Outsourcing any component of your organisation’s HR, payroll or business expansion to a third party company is a big decision. And becomes an even bigger decision when you’re trying to find the best Employer of Record.
There’s a lot to think about. Before you decide to make use of an Employer of Record’s services, you’re going to have questions. A lot of questions.
- Does this Employer of Record have the global coverage to support my hiring plans in the coming weeks, months or years?
- Am I going to be using a provider with in-depth knowledge of the nuances of local employment laws in selected countries?
- Will my staff get responsive, personalised customer support to help them with their key global employment questions?
We know these are the big questions that business leaders ask because we hear them a LOT.
In case further proof were needed, we recently ran a special ‘Ask Me Anything’ webinar with our senior legal counsel, Stan Broome and our head of sales, Alex Henderson. Sure enough, a lot of questions came up.
We’ve compiled the seven most common questions, along with Stan and Alex’s advice for globalising companies who are considering an EOR.
Find the best EOR service provider: your questions answered.
Question 1: How should companies approach researching an Employer of Record?
This is the most foundational question - so it’s not surprising it comes up often. You know an Employer of Record might be the right solution for you. But what should you look for in your research?
It’s common for EOR providers to tell you how many countries they support. And make no mistake - quantity is important. You want to be sure that, if you choose to use an EOR to improve the flexibility of your hiring, your EOR actually has the coverage to allow you to be flexible.
But quality is important too. As well as having coverage in a particular country, a good EOR provider should also have the knowledge and expertise to help you navigate that company’s employment laws and regulatory requirements.
This is especially important in hiring markets where employment laws are tighter, or more rigorously regulated. Examples we often like to talk about are EU countries such as France and Germany, where even the EOR market itself is heavily regulated.
Let’s use Omnipresent as an example. During our ‘Ask Me Anything’ session, Stan explained how the Omnipresent legal team is often the differentiating factor for companies who are weighing up their various EOR options.
“At Omnipresent, we start by tracking trends. We break the world down into legal and regulatory patterns, paying close attention to how different countries govern the employer–employee relationship. You’ve got places like the US, which are more hands-off, all the way to France and Germany, which are far more protective of employees and stringent with employers. Day-to-day, my legal team—lawyers and paralegals based all over the world—spend their days doing the hard work: scanning legal updates, combing through trade association bulletins, reading law journals, and flagging anything relevant. If someone hears of a new regulation in one country, we alert the rest of the team in case similar trends are emerging elsewhere.’ Stan Broome
Question 2: What are the risks of using an EOR that globalising companies typically underestimate?
Stan notes that, when many companies go looking for an EOR provider, hiring capability will be first on their mind. This makes total sense - but this can’t be your only decision-making criteria.
As well as considering an EOR’s ability to hire and onboard staff, you also need a good understanding of how they will perform when global employees need to be off-boarded or terminated. Stan explained why failure to do so can be more costly and damaging in the long run.
“ Everyone, when they're first starting to hire globally thinks about onboarding. They think about, you know, how am I gonna recruit the best person? What are the qualifications that I need? You know, that kind of thing. That is not where your mind needs to be. You need to go to the other end. The thing that clients underestimate is the other end of the spectrum. Offboarding, terminations, severance. What happens when the employer employee relationship goes off the tracks? Because that's when it gets risky. That's when it gets expensive.” Stan Broome.
Question 3: How should I choose between an Employer of Record and a foreign subsidiary?
As Stan and Alex explained, there is no one ‘right’ answer to this question. It really depends on your global expansion priorities.
Stan used the example of a company that hires 10 employees in Spain to support a workforce that’s primarily based in Germany. It makes sense to use an Employer of Record to look after those employees in Spain, as your footprint is lighter and an EOR is more cost-effective than a fully-established legal entity.
But let’s imagine your team in Spain scales. Perhaps you’d initially only hired a handful of salespeople. You want to grow the whole GTM function and hire some marketing team members too. Your footprint is heavier. Your investment in Spain as an employment market is suddenly bigger. Now might be a good time to invest in your own foreign entity. After all, Spain is proving to be a viable, long-term market and creating your own subsidiary makes sense.
Question 4: When do companies typically make the switch from an EOR to an entity?
As we covered in the last answer - it really does depend. Organisations may initially use an EOR as a low cost means of entering a new market, with a plan to set up an entity later.
But Alex told us she’s noting a particularly interesting trend amongst companies that choose to partner with Omnipresent.
