Abbreviated to GEOR, a global employer of record is a third-party organization that onboards its clients’ foreign employees locally in their target countries using its global infrastructure.  

Employees acquired in this way (GEOR employees) are officially registered as employees of the GEOR company, which handles legislation, tax compliance, global payroll, expats’ work permits and immigration support, and employment requirements. The actual employer maintains the substantive day-to-day working relationship with the global employee hired via a GEOR model.

The GEOR solution, also known as global employment outsourcing, allows companies to hire, compensate, and provide benefits to the talented foreign workforce that is key to their business. It helps them expand their business to (or operate in) an international market quickly, easily and with 100% compliance (for either compliance or convenience reasons).

GEOR acts as a legal and functional intermediary between the employer and foreign employee. It takes responsibility for the employee while leaving active employee management to the employer. International hiring processes are complicated and require detailed in-country legal and payroll logistics knowledge. The global employer of record takes up this challenge and handles all global HR issues on the client’s behalf.

Global Employer of Record Responsibilities

GEOR assumes more legal and financial responsibility for the employees, regardless of their country of residence and the number of employees under the agreement.

Unlike a local third-party employment service that would do that in one country (or a limited number of countries, or 190+ countries to meet your company’s global expansion needs), a global employer of record gets you covered anywhere in the world, which makes global employment outsourcing faster, easier, cheaper, and 100% compliant.

A global employer of record is responsible for the following tasks:

• Comply with host country labour laws and regulations.
• Facilitate acquiring of visas and work permits.
• Offer advice to the employer on foreign labour laws.
• Process legal work permits.
• Provide a legislation entity for compliance with local payroll.

Why seek a global employer of record solution?

A company can enjoy several financial and legal benefits from working with a global employer of record. The GEOR replaces several separate entities that would alternatively handle foreign workforce employment. Before the advent of GEOR, companies struggled with foreign labor adjustments, resulting in the hiring of expensive legal counsel and having to create their own expensive legal entities in each county.

Here are some of the benefits a company  with foreign labour can look forward to by deciding to use global employer of record solutions:

Work permits Immigration and visa processing.

Scrutiny and compliance with constantly volatile international immigration laws can be time-consuming and resource-wasting. GEOR is responsible for handling the processing of visas and work permits and meeting immigration laws and regulations. The global employer of record also ensures immigration compliance should changes be made while the employee is working locally.

No need to dive into country payroll nuances.

Payroll includes critical financial information such as deductible, tax and payable amounts.

A compliant payroll should accurately reflect these details according to set standards. In most cases, payroll is compliant with local standards for foreign employees. The GEOR handles payroll for the employer’s global employees eliminating the need to have different payroll interfaces for foreign employees on assignment or employment agreement.

No need for international branches and own international infrastructure setup

A different way to ensure compliance with foreign labour laws is to establish a subsidiary in a foreign country that complies with the country’s laws. This is a time-consuming, labor-intensive undertaking that would require expensive legal guidance. For most firms, this is not a viable option. The easiest solution is a GEOR service. The service takes care of all legal compliance, including work laws, to ensure legal foreign employment.

Single point of contact and consolidation of actions  single unified invoicing and reporting

No matter how large your international workforce may grow or how many countries they are in, your global employment outsourcing efforts can be much more successful and compliant through the use of a Global Employer of Record solution.

Whether you have one or one hundred global team members, your global employer of record solution provider will provide one monthly invoice that covers them all.

Transparent, easy-to-understand, unified billing.

Even if your global employment outsourcing efforts involve one hundred team members in one hundred different countries, your global employer of record provider will handle them all in one place.

A global employer of record is the easiest and fastest way to venture into international markets by hiring foreign sales teams or to utilize and reward top foreign talent who is instrumental in growing your business.

When considering other available alternatives, the advantages of using a global employer of record are overwhelming. GEOR reduces the company’s liabilities and exposures to misclassification risks and legal resources in the hiring process.

The main benefit apart from being a single access point to foreign labour is the time and cost savings along with 100% compliance.

Use the easy button for your global employment outsourcing initiatives, and use a global employer of record solution.

