The closing of foreign business entities is not uncommon
While this statement may sound bleak, it's not necessarily a bad thing.
The business climate we currently occupy favours and highly encourages remote work. Be it in the form of regional remote workers or even a fully-fledged global remote workforce, it is quickly becoming a go-to employee system.
New methodologies and policies are helping businesses make rapid progress on this front. These advancements make a distributed workforce more cost-effective, operationally efficient, legally compliant, and most importantly, flexible for staff and organisations.
Many modern businesses benefit from having remote employees in specific regions. These employees bring along with them, experience and local know-how that can be invaluable.
This then begs the question; If your business benefits from having an international remote workforce but needs to close an overseas entity, how do you continue employing your workers?
Hire international employees using an Employer of Record (EOR)
Decades ago, what would have seemed like a step backwards for businesses, closing an overseas entity is now a viable option to reduce operational costs with no downsides to productivity.
However, without the presence of a physical business entity in a foreign market, employers typically have limited options when employing and hiring staff. Establishing familiarity within the new market and manoeuvering legal minefields are also complications that can present themselves during these instances.
For businesses that decide to shut down an existing entity, delicate matters such as hiring, payroll processing and employee management are challenges that the organisation will have to combat. While there are alternative methods to continue employing staff, such as hiring contractors, one of the most reliable and efficient methods is to use an Employer of Record service.
What is an Employer of Record?
An EOR serves as a “go-between” for the employee and the client company. EORs set up legal entities in various countries around the world. They act independently and possess expertise in local business cultures, employee trends, tax regulations, and labour laws.
An EOR allows your business to continue employing international workers despite not having a physical entity of your own in a foreign location.
In such cases, the EOR partner acts as the legal employer of a workforce based in the host country while the company is based in the home country. By doing this, the company maintains legal compliance and is able to offer local employee benefits.
What does the client gain by partnering with an EOR?
Did you know that 58% of respondents in a CFO Research Survey said that their businesses engage an Employer of Record to facilitate their global business strategy? Let’s explore the benefits of working with an EOR.
1. Cost & Time Effective Operations
Most employee-related tasks fall within the scope of an Employer of Record. Tasks such as background checks, employee benefits, HR functions, payroll and more. An EOR is able to perform these tasks quickly and at a lower cost. This is down to its larger capacity of resources. As a result, your business saves on costs associated with hiring additional staff to complete the same workload.
2. Frees up resources for core responsibilities
The previous point ties into this one. Engaging with an EOR frees up your company's internal resources. These can be used to further advance core business objectives. Working with an EOR provides you with the confidence to focus on growing your business while the EOR handles all other related administrative responsibilities on your behalf.
3. Efficient Payroll Management
Payroll requires meticulous attention to detail. More so when remote workers are in the picture. With this comes various country-specific legal implications.
Tax rates for example vary from country to country. The rules and regulations concerning finances are constantly changing and an EOR's duty is to keep track of all the appropriate requirements and apply them in payroll processing.
Payroll management functions performed by an EOR include accurate and timely salary disbursement, compensation complete with statutory tax deductions, and benefits packages.
4. Minimised Risks
Legal and compliance issues are the bane of many global companies. Navigating the red tapes of the global remote workforce takes a lot of resources and presents a huge legal risk. An Employer of Record minimises this risk by staying up to date with ever-changing payroll regulations, HR guidelines, region and industry-specific employment laws, tax fees, worker permits, and so on.
It is logically sound to employ an EOR's vast resources and experience to plug the drain on potential risks. Doing so spares you from running into penalties and helps you maintain better control over business operations.
5. Better Employee Management
Employee experience is highly valued by, you guessed it, employees. Remote work has created an opportunity for employers to develop new ways to interact and engage with employees from a distance. Many of the new policies adopted to maintain employee engagement require more resources, time and cultural awareness.
An EOR absorbs these responsibilities and gives the employees the attention and support they need to thrive in a remote environment. The EOR will address employee day-to-day concerns, both personal and work-related, and convey them back to the client organisation.
According to Korn Ferry's Dan Kaplan, this underscores an overarching theme of disengagement amongst employees. Remote workers don't feel that they have enough support or relationships to be successful at their companies.
An EOR can be an invaluable component in improving the remote employee experience. They can, for example, help develop virtual employee onboarding experiences to acclimate new remote hires to their role and your company culture. An EOR can also work with your company's HR department to create policies and processes that are unique to the remote worker experience.
By facilitating communication between the remote employee and ]your business, a full-service EOR is able to bridge the gap and provide you with a better line of sight into your remote workers' needs while reducing feelings of isolation and disconnectedness amongst employees based in foreign countries.
Streamline your business expansion with Airswift's Employer of Record
Do not let the challenges of an international remote workforce hinder your global business expansion. Global employment is thriving and now is the time for businesses to strike.
Whether you're looking to hire remotely and expand into Europe, Asia, Latin America, the Middle East, North America, Africa or Caspian, Airswift is here to help.
From global mobility to Employer of Record services, we have dedicated teams in each region, ready to provide our clients with the support they need.
Airswift's EOR solutions add to the suite of services provided within our Global employment outsourcing (GEO) portfolio. This comprises a wide range of functions from international payroll services and tax administration to comprehensive HR services, overseeing employment contracts, and employee immigration.