“One interesting use case we often see is when companies come to us and view Omnipresent as a bridge to setting up their own entity. They'll say, "We're really keen to build a sales function in the US, but it's going to take time to get that sorted. So, they start by hiring three people through us, with the plan to transfer them to their own entity in 12 months. What I find interesting is that this transfer often doesn’t happen. There are a few reasons for that. The first is that they realise how cost-effective it is to use an Employer of Record for a relatively small number of employees - and that they don’t actually need to set up a local entity. Once they’re up and running with us, they often realise it’s a great long-term solution. It saves them significant time and money, and removes the need to establish their own entity at all.” Alex Henderson, Head of Sales
Question 5: When is it best to use an Employer of Record vs a Professional Employment Organisation?
This is a common question if you’re new to the concept of an EOR. Because of course, an EOR isn’t the only model for simplifying your global employment and speeding up your global expansion.
You also have the option of using a Professional Employment Organisation (PEO). A PEO works slightly differently from an EOR in that the expanding company sets up its own entity, but then outsources HR and payroll to the PEO.
But when should you seek out the services of an EOR as opposed to a PEO?
When it comes to managing HR, payroll and benefits, there’s not a huge difference - under both employment models. But, as Stan explains, the big difference is the amount of risk your company is prepared to take on in each scenario.
"In both setups - a PEO and an EOR - the provider handles payroll, benefits, healthcare, and all the administrative tasks and compliance requirements. All of that is taken care of. But in a PEO setup, there's much more risk for the client because you are still the employer of record. So if a regulator or government authority gets involved, your company is the one on the line. You’re the one registered as a corporation in that country, and you carry the legal responsibility. In contrast, if the same thing happens under an EOR model, it’s the EOR company that’s on the line. That means my team might have to go to court or respond directly to the tax authority, regulator, employment tribunal, or whatever the relevant body is."
Question 6: Why do companies typically switch Employer of Record providers?
In Stan’s experience, one major reason is failure to be transparent about compliance issues as a company scales.
For example, EORs cut corners by classifying employees as contractors to reduce costs.
But this can expose companies to fines, audits, and even criminal liability, especially around offboarding. That’s when risks spike: a disgruntled former employee may report non-compliance, triggering investigations by tax authorities. Misclassified contractors don’t receive the protections or benefits they’re entitled to, and employers fail to meet obligations like tax withholding.
It’s why more companies are switching to EORs who offer sound legal guidance and help them stay compliant through the entire employment lifecycle including exits and employee offboarding.
But, in our experience that’s not the only reason.
- Invoicing doesn’t make sense, meaning that companies struggle to understand how their EOR running costs fit into their wider HR budgets.
- Some EOR companies don’t have the necessary licences to operate in countries where the employment market is more tightly regulated - this obviously causes problems for companies further down the road.
And, as Alex explains in the webinar, it’s why more companies are seeking to make the switch to Omnipresent.
Question 7: What would you say to companies thinking about switching their EOR providers
“ A lot of people might say price is the reason they switch EOR providers. But interestingly, many come to Omnipresent even when they pay a little more than with their previous provider. The reason is poor customer support and guidance from their EOR. The cost of dealing with external legal counsel, plus the internal time spent fixing issues, means their actual cost is far higher.”
Alex nails the reason why so many more people are choosing to switch to Omnipresent.
While the upfront cost might seem higher, this is (literally) a small price to pay in exchange for more responsive customer support and more transparent invoicing.
There are a number of reasons why expert customer support is THE silver bullet if you’re trying to find the right Employer of Record (and why Omnipresent has been nominated so frequently on G2 and Trustpilot for our expert customer support in recent months).
Firstly, there’s the trust issue that we covered at the start of this article. In using an EOR, you are quite literally outsourcing elements of your business operations to another company. It’s vitally important that your remote employees feel like they’re being managed by an employer of record who treats your team like one of their own.
Second, there’s the compliance issue. Imagine you do come up against complex employment laws in unfamiliar countries.
Portage Salarial in France. Punitive contractor misclassification rules in Spain. When those uncertainties arise, you need advice quickly. At times like this, just relying on a tech platform or a help centre isn’t going to cut it.
So consider these the three pillars of your EOR buying process - cost-effectiveness, compliance and customer support. Use these as the barometer to find not just the best Employer of Record on the market, but the best Employer of Record for your business and your employees.
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