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ToggleAn EOR is an Employer of Record, a company that legally employs staff on behalf of another business, handling all compliance, payroll, and HR tasks. This arrangement is particularly beneficial for companies expanding into new markets, as it allows them to hire employees without setting up a local entity.
The two main responsibilities of an EOR in employee management are payroll and onboarding/contracts. Payroll management by an EOR covers accurate processing of employee salaries, tax withholdings, and ensuring adherence to local tax laws. Onboarding involves the EOR handling all aspects of bringing a new employee into the company, including contract management, which ensures that employment agreements comply with local laws and regulations.
Employee management is a critical component of the broader range of services offered by EORs, which also include legal compliance, HR support, and benefits administration. By managing these operational and administrative tasks, EORs enable companies to efficiently expand their workforce globally, maintain compliance, and ensure a smooth employment process for both the company and its employees.
What responsibilities does an EOR take over in employee management?
Employee management can range from handling day-to-day operations, onboarding new hires, managing offboarding and termination processes, processing payroll, conducting performance reviews, to ensuring compliance with local labor laws and regulations. It encompasses setting up employment contracts, administering benefits, and addressing employee grievances, all critical for maintaining a productive work environment.
An EOR assumes key responsibilities in employee management when working with companies, enabling them to hire global talent quickly and compliantly. By acting as the local employer for foreign workers, the EOR offers critical support in managing employment-related administration, reducing the company’s risk and liabilities, and providing guidance on employment strategies and compliance.

Who is responsible for the day-to-day of an employee?
The client company retains control and responsibility for the day-to-day management and oversight of the employees, ensuring tasks align with operational goals. It manages job performance, supervises work, and makes key decisions regarding roles and responsibilities. The company provides the necessary workspace, tools, and resources, allowing employees to perform effectively. Managers within the company are tasked with overseeing daily activities, handling disciplinary actions, and maintaining a focus on the core business objectives.
In contrast, an Employer of Record handles administrative and legal responsibilities, such as contracts and payroll. This division of responsibilities ensures that the client company can focus on its key operational activities, while the EOR manages the complexities of employment administration and legal compliance.
This arrangement benefits companies by allowing them to maintain control over their employees’ day-to-day activities and performance.
Does an EOR do employee onboarding?
Yes, employee onboarding is one of the key responsibilities handled by an EOR service provider. An EOR plays a crucial role in ensuring a smooth and compliant onboarding process for new employees. This includes managing administrative tasks, adhering to local employment laws, and providing a positive experience for the new team member.
The EOR’s function in employee onboarding covers the following key areas.
- Compliance with Local Laws: EORs ensure adherence to local employment regulations and laws, crucial for companies expanding into new markets where they’re unfamiliar with the local legal landscape.
- Administrative Tasks: Handling administrative duties such as gathering necessary personal documents, ensuring accurate record-keeping, and managing employment contracts is a core service provided by EORs. This streamlines the onboarding process, making it more efficient.
- HR Management: EORs undertake HR management tasks, including setting up payroll, ensuring tax compliance, and managing benefits. This ensures that all employment-related tasks are compliant with local laws and regulations.
- Onboarding Support: Facilitating a smooth onboarding experience is key. EORs coordinate introductory meetings, schedule training sessions, and answer any questions the new employee might have. This support is crucial in integrating the employee into the team effectively.
- Employment Services: Beyond the initial onboarding, EORs provide ongoing support for both the employer and the employee. This includes managing changes to employment contracts, facilitating performance management, and ensuring continuous compliance with employment laws.
These tasks help employees get the right contracts, setup, and smooth introduction to the client company.
Does an EOR do employee offboarding?
Yes, a large part of employee offboarding can be handled by the EOR, which typically undertakes key responsibilities to ensure a smooth transition for departing employees, aligning processes with local laws and company policies. This includes managing administrative tasks, such as handling termination paperwork and ensuring legal compliance.
The EOR’s core function is to facilitate a compliant offboarding process by directly managing aspects like revoking access to company accounts, retrieving company property, and adhering to state and federal employment laws.
The EOR also plays a crucial role in guiding the departing employee through the offboarding process, clearly explaining necessary procedures and what’s expected from them. This often involves filling out exit paperwork, completing final HR tasks, and sometimes ensuring that all company property is returned properly.
By providing a streamlined and compliant offboarding service, the EOR helps companies manage the departure of employees while minimizing the risk of legal issues.
Who does the payroll management when using an EOR?
Payroll management is one of the main services an EOR provides, handling the complex process for companies, especially those with employees in multiple countries. The EOR takes full responsibility for accurately processing payroll, ensuring timely salary payments to all employees. This includes calculating and withholding the appropriate taxes, social security, and other statutory deductions. Additionally, the EOR is responsible for filing tax returns and remitting withheld taxes to the appropriate government authorities.
The EOR’s expertise and infrastructure in local compliance laws are key to managing payroll in a way that’s compliant with each country’s regulations. This service relieves client companies from the burdens of setting up legal entities or having to understand and navigate the intricacies of international tax laws and payroll regulations.
Moreover, the EOR provider handles the entire payroll function, from record-keeping and managing payment systems to providing detailed payroll reporting and analytics. This comprehensive service ensures that companies can focus on their core business activities, while the EOR takes care of the critical payroll and tax compliance needs, allowing for the seamless hiring and management of a global workforce.
Does an EOR do employee performance reviews?
No, an EOR does not typically provide employee performance reviews. This task remains within the purview of the client company. The division of responsibilities clearly separates core HR functions from administrative and legal compliance tasks, which an EOR handles. This model allows companies to focus on key business activities, such as managing and monitoring employee performance, which is crucial for maintaining productivity and company culture.
Outsourcing performance reviews to an EOR isn’t advisable because it takes control away from the parent company, where the understanding of company goals, culture, and the specific roles of employees lies. Performance reviews require a deep understanding of the employee’s work, their contribution to the team, and how they fit into the company’s overall objectives. An EOR, while expert in providing employment-related services, typically focuses on ensuring legal compliance, managing employee records, and handling local employment laws, rather than conducting performance assessments.
Furthermore, maintaining control over performance reviews allows a company to ensure that feedback is timely, relevant, and aligned with its strategic goals. It reinforces the relationship between employees and their direct managers, which is key to fostering a positive work environment and encouraging professional growth. Leveraging the expertise of an EOR for employment administration and compliance, while keeping performance management in-house, ensures that companies can effectively manage their workforce while benefiting from the support an EOR provides in other areas.
What services does an EOR provide?
An EOR provides comprehensive services for companies looking to outsource employment tasks, primarily focusing on payroll, employment compliance, and HR management. They can provide employee management tasks like payroll processing and HR management. But other services are also the core responsibilities of an EOR, like reporting and analytics and benefits administration.
By offering these services, an EOR allows companies to efficiently manage and scale their workforce across different countries without establishing a local entity, thus minimizing legal risks and administrative burdens.
What are the benefits of using an EOR for employee management?
The benefits of using an EOR for employee management include streamlined HR operations, enabling companies to focus on core business functions. EORs facilitate rapid market entry and expansion by handling complex legal and tax compliance, employment laws, and payroll, avoiding the expenses and complexities of establishing local entities.
What are the downsides to using an EOR for employee management?
The downsides of using an EOR for employee management include reduced control and influence over employees, potentially creating a disconnect in company culture and employee engagement. EORs operate under different legal and cultural frameworks across countries, leading to inconsistencies in employment practices and potentially affecting the workforce’s cohesion.
Outsourcing employee management to an EOR can also result in less flexibility in handling HR tasks and responding to operational needs, as EORs may impose their own constraints and limitations.