Employer of Record: Myths and Misconceptions

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Mauve lists the main myths and misconceptions Employer of Record (EoR)

Employer of Record (EoR) is becoming an increasingly popular option for organisations seeking compliant employment and administration of workers – particularly overseas. Companies are recognising the benefits of EoR more than ever in the current pandemic situation. EoR’s emphasis on cost-saving, efficiency and localised support of workers when you cannot be there yourself has been a boon to many organisations in these challenging times.

As an employment model still relatively in its infancy, naturally there are myths and misconceptions around EoR that can make companies hesitate. We put our heads together and considered some of the misinterpretations of the EoR model – providing our own explanations to demystify the process and shine a light on the benefits it can provide to any organisation.

Myth 1: Employer of Record solutions are more expensive than just setting up our own company.

The initial outlay of registering a new company might seem low, but the ongoing running costs are a long-term financial commitment. On top of local staff salaries and benefits, maintaining a company also requires regular expenditure on essentials such as premises, banking, business insurances, corporate taxes, utilities, local professional services and so on. Without local knowledge, there is also the possibility of unexpected costs such as fines for local non-compliance and late payment penalties.

An Employer of Record service means you simply pay a consolidated monthly margin to the EoR provider, who then takes on all employment duties in-country and has its own local company infrastructure in place. Mauve Group also has an inhouse Compliance team and network of local partners who will ensure compliant employment where you may not have these resources.

If you want to dip your toe into a new market without the long-term commitment and costs of your own entity, Employer of Record is easily the better value option.

Myth 2: There are hidden charges associated with Employer of Record solutions.

For Employer of Record solutions, Mauve Group charges a one-off set up fee and subsequent monthly margin based on the salary amount. EoR costs are consolidated within that monthly charge, so there are no hidden costs. Full details of the solution are always included in the initial proposal document, giving clients a full understanding of the financial commitment before they sign off.

In delicate employment situations where external advice is needed to ensure absolute compliance, there may be one-off additional costs from external partners – but advice will only be pursued with full prior agreement from the client.

Myth 3: Employer of Record solutions are only for long-term assignments.

Employer of Record solutions can be an excellent long-term solution for companies needing to employ full-time, permanent staff. However, this employment model can also be utilised for short or fixed-term employment solutions. If you want to secure a worker for a short-term or rolling project, EoR may still be the answer.

Myth 4: EoR is only used for workers who are going overseas on an assignment.

While EoR is often used for expatriates assigned to an overseas location where their employers do not have an existing or functioning entity, this model can also employ workers in their home country, too. If the client does not have an entity in the worker’s home country, EoR is often used to ensure compliant employment without the need for the client to set up locally themselves. We can also provide EoR in locations where the client does have an entity, in limited circumstances where this is deemed to be fully compliant.

Myth 5: My business is too small – EoR is probably only used by big multi-nationals.

We understand SMEs also require overseas employment support – globalisation is no longer just the realm of large corporate companies. Mauve Group itself started as a small enterprise which quickly grew by opening its services to the wider world – so we have been there, too.

EoR solutions suit SMEs particularly well, as they provide access to the resources of an international company, without the financial and infrastructure requirements. Mauve Group’s EoR solutions do not have minimum headcounts – clients can secure our services for one worker, or as many as they need.

Myth 6: EoR is a corporate solution, so wouldn’t suit the not-for-profit sector.

Not-for-profit organisations make up a robust proportion of our client base. EoR suits this type of client, because it helps to optimise restricted budgets, and also ensures the utmost compliance to give stakeholders confidence in the project. Timescales for onboarding in-country are considerably reduced, allowing the client to get workers into country quickly and focus on the vital key work they are doing.

Myth 7: I will lose control over managing the worker if Mauve becomes their Employer of Record.

An EoR solution doesn’t mean Mauve takes over all decision-making and management of the worker. Mauve works closely with the client to carry out the administration of the worker’s employment, allowing the client to manage their day-to-day tasks as normal. Mauve is on hand to ensure compliant decisions are made, and should always be involved in situations such as terminations and disciplinaries as the local employer. Our approach is to avoid unbalanced relationships and welcome collaboration with the client.

Myth 8: Employer of Record isn’t a legal solution.

In most countries, Employer of Record is a recognised legitimate employment model. It is true that some jurisdictions require special licenses or entity registrations in order to perform an Employer of Record solution legally. Mauve Group holds all required licenses and registrations for its operational countries, and won’t offer Employer of Record solutions that are not 100% compliant – for our security and that of our clients.

Myth 9: The Employer of Record won’t share the same company ethos as us.

A good Employer of Record should take the time to get to know the client’s guiding values and company ethos, enabling them to offer a consistent service to the worker. We also seek to share our family values with our clients so they can ensure we are a good fit for their organisational strategy. Collaboration and communication take place in both directions to create a united partnership.

Myth 10: Workers will feel uncomfortable about being employed by a third party.

We take worker wellbeing extremely seriously and aim to build strong worker relationships throughout the employment. People are at the heart of any employment solution, and we value their personal and professional happiness highly.

Account Managers and Sales Support staff are on hand throughout the EoR set-up process for any guidance the worker requires. Once the solution is established, our Client Liaison department or in-country representatives carry out regular check-ins. We also have enjoyed hosting a number of social events for workers over the past couple of years, including our Christmas Cocktail Party in London which we hope to develop into other countries.

The proof of worker happiness is in their own positive stories. Many Mauve EoR workers go on to provide references and testimonials in support of our service offering, and request us as an EoR provider when they move on to new contracts.

If you’re considering an EoR solution, or want more information about how it can support your specific circumstances, get in touch with Mauve HERE.

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