2023-06-02 16:10:15
When a company wishes to expand its activities abroad or hire freelancers for specific projects, it often finds itself faced with legal, administrative and tax challenges. It is not always easy to open a subsidiary abroad, another solution, completely legal, has been created – Reference Employer (RE)also known as ” Employer of Records » (EoR) in English.
What is a Reference Employer?
The Reference Employer is a third-party entity that acts as the employer of record for workers hired by a client company. In other words, the ER assumes the legal responsibility of the employer, while the client company retains operational control over the workers.
It is important to emphasize that the EOR is the legal employer of the worker, but did not no role of supervising or directing its actual work. The original employer maintains the employment relationship on the merits and makes all decisions regarding remuneration, functions, worker assignments and dismissal.
The benefits of using the Referral Employer
The use of a Referral Employer offers various advantages to a company. In many situations, ER represents the most attractive solution to conducting business in foreign countries where the costs, complexity and risks associated with non-compliance with local labor laws can be excessive and dissuasive.
- Simplified international expansion : The RE facilitates the expansion of companies abroad by taking care of the legal obligations and the specific regulations of each country. Businesses can use the Services without having to create a separate legal entity.
- Risk management : The RE assumes legal responsibility as an employer, thereby reducing the risk of non-compliance and litigation for the client company.
- Flexibility : The ER allows the client company to work with independent workers while respecting the labor laws and the regulations in force. This allows the client company to benefit from the expertise of an independent without the risks associated with misclassification.
- Simplified administrative management : The ER takes care of the administrative tasks related to employment, such as payroll, benefits and tax declarations, freeing the client company of these responsibilities.
- Immigration Compliance : Immigration policies and regulations vary from country to country and they are constantly changing. The Employer of Record facilitates immigration compliance by taking care of the administrative and legal procedures related to the hiring of foreign workers.
- Access to talent globally: With the Employer of Records, companies can benefit from access to qualified and diverse professionals, without the challenges often associated with international expansion. This allows them to build high-performing teams and hire the best talent, wherever they are in the world.
The points of vigilance to take into account when it comes to the Reference Employer
Although ER has many advantages, there are some points to pay attention to. :
- Legal compliance with the laws of the host countries : Although the Referral Employer assumes responsibility for legal compliance, it is important that the client company is also aware of labor laws, tax regulations and country-specific obligations. Good communication and close collaboration with the Reference Employer is essential to avoid any potential problems.
- Costs and Financial Transparency : Before engaging with a Referral Employer, it is important to clearly understand the pricing structure and costs associated with the services provided. It is necessary to ensure that the provider is transparent with regard to ancillary costs such as social security contributions, taxes and administrative costs.
- Privacy and data protection personal : As the Referral Employer will be handling sensitive employee information, it is essential to ensure that appropriate security measures are in place to protect the confidentiality of the data. Ask for details regarding the provider’s privacy and data protection policies.
The appearance of ER will definitely have an impact on the future of international employment, especially in the digital sector where the current trend is telecommuting. In a sector as competitive as the digital sector, where innovation and expertise are essential, the Reference Employer offers companies and workers the necessary flexibility to follow the evolution of the job market and to ensure that their companies attract the best talent.
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