*The terms Global Employer of Record, also known as Global Employment Outsourcing, International Professional Employer Organization (PEO), and payroll solution, are often used interchangeably.

Multinational companies are often seen engaging self-employed contractors for their foreign-based business as opposed to hiring full-time employees for seemingly cost-effective reasons. By hiring a foreign independent contractor, a company escapes the responsibility of fulfilling financial-based employee benefits like health-care, sick leave, paid vacations and retirement benefits.

However, the long-term sanctions that come with foreign independent contractors are exponentially larger than any amount that the company may end up saving.

Some of these risks include but are not limited to the following:

• Owing to decreased organizational authority and absence of company culture, the contractor may not feel part of the team and may withhold necessary or valuable information.
• Loss of intellectual property that the contractor takes with themselves when they decide to leave or the contract ends
• Low employee retention owing to the fact that a contractor is not obligated to stay with the company, which forces the company to make replacements continuously. This includes time and efforts invested in advertising, interviewing, screening, hiring and onboarding the new worker.
• Losing top IT talent means losing an edge over your competitors.
• The legal hassles and penalties that may result when a contractor claims for employee benefits.

The Misclassification of Employees Lawsuits: Financial Costs

Misclassification of employees as independent contractors and vice versa is perhaps the riskiest outcome, especially for multinational companies in a foreign land who are unfamiliar with the domestic legal systems. This process gets complicated by the involvement of legislation of more than one country, both of which may have distinctive customary practices.

Locally, independent contractor mislabeling cases notoriously end up costing a hundred million dollars to companies.

Additionally, while it is clear what IRS’s six standards for classification of independent contractors are, another country’s standards may be entirely different and may include additional expensive grounds like mandatory thirteen-month pay, mandatory bonuses and contributions to unemployment funds. Some countries impose fines along with withholding tax in cases of mislabeling.

Switching to Full-time Foreign Employees Ensures Full HR Compliance

While turning self-employed independent contractors into employees initially increases the costs by an approximate of 30% (Steve Santiago, 2009), the aggregate increase in labor cost is exponentially lower because of employee retention and efficiently trained staff. (Biz Carson, 2015)

Additionally, a long-term staff allows better business growth as opposed to short-term contractors for the following reasons.

• Full-time employees devote full-time to the company’s project as opposed to part-time contractors.
• There is decreased staff turnover and higher employee retention.
• A business needs loyal ‘on-deck’ workers and a dedicated team of professionals to carry the tasks forward.
• Business longevity is directly linked with the fluidity with which employees can climb up the corporate ladder; something that gets hard to gauge with independent contractors.
• Businesses are better prepared for when someone unexpectedly resigns when it has a group of well-trained all-encompassing individuals, as opposed to contractors that are not as fully immersed.
• Hiring employees creates a company culture where everyone works as a team towards the same goal, as opposed to working with off-site and inconsistent contractors.

Hiring full-time global employees will not just reduce the prolonged monetary costs but increase employee retention and engagement, ensure full legal and HR compliance and consequentially protect your business against various risks and exposures linked with global hiring.

The Solution

Global Professional Employer Organization (PEO) Services can effectively help your multi-national company transition from self-employed foreign contractors to foreign employees with the minimum risks possible.
Global PEOs can help your business through the following crucial steps:

• Successfully switching to full-time, consistent and long-term foreign employees as opposed to foreign independent contractors.
• Providing compliance with domestic labor and employment laws, familiarity with the legal system and official nitty-gritty.
• Helping your business attract foreign IT professionals seeking stability and security of employment
• Aid your company in getting in touch with global IT talent in a fully compliant manner and retain them long-term, thus reducing employee turnover and increasing employee engagement.
• Making sure that your company’s intellectual property remains within the company.
• Allowing the company to make more profits because of their trained set of individuals that have a shared
  knowledge of the goals, and hence can easily transition from project to project.

As you can see, the positive aspects of utilizing a Global PEO that understands and complies with the laws and labor regulations of more than 180 countries without challenge. Additionally, securing global talent in a new market is pain-free and a seamless entrance into new countries, avoiding the pitfalls of both non-resident status, but HR concerns as well.