What is an Employer of Record (EOR)?
Author:
Raja Abdul Rashid
Published:
September 19, 2024
Last Update:
September 25, 2024
An Employer of Record (EOR) is a third-party service provider that assumes the legal responsibilities of employing workers on behalf of another company. This model is particularly advantageous for businesses looking to expand into countries in the Asia Pacific region like Hong Kong, Thailand, Indonesia, the Philippines, Vietnam, Malaysia, and, Taiwan without the need to establish a legal entity in each country.
How Does an Employer of Record Work?
An EOR becomes the legal employer for your international staff while your company retains control over the employees’ daily activities. Key responsibilities of an EOR include:
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- Payroll processing: Managing salary payments and tax withholdings.
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- Compliance: Ensuring adherence to local labor laws and regulations.
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- Employment contracts: Drafting and managing contracts that comply with local legal requirements.
For example, if your company based in Germany wishes to hire employees in Malaysia, the EOR will handle employment contracts, payroll, and tax compliance in Malaysia, allowing you to focus on your core business.
We’re here to help you on your journey to hire, manage and pay.
Key Benefits of Using an EOR in APAC
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Compliance Management
Navigating labor laws in Hong Kong, Thailand, and other APAC countries can be complex. An EOR ensures compliance with local regulations, including employment contracts and termination procedures.
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Payroll and Tax Management
Managing payroll and tax obligations across different countries can be challenging. An EOR handles these tasks efficiently, ensuring that payroll is processed correctly and tax filings are made on time.
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Faster Market Entry
Establishing a legal entity in each country can be time-consuming and expensive. An EOR allows you to start hiring quickly and cost-effectively.
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Reduced Risk
An EOR mitigates the risks associated with non-compliance, including fines and legal issues, by ensuring that all employment practices adhere to local laws.
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For businesses from the United States, United Kingdom, Canada, and other regions expanding into Asia Pacific countries like Hong Kong, Thailand, Indonesia, the Philippines, Vietnam, Malaysia, and Taiwan, an Employer of Record offers a practical solution for managing employment compliance, payroll, and tax obligations. To learn more about how EOR services can support your global hiring needs, contact AYP Group today.
