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Understanding Employer of Record Services: Everything You Need to Know

When a company hires an employee, it takes on all the duties, expenses, and liabilities related to having that person on staff. However, not every company wants to take on that duty. Consequently, using an Employer of Record can be a great alternative to delegate these responsibilities.

In this article, we will be explaining everything there is to know about the Employer of Record services. In this way, you will obtain more information on how they can help with payroll processing and compliance requirements. Let us observe:

1. Do you know what an Employer of Record is?

2. Learn about what an Employer of Record does

3. Know the benefits of partnering with an Employer of Record

4. How can you select the right Employer of Record services for your company?

5. Obtain the best Employer of Record services with Iberia EOR

Do you know what an Employer of Record is?

employer of record

Entering a new market or establishing a presence in a new country can be intimidating for businesses. This is due to the fact that they must focus on adhering with local employment and tax laws, as well as any other additional business regulations.

In this aspect, having a local advisor who can assist you in navigating the challenges of establishing a firm in a new location and managing your personnel can be extremely beneficial. As a result, many businesses decide to seek outside assistance and select an Employer of Record. An Employer of Record (EOR) is a company that serves as the legal employer for a customer and their employees.

An Employer of Record is a provider of services who handles a variety of tasks on behalf of its customers. Hiring and compensating the company’s workers, as well as accepting certain employer responsibilities, are some of its most important functions.

In simple terms, the EOR provider becomes the client’s employer and manages all formal employment tasks. Consequently, for this reason, when entering a market for the first time, whether a new country or a new state, many firms choose to partner with an EOR.

This is due to the EOR’s ability to efficiently engage with workers while providing local expertise and knowledge. Furthermore, by opting for EOR services, the company avoids the need to establish a local entity, making it an excellent way to test the market before making a major move.

Learn about what an Employer of Record does ?

Because the Employer of Record acts as a link between a company and its employees, it is critical to understand what it performs. The employer-employee relationship can be difficult, but an EOR can help to prevent and resolve any problems that may emerge.

The EOR mostly handles administrative activities; such as, dealing with immigration procedures, processing payroll, and handling employment.

It is vital to note, however, that an EOR does not take part in operational activities or day-to-day responsibilities. As a result, as a client, you maintain complete operational control over your staff while the EOR manages the administrative burden.

As a result, the EOR will be your employees’ registered and legal employer; nevertheless, they will not monitor or manage their activities and obligations. It is critical to emphasize this because many businesses get confused and believe that the EOR will take care of all aspects of their business.

Here is a rundown of some of the things an EOR will do on your behalf:

Hire Staff Members

Hiring employees is one of the primary responsibilities of an EOR. If you want to extend your firm globally, you will not need to set up a subsidiary or engage independent contractors if you use employer of record global hiring. Since an EOR will have legal existence in your target nations, you will not need branches or subsidiaries.

Create Contracts

An EOR will also create contracts between your organization and the employees that are compliant with the laws of the nation of hire. Companies can be employing staff from other nations, which means they will have to cope with various employment rules. In this instance, an EOR will create contracts that meet the legal requirements of each country as well as your company’s. Therefore, this process entails researching tax regulations, minimum wage requirements, termination requirements, social security and other benefits for employees.

Run Background Checks

Before you hire a potential employee, it is imperative that you are fully aware of their legal history and professional background. A bad hiring might take up to 27 weeks to replace, costing you time and money that could have been used elsewhere. As a result, EORs do background checks on every applicant to make sure they are the proper fit for your business in order to avoid making disastrous hires. Red flags and criminal histories are screened for by a good EOR in order to weed out potential troublemakers.

File Employment Taxes

Tax rules differ from country to country, just like employment regulations do. As your company grows abroad, you will need to monitor compliance with numerous tax rules. A minor error in doing this could have serious legal repercussions. An EOR will prepare your tax returns and file them on your behalf. In addition to saving you a ton of time, doing this will guarantee perfect compliance and accuracy.

Payroll Outsourcing

If you have not worked abroad before, you might not be aware that overseas payments are far more complicated than local ones. Payroll processing can be made significantly more difficult by currency conversion and bank fees. Consequently, hiring an EOR to provide payroll outsourcing services can make it way simpler. Deductions, taxes on payroll, and returns are all taken care of by the EOR. Additionally, this process gives your staff the option to select the payment option that fits them best.

Benefit Administration

The perks your company gives may need to vary more as you expand into more nations. In order to ensure that your overseas employees receive their due benefits, including those listed below, EORs collaborate with benefit suppliers.


    • Health insurance.

    • Unemployment benefits.

    • Wellness initiatives.

