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 in doing so, they become the legal employer of your workforce.
In this article, you will learn everything about Employer of Record and why it is a good option in Dubai.
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ToggleWhat does an Employer of Record do?
As we mentioned earlier, an Employer of Record (EOR) is an intermediary in an employee-employer relationship. In addition, the EOR carries out the company’s legal activities, such as immigration requirements, employment, payroll, etc. However, the EOR does not participate in regular work activities.
For instance, the Employer of Record (EOR) entity is legally the registered employer of your employee, but it does not have any role in the workspace. The workplace relationship remains unchanged with the original employer, who retains control over decisions such as termination, job position, compensation, and project assignments.
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 processes, such as taxes and payroll.
- Provides and arranges required visas or work permits for the employees.
- Complies with national laws, including benefits, holiday arrangements, or reforms on labor laws.
- Process payrolls of the company’s employees. They process payments and execute deductions and other additional fees on their salary. The Employer of Record as the legal employer, also keeps a record and makes sure to pay salaries on time.
- Lets you control the daily employer 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 Dubai. For example, the company might need to export data to an overseas division as part of a placement or return process. However, an Employer of Record (EOR) may face limitations in certain scenarios, such as:
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- Not having a registered entity in the destination country.
- Not being authorized to handle shipments.
- Lacking the necessary licenses or permits.
- Lacking knowledge of local laws and requirements in the destination country.
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Why Use an Employer of Record?
There are many valid reasons to use an Employer of Record and one of the main reasons is to skip regulation and overcome cost obstacles when the company hires remotely.
Every country has its employment laws, work permits, and payroll methods for non-national companies that want to establish themselves. Complying with those regulations and rules is an obstacle to many organizations trying to expand internationally.
If the company has a huge budget, a big staff, and plenty of time to waste, it may not need an EOR service. However, for companies entering new markets or medium to smaller firms with limited resources, an EOR service is the perfect alternative.
Employers of record in the UAE are also part of the GEO (Global Employment Organization), which eases the employment process for foreigners in companies of any size. An Employer of Record (EOR) in Dubai is highly efficient for both expatriates and local residents as it ensures compliance with the host country’s laws. Utilizing an EOR eliminates the risk of violating labor, employment, or tax regulations, offering a globally available solution for legal employment management.
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.
Benefits of Using an Employer of Record (EOR)
All companies can take advantage of EOR services or Global Employment Organization services since there are many benefits. These services are particularly useful for businesses operating in foreign countries or hiring international employees, especially in regions where the complexity, costs, and compliance risks of local employment can be challenging or prohibitive.
No Need for Local Incorporation
If the organization chooses a DIY approach, it must register 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.
Some businesses can justify the expense and time required to establish a foreign subsidiary, while in other cases, using an Employer of Record (EOR) is a more practical and cost-effective alternative. The EOR service already has an entity in the destination that can handle:
- Payroll
- Employment
- HR activities
- Immigration Requirements.
The employer of Record is the middleman between the employee and employer and has enough expertise to ensure compliance with local laws and regulations.
Immigration Compliance
Immigration laws are constantly evolving, and foreign governments are increasing their scrutiny of visas, work permits, and business activities. As a result, compliance has become a critical priority for companies and multinationals. Violating immigration laws can lead to significant and lasting consequences for both the company and its employees.
So, to comply with these previously mentioned laws, many companies decide to use an EOR service. Likewise, this method has the following 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 work visas and work permits, and by doing so, it avoids any complications with the immigration authorities.
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 (where payroll is managed from the home country) is not always allowed, especially in the long term.
An important aspect of running a hosted payroll management 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, and they also ensure accuracy and compliance for each employee or global talent.
The Employer of Record (EOR) provides the necessary entity to manage payroll while ensuring compliance with the host country’s tax regulations and withholding requirements. They also address any potential issues with local government authorities. Additionally, EOR services offer a cost-effective solution for quickly hiring workers abroad or managing global hiring needs. You can leverage EOR service providers or partners to streamline employee onboarding and payroll management.
Who Can Benefit from an EOR?
A global employer of record (EOR) in Dubai can provide significant benefits to a variety of organizations looking to expand or operate within the UAE. Here’s how different types of businesses can leverage global EOR in Dubai:
Small and Medium-Sized Businesses Expanding Globally
For small and medium-sized businesses (SMBs) looking to expand globally, an EOR offers a cost-effective solution to navigate the complexities of local employment laws. It enables businesses to hire employees globally in Dubai without the need to establish a legal entity. The EOR takes care of compliance with labor laws, payroll processing, and employee benefits, enabling SMBs to focus on growth and operations.
Startups Looking for Cost-Effective Global Hiring Solutions
Startups often face resource constraints when scaling globally. Hiring global talent in a foreign market like Dubai, can be expensive and time-consuming. An EOR provides an efficient and cost-effective way to hire employees, manage global payroll, and ensure compliance with local regulations. It is also best for global workforce management. This allows startups to hire international employees in Dubai while keeping operational costs low.
Large Enterprises Entering New Markets
Large enterprises that are expanding into new markets in Dubai benefit from an EOR’s ability to quickly hire local and global talent. This helps them maintain full compliance with local employment regulations. EORs allow enterprises to bypass the time-consuming process of setting up a local branch or subsidiary, providing immediate access to the market. This flexibility helps companies scale their operations faster and more efficiently.
What is the Difference Between a GEO and an EOR?
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 the employee is referred to the local EOR for payroll and onboarding.
The GEO oversees the roles within the Employee/Client/EOR relationship, ensuring deadlines are met and that there are no issues overall. In summary, a single Global Employment Organization (GEO) acts as the central business entity, while multiple EORs handle local employment in various host countries.
What is the Difference Between an EOR and a PEO?
A Professional Employment Organization (PEO) is a third-party service that has a similar role to a GEO. A PEO service is common in countries like the United States, where employment and reporting requirements vary between states and regions.
However, smaller companies also use a PEO for assistance since they can meet all of the regulations and rules. 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.
The Future of International Employment Using an EOR
The advantages of using an Employer of Record (EOR) or a Global Employment Organization (GEO) become clear when an organization considers the costs and complexities of a DIY approach. EOR services provide a legal framework for companies taking on responsibility during the process of hiring workers abroad.
The future of EOR services is simple: More and more countries are changing their immigration and employment laws to prevent loss of tax profit and to curb corporate abuses. While organizations face the challenges of doing business abroad, the EOR solution is emerging as an excellent foundation for supporting both local workers and expatriates.
How can ConnectGroup provide your company with an EOR?
If you have made up 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 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 what type of business you want to establish; we will do the tedious process for you. Besides, with our PEO (Professional Employment Organisation) and EOR services, you will have the following benefits:
- Help in your employment process and set you up in the UAE market faster.
- 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 can also request other services to benefit your business’s growth. For example, you can find the employees you need more efficiently with our recruitment services. If you want to improve your human resources department, you can ask for HR consultancy and payroll services in Dubai.
Would you like to contact ConnectGroup to receive more useful information and tips about the Employer of Records or EOR costs? If you want to get more information or if you have any inquiries, call us at +97143316688. You will talk to one of our agents, who will answer all of your questions.