Exploring business opportunities overseas opens up new horizons with access to new markets and a broader talent pool, all at a lower cost. However, businesses need to consider all the extra paperwork and responsibility that comes with this kind of expansion. Or… Hire an Employer of Record (EOR)! In 2022, the remote working continues to be a dominating trend across the globe in several industries. Since 2020, searches for remote work have increased by more than 500%. With more and more organizations transitioning to a remote-first culture, the future of work is evolving at a very rapid pace.
While this shift allows for greater flexibility and work/life balance, it adds complexity for both the employer and employee. In this article, we’ll guide you through understanding the concept of an EOR, what they are, how they work and if they’re right for you. You will also find out how our expert team can assist foreign people living in Malta and Maltese working with foreign businesses. Let’s dive in.
What is an employer of record?
An Employer of Record is a third-party global employment services provider. What can it assist you with? Well, this type of employment can help with employing people in other countries and taking care of responsibilities such as payroll, benefits, taxes, stock options, and compliance without getting involved in the day-to-day management of the employee. The EOR acts as a local ‘go-between’ for the employer and employee to ensure all regulatory requirements of immigration and employment are seamlessly met. While businesses focus on expanding their operations abroad, they can rely on an Employer of Record to help them hire employees in multiple countries.
Getting an Employer of Record
The EOR is the registered employer for the worker. The biggest responsibility is acting as the local employer on paper. In this way, an Employer of Record shields your business from liability and compliance risks by legally employing workers in another country on your behalf. An Employer of Record typically performs critical tasks such as:
- Arranging visa-related documents and work permits for the employee if necessary
- Providing a registered entity for running a local, compliant payroll within that country
- Ensuring compliance with local labour laws pertaining to local contracts and worker protections
- Advising the client on best practices for an employee on and offboarding.
- Acting as the interface between employee and government authorities
- Managing payroll, tax deductions, social security contributions, and benefits administration
When to use an employer of record?
If your company is looking to venture abroad without establishing a physical entity in that region, or if you are hiring employees based in Malta and they would like to pay taxes in Malta, then you need to look into hiring an EOR. This solution allows your business to be efficient and cost-effective in your new project. As outlined throughout this article, an EOR vendor takes on the responsibility of the more tedious and laborious tasks on behalf of your company. Appearing as the legal employer to manage local payroll, employment tasks, and immigration clears your time, budget, and resources to focus on core business objectives.
5 Main benefits of using employer of record services
Expanding your workforce can be challenging and time-consuming. Hiring abroad often presents several hurdles, such as dealing with different tax residencies. There are key benefits to partnering with an EOR vendor. It’s important to reiterate that the business where the employee works still retains control in the daily business operations and workplace safety. Furthermore, the Employer of Record assumes liability for employment issues, including payroll management compliance and tax laws.
Registering a business entity abroad comes with a host of challenges. The high level of bureaucracy and waiting time for approval could take several months. Since an Employer of Record is an officially registered company, a vendor such as Payroll Malta can step in to hire and pay employees right away.
Each country has its own employment, payroll, and work permit requirements. The team at Payroll Malta takes on the arduous and costly work to ensure that all banking, insurance, tax, human resources, facilities, and contract requirements are met.
Probably one of the biggest outsourcing benefits of an EOR is that it saves your business time. There is always the option to take the ‘DIY’ approach, but that requires committing time and resources that could be better used elsewhere. Payroll Malta has already set up an entity in Malta in order to hire, onboard, manage salaries, taxes, and benefits, and legally comply with local laws on another company’s behalf. The EOR takes on the burden of complicated HR tasks involved in the hiring and onboarding of new staff. Since Payroll Malta would be present on official documentation, a business owner doesn’t need to be preoccupied with tax documentation negligence, non-compliance with local labour laws and common payroll mistakes.
A lot of costs are associated with setting up a global office. Hiring an EOR vendor, such as Payroll Malta, bypasses a lot of these costs, with added flexibility. Collaborating with Payroll Malta allows you to use the saved costs to explore new markets instead of building teams abroad from scratch.
What to look for in employer of record services in Malta