    • Modules for remote work.

    • Social insurance.

    • Sick time.

    • Retirement and pension plans.

Employee Severance

The process of dismissing an employee or merely amending their contract might be tricky. EORs will complete these tasks for you while adhering to the applicable country’s termination regulations to ensure precision and compliance.

Additional Services

In addition, an EOR can also provide support with immigration processes such as, employment visa support for international workers coming into a new region to work for your business. Also, they can provide HR management solutions, employee relocation services, and more.

Know the benefits of partnering with an Employer of Record

employer of record

The first advantage of dealing with EORs is that there is no longer a requirement for local incorporation in order to enter the global market. The first step in employing international workers is to establish a legal business through registration and incorporation.

You will not have to invest in that obligation because an EOR already exists as a legal organization in that country. As a result, the EOR serves as a liaison between your organization and the candidate while also verifying compliance with local legislation.

An EOR can also assist you in meeting some of your company’s inclusion, equity, and diversity (DEI) objectives. Getting access to and employing from a global talent pool helps you to expose your firm to a wider range of people from various backgrounds.

Some of the greater benefits of hiring an Employer of Record are:

Manage Compliance Risks

Foreign governments frequently examine how multinational corporations manage visas, work permits, and different economic activity kinds. Additionally, immigration laws are always changing. Maintaining legal compliance for your company during and even after development can be difficult.

Working with an EOR is preferable to running the risk of legal issues and immigration non-compliance. As a result, there will not be any need for regular business travel or business visas. In the end, your foreign workers will be able to legally work in the host nation.

Local Payroll Oversight

Naturally, the payroll procedure must also adhere to local requirements in the nation where the employee was hired. Rarely, notably when it comes to long-term employment modules, is remote payroll authorized. The payroll process at your organization may become very difficult as a result.

An EOR will take care of all the important parts of the payroll process, such as computations and mandatory deductions like taxes, health insurance, and pensions.

Saving Time

Employment-related duties necessitate a great deal of attention to specifics, which can take attention away from other crucial tasks. You and the HR staff can save a ton of time by hiring an EOR. Additionally, it will lessen some of your accountant’s workload.

Monitor Regulatory Risks

Partnering with an employer of record will also help you reduce your exposure to regulatory risk. Not only will an EOR take care of your taxes and payroll, it will also make sure you avoid any employment-related legal issues abroad. This is due to the fact that EORs are knowledgeable about the commercial rules of the nations in which you intend to conduct business.

Minimize Resources

Your HR team will not have to go through the tedious and endless process of producing reports thanks to an EOR. Thankfully, an EOR is qualified to handle current records. They will make sure that all of the information and documents pertaining to your employment are adequately backed up and maintained. Additionally, whenever you want to verify on the status of your business, they will give you payroll details.

How can you select the right Employer of Record services for your company?

Knowing how to pick the best partner is one of the most crucial components of partnering with an Employer of Record. To determine if the service provider would make the ideal business partner, you should ask them many questions.

The following are some of the finest recommendations for choosing an EOR:


    • Does the EOR have offices there in the country you want to expand to?

    • Will the EOR offer job prospects that meet your needs an employment contract?

    • Does the EOR have any prior experience working with organizations in your sector that are similar?

    • What is the background and experience of the EOR?

    • Does the EOR have the competence to evaluate and comprehend your needs?

    • Can the EOR modify its offerings to better suit your needs?

    • Does the business offer EOR as a primary or secondary service?

    • What are the costs and prices? Are there any unstated costs?

    • What resources is the EOR providing?

Are there any differences between an Employer of Record and other service providers?

The EOR is frequently mistaken for other service providers by businesses. Here are two of the most typical third parties that are mistaken for EORs:


    • GEO: A GEO is an official global employer. It is a service supplier that has numerous EORs in numerous nations that it can hire locally. A GEO is ideal for international companies that want to establish a presence in numerous locations, but it may be challenging because you will not be working directly with the EOR, but with the GEO.

    • PEO: A professional employment organization is known as a PEO. This an agency that provides a comparable service; but, it is most frequently employed by organizations that already have a presence in the area and merely require assistance with administrative work. This is so that the PEO does not take on any liabilities or complete legitimate employment tasks.

Obtain the best Employer of Record services with Iberia EOR

Iberia EOR strives to offer you the best and most effective business service to meet your unique demands. Our extensive network of businesses can provide you with unmatched experience in a number of areas to help your organization.

You can get in touch with us if you’re seeking for an EOR to enhance your business operations in Spain. We will offer a solution that is specifically designed to assist you accomplish your company objectives and lessen your administrative effort. To start a partnership with us, contact us right away!

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