Employer of Record (EOR) platforms have emerged as a game-changer for hiring internationally without the headache of setting up foreign entities or managing employment in-house. But as with any fast-growing new solution, myths and misconceptions spread about how EORs truly operate and the tangible value they offer.
As experts in the EOR space, we think it’s important to clear up some of these myths.
The truth is, EORs carry tremendous power to enable businesses to tap into global talent with confidence and competence. When wielded ethically and strategically, they give companies on-demand access to the same scalable hiring infrastructure that would have been reserved only for large multinationals.
In this article, we address nine common myths and set the record straight on how EORs can be strategically leveraged.
One of the main misconceptions we encounter is the idea that Employer of Record services are only suited for short-term needs, such as testing out new markets. While it’s true that pairing up with an EOR can get companies up and running quickly, EORs also work as a long-standing talent solution for many organisations.
The right EOR partner grows alongside your business, acting as a consultative partner for those involved in global employment. As you move into more countries, a capable EOR helps ensure ongoing compliance and efficiency without the overhead of managing local entities or staff. At the same time, EORs have specialised expertise and established best practices that would take considerable time and resources for a company to develop internally.
In its purest form, the EOR model poses no limitations on how long a company can leverage it. However, some countries do have regulations regarding the maximum length of outsourced employment arrangements. In those cases, EORs can utilise temporary agency licences or similar structures to comply with local laws.
Examples include Germany, France, Norway and many Eastern European countries that limit how EORs can operate, including imposing time restraints. In these cases, EORs can serve as a temporary bridge until establishing an in-country subsidiary makes sense.
The key is understanding regulations in each country you enter, so you can work within the legal lines to the fullest while determining ideal timing for transitions where needed.
When you review the EOR service fees, taking care of employment in-house might seem like the cheaper route. But what this perspective does not consider are the large (often unexpected) costs that come with running international subsidiaries on your own. That initial investment to set up an overseas entity is just the beginning.
You have to account for ongoing legal, accounting, HR, and payroll administration expenses. Managing all of that alone is challenging, especially when attempting to navigate complex foreign regulations independently. On top of this, there is always risk and cost associated with compliance mistakes too.
It’s also important to consider the opportunity cost. The tremendous amount of time, energy, and resources it takes to establish and manage foreign operations and employment pulls attention away from both employee experience and business-driving exercises such as new product development and sales growth.
EOR services remove this potentially overwhelming distraction by providing expert knowledge and experience in global payroll, HR, and compliance. The saved time, focus, and money can be used to scale up your core strategic initiatives.
Despite the perception, Employer of Record services aren’t just for large corporations. It’s easy to think only big, global companies can take on the costs and complexity of hiring overseas. In reality, EORs make global expansion possible for organisations of any size.
The main goal of an EOR is to remove the barriers that companies face when hiring globally. For many, this is often a lack of HR capacity, compliance expertise, or budget restraints making international hiring feel out of reach. This is where EORs bridge the gap – they handle these logistics behind the scenes so companies can access global talent.
Essentially, EORs “even the playing field” and open up overseas hiring for businesses that thought it wasn’t an option before. By leveraging an Employer of Record, companies no longer need sophisticated in-house HR functions to build global teams. The EOR owns these complexities, making international growth accessible at any scale.
In other words, company size does not dictate the value of an EOR partnership. Organisations both large and small can avoid the typical headaches of foreign hiring through EORs. It’s about having the right platform in place to unlock global opportunities, regardless of resources and experience.
Some companies fret that using an Employer of Record means surrendering control over employee management. This misconception stems from a basic misunderstanding of how EORs function.
While legally the EOR serves as the employer in front of authorities, clients retain full oversight of day-to-day operations. You still make pivotal decisions around employment terms, work directives, performance evaluations, compensation, promotions, etc.
The EOR handles the critical administrative tasks, but they don't replace your role as day-to-day decision-maker over your team. This frees you up to focus on the human element of leadership.
