If you’re serious about growing your business globally, then relying on an Employer of Record (EOR) isn’t a long-term strategy. Here, PeoplePay explains the compelling case for global payroll and why using EOR is never the best solution for sustainable expansion …
EOR is not sustainable
While it’s true that EORs allow you to hire quickly without setting up a local entity, this convenience comes at a premium – typically 15-30% over base salary. Beyond cost, EORs limit your control over employment terms, benefits and HR policies, meaning critical elements of the employee experience are outsourced.
EOR can put your business at risk of financial penalties
Not all countries permit EOR. Some, such as Japan and China, largely prohibit it and in others there are grey areas which could cause serious compliance issues. A prime example of this is Spain where employment laws don’t allow the separation of legal and operational roles in a business. Businesses, therefore, are putting themselves at considerable risk of financial penalties by using EOR.
EOR isn’t a permanent solution
Some countries only permit the use of EOR arrangements for a short time. In Germany, for example, they can only be utilised for 18 months. This disparity between countries creates unwanted complexity and allows little flexibility for future growth planning.
EOR limits global expansion in the future
If you’re hoping to continue to expand globally in the future, using EOR will considerably complicate matters. You could end up with separate EOR arrangements for different countries, all with their own tax and employment laws – all of which increases the chances of unintentional non-compliance.
Global payroll reduces the risk of financial penalties
Every country has different tax laws, labour rules and reporting requirements. Using a global payroll service will ensure compliance is expertly managed, helping you to avoid costly fines, misclassification, or legal exposure.
Global payroll ensures you maintain control
Instead of juggling local vendors or manual processes, global payroll gives you a single solution for managing the employee experience. You own the employment relationship, not a third party.
Global payroll offers greater growth opportunities
Global payroll enables you to operate as the legal employer through your own entities while streamlining compliance, tax filings and multi-country payroll processing. It’s a model designed for growth. This means it is far more cost-effective as a long-term strategy.
Global payroll is more efficient
As you enter new markets, you don’t want payroll to become a bottleneck. Global payroll makes it easy to onboard, pay and manage employees in dozens of countries – without rebuilding the process every time. This makes global hire less risky and will strengthen your opportunities for hiring overseas.
At PeoplePay our comprehensive, hassle-free and cost-effective service keeps global payroll running smoothly and guarantees compliance with local laws. Contact us and find out how we can help make your international business move a successful one.