in which huge corporations may need the help or guidance of an Employer of Record (EOR). Moreover, the company may require the exporting of data to any overseas division as a result of a placement or return process. Likewise, it may not be capable for several reasons:

  • Not having a registered organization in the destination.
  • It is not registered for shipping.
  • They do not have the required licenses or permits.
  • The organization is not familiar with the destination’s local laws or does not understand the local requirements.

2. Why Use an Employer of Record?

There are many valid reasons to use an Employer of Record, one of the main reasons is to skip regulation and cost obstacles when the company is hiring remotely. However, every country has its employment laws, work permits, payroll methods for non-national companies which want to establish in it.

Complying with those regulations and rules is an obstacle to any organization trying to expand internationally. Moreover, if the company has a huge budget, a big staff, and plenty of time to waste, it may not need an EOR service. But companies entering new markets, or medium or smaller firms with limited resources, an EOR service is the perfect alternative.

Similarly, Employer of Record in the UAE is also the of the GEO (Global Employment Organization) that ease the employment process for foreigners in companies of any size. An Employer of Record in Dubai is fairly efficient for ex-pats and local residence, this is due to its compliance with the host country laws. There is no point in risking the violation of labor laws, employment, or tax regulations since the EOR solution is available worldwide.

The EOR is perfect for companies that want to hire in the UAE without registering an entity. The EOR always has registered businesses in the country of interest. Similarly, this saves huge amounts of time and money since your company can expand quickly. This method is efficient and beneficial when the company requires a workforce to meet the business demands.

3. Benefits of Using an Employer of Record

Benefits of Using an Employer of Record

All companies can take advantage of EOR services or Global Employment Organization services since there are many benefits. That is to say, these services have a greater impact on the company when it is doing business in foreign countries; …countries where the complexity, costs, and compliance risks of local employment can be prohibitive.

Read More About : What is Global Employment Outsourcing (GEO ) Services

4. No Need for Local Incorporation

If the organization chooses a DIY approach, they must complete the register of a local organization. However, this is a time-consuming and grueling process for the company since it requires an account and legal support to comply with the laws.

There are businesses that justify the expense and time of setting up the foreign subsidiary, and also there are other instances where using an Employer of Record is a better alternative. The EOR service already has an entity in the destination that can handle:

  • Payroll
  • Employment
  • Immigration Requirements.

Employer of Record services is the middleman between the employee-employer and has enough expertise to ensure compliance with local laws and regulations.

5. Immigration Compliance

Immigration laws are constantly changing, there is an increased inspection by foreign governments of visas, work permits, and types of business activities. Therefore, compliance is an important point for companies and multinationals to have in mind, in addition, violating immigration laws can have lasting and impactful consequences for the company and its employees.

So, in order to comply with these previously mentioned laws, many companies decide to use an EOR service. Likewise, this method has the next features:

  • The staff can legally work in the host country.
  • Elimination of problems with remote payroll.
  • Get rid of overworked business visas and multiple entries to the UAE.

To sum up, the company’s EOR handles from work visa requirements to work permits, doing so it avoids any complications with the immigration authorities.

6. Local Payroll in the UAE

Countries require their companies to run their payroll in compliance with local laws with a registered entity. The ‘remote payroll’ procedure (remitting by the home country payroll) is not always allowed, especially in the long term.

An important aspect of running a hosted payroll is that calculating and withholding deductions from pay, pensions, health insurance and taxes can be a grueling task. The EOR services take care of these little but crucial details, they also ensure accuracy and compliance for each employee.

The EOR provides the required entity to run a payroll with experience in the host country, tax rules, and withholding. They also ensure that there are no problems with the local government bodies. In addition, is the most cost-effective solution to quickly employ workers abroad.

Read More About : When should you consider outsourcing your payroll?

 7. How to Choose an EOR Service

Hiring internationally can be a dangerous and difficult process so it is important to choose wisely.

The following are the core questions about how to choose an EOR service:

  • What is the EOR’s performance record?
  • Is the EOR is managing companies with regional accountant managers?
  • Does the employment contract they are using go along with your organization’s interests?
  • Has it worked with companies like yours, and most importantly, are they capable of understanding your need?
  • Does your company need only the EOR service or does it need similar services?
  • What is the notice period for termination and the minimum contract length?

8. What is the Difference Between GEO and an EOR?

If you don’t know the difference between both, we will explain it for you:

The Global Employment Organization (GEO) is an international organization that utilizes Employees of Record in the countries of employment. The GEO services start the relationship with the clients, and then it refers the employee to the local EOR for payroll and onboarding.

The GEO supervises the roles of the Employee/client/EOR relationship, and they make sure that the deadlines are met and no issues overall. To sum up, there is a single GEO entity, and many EORs employing locally in multiple host countries.

9. What is the Difference Between an EOR and PEO?

A Professional Employment Organization (PEO) is a third-party service that has a similar role compared to a GEO.  A PEO is common in countries like the United States employments and reporting requirements vary between states and regions.

However, smaller companies use a PEO for assistance since they can meet all of the regulations and rules on their own. In addition, the PEO does not take the full legal role like an EOR or GEO but provides help with registrations, compliance steps, and payroll.

10. The Future of International Employment Using an EOR

The advantages of using an Employer of Record or a Global Employment Organization become evident when the organization examines the costs and involvement of a DIY approach. The EOR service provides a legal foundation for companies. And taking responsibility when they are in the process of employing workers abroad.

The future of EOR services is simple, while more and more countries are changing their immigration and employment laws to prevent loss of tax profit and to prevent abuses from companies. However, organizations must control the challenge of doing business abroad, the EOR is becoming an excellent foundation for both national workers and ex-pats.

11. History of Employer of Records

The general use of EOR has made an impact on how companies are functioning in the world, mobility programs have eased up and have expanded. The traditional multi-national organization has also evolved way better, flexible settles may include several countries in a year.

The trend made the DIY option of integrating into every market is just unsustainable, and the demand for local alternatives grew. In addition, organizations began to explore outsourcing the next tasks:

  • Hiring process.
  • Seek local partners to relieve the regulatory weight.

However, a more complete solution was needed. This led to the development of services that manages the wide scope of the company’s legal requirements. The Global Employment Organization and the Employer of Service allow organizations to enter new markets and deploy employees efficiently, and legally.

12. How can ConnectGroup provide your company with an EOR?

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In case you have made your mind regarding the Employer of Records; the next step you should take is to find a good business setup partner. This way, you will settle faster in the UEA or Dubai and without doing mindless procedures. With ConnectGroup by your side, you can establish your company in your desired location and start obtaining the benefits.

However, we can also help you in your hiring process. It does not matter the type of business you want to establish; we will do the tedious process for you. Besides, with our PEO and EOR services you will have the next benefits:

  • Helps you in your employing process, sets you up in the UAE market faster, and gives you the best services.
  • Consultancy to stay in compliance with mandatory local regulations.
  • New revolutionary ideas to incorporate in your company.
  • Efficient HR management and methods.

After you have completed your company’s hiring process, you should also request other services to benefit your business’s growth. For example, you can find the employees you need in a more efficient way with our recruitment services. Or if you want to improve your Human Resources department, you can ask for HR consultancy and payroll services.

Would you like to contact ConnectGroup to receive more useful information and tips about the Employer of Records? If you want to get more information or if you have any inquiries, call us on +97143316688. And you will talk to one of our agents who will answer all of your questions.

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