So in reality, partnering with the right Employer of Record grants you more control where it matters most - the productivity, well being, and growth of your people.
From the outside looking in, it would be easy to assume that the EOR model can be applied everywhere consistently. The reality is more complicated. While we wish that we could apply the same model in every country across the globe, many jurisdictions apply limitations to the outsourced employment model.
In a handful of countries like the UK and Ireland, EORs can function in their purest form. Here, a straightforward three-party agreement between the EOR, employer, and employee can remain in place indefinitely.
However, in many other countries, strict regulations constrain both the legal and operational framework governing the three parties, as well as specifics of their relationship. These restrictions may involve time limits, job roles, or the particulars of the work performed. Countries with such limitations include France, Germany, Norway, Poland, Bulgaria, Czech Republic, among many others.
And then there are the countries, where outsourcing employment via an EOR or temp agency is simply not possible, such as in Spain.
The bottom line - there's no one-size-fits-all EOR model. But a knowledgeable EOR partner helps you enter new markets in compliance with local employment laws, unlocking global growth while minimising legal risk.
A common misconception is that you can't use an Employer of Record if you already have your own established in-country entity. While this is true in some places like Mexico due to strict regulations, in many locations, an EOR can actually complement your existing in-country entities.
For example, an EOR may allow you to outsource certain roles even if you have your own HR and admin capacities on the ground. This provides flexibility - you can leverage both parallel EOR arrangements and local legal entities as needed, based on hiring demands and how much bandwidth your current team has.
During growth spurts or fluctuating hiring needs, partnering with an EOR can help you scale up staffing without overburdening your in-house people.
The specifics differ by country and industry, so it is important to carefully review local compliance rules before moving forward. But in most cases, an EOR can work in tandem with your global employment infrastructure, not serve as a complete replacement.
An understandable worry is that using a separate company for your employment needs such as an Employer of Record may increase their risk of data leaks, misuse of private information, or large-scale breaches.
It makes complete sense to have concerns when another party accesses sensitive company and payroll data about your employees. You want assurance that your data will be handled with care.
The good news is that reputable EOR firms take data protection very seriously. Leading EOR providers have robust security measures in place, like encryption technology, secure servers, strict access controls over data, and rigorous compliance practices for regulations.
By thoroughly vetting potential EOR vendors and confirming their data security standards, companies can alleviate understandable fears around security risks that may initially generate hesitation.
There may be fears that Employer of Record services lack sophistication to manage complex global hires. The assumption is EORs can only handle entry-level positions - not specialised or high-skilled talent.
This notion is misguided. Modern EOR platforms have the infrastructure to compliantly employ expert talent across borders, regardless of how niche or advanced the role.
Whether you need a software architect in Australia, a visionary product leader in Singapore, or have to make a C-suite hire in South Africa, the right EOR makes it possible.
If anything, high profile or highly skilled hires often have greater expectations around their contract terms, employment conditions, and may require more of a white-glove approach. An EOR specialising in the target country is likely better equipped to provide guidance on local laws, benchmarks, and best practices to meet these demands than your in-house teams based abroad.
Employers of Record services are frequently associated with building overseas teams. While that is their primary purpose, EORs still have valuable applications for domestic hiring as well. Right in your home country, an EOR can manage critical back-office tasks - payroll, taxes, benefits, compliance management, and more.
By offloading these administrative tasks, EORs empower you to devote energy toward core priorities rather than getting buried under HR paperwork. They also ensure you are always up to date with shifting employment laws, minimising compliance risks.
At Boundless, we recognise that going global is an exciting milestone for any business, yet it is often accompanied by daunting legal and logistical challenges. As a leading Employer of Record, we have designed our services to directly address the most common pain points of building a global team by providing:
We're passionate about empowering companies to access the best talent globally. If you're exploring expansion, our team is here to consult and make it achievable. Get in touch with our team today to get started.
