An employer of record (EOR) is an organization that employs workers on your company’s behalf. Acting as the legal employer, the EOR assumes full responsibility for all aspects of employment, including payroll, taxes, compliance, and benefits. Companies looking to onboard talent internationally often turn to EORs located in other countries to navigate the intricacies of international hiring.
An EOR may deliver many noteworthy benefits for your company, but no two are exactly the same. At some point, you may find that the EOR you initially enlisted no longer fits your business’s needs. It may then make sense to switch EOR service providers, but there are certain challenges that can ensue.
In this article, we’ll walk you through everything you need to know about switching EORs and how to overcome potential challenges to ensure a smooth and seamless transition.
Why would you need to switch EOR service providers?
The right EOR will allow your business to hire in its target territories compliantly and seamlessly. The best EORs therefore have local expertise, ensuring compliance with local labor laws and bringing regional knowledge that can be beneficial for attracting talent. These entities should have a strong understanding of customs and cultural norms in their geographical area, positioning them as a trusted source among the local workforce.
Aside from these characteristics, the best EOR for your company will offer the services you need to onboard, pay, and manage global employees with ease, while also minimizing risks. The challenge lies in the fact that these services differ among EOR service providers. While some offer comprehensive human resources support, others have a much more limited scope of services.
With that in mind, here are some reasons you may need to switch to a different EOR solution.
Limited services
Small to midsize companies looking to expand their global workforce often need robust talent management support that extends beyond what their current EOR may offer. For instance, they may need assistance running payroll internationally, managing compensation and benefits, and overseeing contracts. If your EOR’s services fall short, you may find yourself having to partner with other services providers, which can quickly become a costly administrative burden. It may therefore make sense to find a more flexible EOR solution that can handle all of your business’s needs.
Isolated coverage
If your company is looking to grow its workforce beyond the first country in which you partnered with an EOR, there’s a chance that the same EOR doesn’t operate in your other target regions.
Simply put, an EOR in one country may not be equipped to serve you in the other countries where you want to hire. In this case, instead of having to find and work with multiple EORs whose services all vary, switching to a more universal solution would be a much more convenient option. A global employment solution with coverage in multiple countries will better support your company as it scales.
Poor organizational fit
Lastly, you may find yourself needing to switch EORs because your current provider simply doesn’t fit your company’s business needs. Whether the communication styles aren’t aligned, or your company values differ too significantly, there are many unique reasons why a certain EOR service provider might not suit your organization.
The challenges of an EOR switch
Sticking with an EOR service provider that doesn’t serve your needs is never the answer, and from a business standpoint, it makes sense to switch as soon as you discover that the situation isn’t working. Unfortunately, that doesn’t mean an EOR switch will be simple or quick.
As with any new partnership, transitioning to a different EOR service provider can introduce complex challenges for your business. From transferring sensitive data to addressing compliance matters, there are various issues that can come up during the transition. Data migration is a particular concern for companies with applicable data regulations such as GDPR or HIPAA—clear protocols must be established to prevent any violations and to avoid any leakage of sensitive client or employee data.
Unfortunately, it’s easy for oversights and errors to occur during the transition. But when you’re dealing with something as important as labor laws and global payroll, there’s no room for mistakes, and even seemingly insignificant missteps could lead to legal penalties or fines.
Switching EORs can also become an administrative strain on your employees. From HR to legal and finance teams, the transition will call for support from numerous stakeholders. The goal of working with an EOR is to alleviate your internal team’s responsibilities, not add to them, but switching providers comes with a long list of tasks to manage.
Further, if the transition should become too complex or drawn-out, frustrations may arise among your global workforce. Maintaining clear and ongoing communication is critical to keeping your workers informed through every step of the transition, which brings us to our next point.
💡 Learn how Kinsta ensured a smooth transition from a legacy EOR to Oyster.
Ensuring a successful EOR switch
Effectively switching EOR service providers calls for a thoughtful, multi-step approach.
First, start with a side-by-side analysis to compare how each EOR handles employment contracts, benefits, and day-to-day operations, among other details. You also want to perform a cost analysis to make sure the switch is an economically sound choice.
Next, you’ll have to establish and implement an EOR migration strategy. This is a robust undertaking that includes internal communications to all parties involved, as well as the closure of employment contracts with the previous EOR, resigning and rehiring or terminating employees, transferring employee records, and coordinating with the new EOR provider. Each step requires close monitoring to prevent any mistakes. The process also involves many parties in your organization, each of whom will have specific responsibilities for onboarding employees.
Switch to Oyster for a seamless global employment experience
An EOR alternative such as Oyster’s global employment platform can significantly streamline the process of switching EORs. Our end-to-end solution enables you to hire, pay, and manage talent in over 180 countries. You’ll also have access to a comprehensive suite of global employment tools to calculate employment costs, look up local benefits, compare employment terms, and more.
If you need to switch EORs, Oyster’s migration experts will guide you at every step to ensure a smooth transition for you and your team. Learn more about how Oyster can transform your global hiring.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.
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