Emerald Technology Apr 28, 2022 11:05:59 AM 4 min read

Employer of Record VS Automated Payroll Platforms

Both an automated platform and Employer of Records assist organisations in payrolling globally seamlessly. The two have seen accelerated advancements in recent years and are predicted to be estimated at $14 billion by 2025. Although both have similarities, some distinct features differentiate them;

An Employer of Record (EOR) is an external company that has been outsourced as a partner and international Human Resource solution designed to manage payroll for employees who work for clients in different locations and countries where the organisation does not have a legal entity or operations. An Employer of Record is essentially an entity that has assumed tax or employment reporting responsibilities for its employees working under a full-time employment contract. They are responsible for anything from onboarding, payroll, and HR admin tasks to compliance but, most notably, are subject to country-specific employment law.

Automated payroll platforms are a hub for global employee documents, such as employment contracts, compliance, employee benefits, payroll and onboarding information and some also offer the ability to hire, pay and offer benefits to remote employees.

But, which suits you best?

If you require a Bespoke approach;

The client's needs are centric to an EOR's customised approach, aiding in streamlining the outsourcing process and communication. This approach fits organisations focused on a long-term growth strategy that requires their HR admin to be managed to free up time to conduct daily operations for employees. As EOR solution will also allow companies to reduce entry costs by up to 50%, eliminate withdrawal costs and onboard new hires within 72 hours.

You value more experience 

Experience highly differentiates EORs and payroll automation platforms. Unlike a one size fits all service, EORs such as Emerald Technology can provide over two decades of expertise and understanding of the industry. Naturally, with experience, unforeseen challenges are met with a high level of knowledge and action. An EOR's experience also provides expert agents globally in relevant territories to support organisations and employees.

Compliance is key

EORs are experts in handling compliance. They have the information and experience of adhering to regulations and guidelines in whichever region or territory your personnel reside in, meaning they can manage unforeseen challenges and assist organisations in taking care of any legalities. Moreover, they are responsible for any risks regarding staying compliant. Since an EOR is culpable for anything regarding compliance and is well equipped with the knowledge and expertise to ensure risks are avoided, you fundamentally decrease your likelihood of penalties and compliance responsibilities. You essentially get risk-free expansion.

You want cost savings

Usually, EORs are more costly as they offer organisations more in what they handle and assume responsibility for. However, savvy SMEs partner with an EOR as they gain access to excellent benefits, unlike acquiring this elsewhere. Also, an EOR assists with worker onboarding and any HR administration, which a payroll platform lacks.

It is essential to acknowledge how an EOR is valued and subsequently priced; it is often a percentage of an employee's gross earnings. However, a payroll automation platform is contingent on the number of employees.

Regardless of a greater expense, an EOR is a more cost-effective choice for some organisations. A review done by NAPEO revealed that organisations with an EOR or PEO provider had a preferable ROI over other outsourcing resources.

To find out more about how we can help your company expand globally, contact Emerald Technology.