What’s an Employer of Record (EOR)?

Employers of Record (EOR) handles the formal employment tasks and responsibilities. Useful for companies looking to expand internationally.

Julio Becerra

Estimated reading time: 5 minute(s)
March 12, 2024

An Employer of Record (EOR) is a company that legally employs a workforce and handles all the formal employment tasks and responsibilities, like taxes, payroll, and benefits.

Employers of Record are particularly useful for companies looking to expand internationally without setting up a legal entity in a new country or for small businesses that can’t handle HR functions in-house. By using an EOR, companies can focus on their core business activities. At the same time, the EOR manages the complexities of employment, and if you know a little about Mexico’s Federal Labor Law, complexity can sound like an understatement.

An Employer of Record (EOR) is a company that legally employs a workforce and handles all the formal employment tasks and responsibilities, like taxes, payroll, and benefits.

What does an Employer of Record (EOR) do?

Here’s what this typically involves:

  • Payroll Processing and Taxes: The EOR manages employees’ payroll, ensuring they are paid correctly and on time. Includes withholding the appropriate taxes and handling any other deductions.
  • Compliance: They ensure that employment practices comply with local and national laws, which can vary significantly from country to country. It is particularly valuable for companies hiring in multiple locations or countries.
  • HR Responsibilities: The EOR oversees human resources functions such as administering benefits, handling workers’ compensation claims, and managing employment contracts.
  • Risk Mitigation: They manage much of the legal and compliance risk associated with employment, as they are the official employer on record.

Employer of Record (EOR) benefits

Employer of Record (EOR) services can help reduce your workload significantly. An EOR can handle many HR tasks, such as candidate recruitment, screening, cultural alignment with the company, and onboarding. They can also promptly resolve any issues that may arise with the candidate.

An EOR can be a valuable partner when hiring diverse talent, especially outside your company’s home country. Diverse talent can bring a fresh perspective and enhance your services.

Moreover, EOR services can help you create a customized benefits package based on the employee’s location. Since EOR services are based in the same country as your employees, they better understand the expected benefits. They can offer competitive and desirable options beyond the legal minimum.

What does an Employer of Record do?

* Payroll Processing and Taxes
* Compliance
* HHRR Responsibilities
* Risk Mitigation

Problems with EORs

Only some things can be beautiful; many EORs keep bad practices that could hurt your operations. These are the most common ones:

Compliance failures

Many Global EORs promise the same to all companies, regardless of the country they hire; this can be problematic because you need to trust a questionable EOR, leading to legal problems. Regulations can differ in many countries; offering the same for every country is a red flag.

For example, in some countries, you must offer a temporary contract, and then you, as an employer, must directly employ the worker. Some EORs may need to be more transparent with their clients regarding the regulations and laws in different countries; this can lead to legal problems and, ultimately, losing a client. 

At Aviada, we believe in being transparent with our clients and maintaining complete honesty in our processes. We prioritize our services’ ethical and legal aspects and ensure compliance with local and national laws. Our goal is to build long-term relationships with our clients, and we achieve this by providing high-quality, reliable, and transparent EOR services.

Providing generic solutions instead of a customized solution

To provide fast service, an EOR often has to sacrifice customized solutions; this may seem like a good thing at first, but when solutions are not designed for the client who hires them, several essential things can be lost along the way.

Hiring a Customer Service differs from hiring a Project Management or Development service. The needs or complications may vary for each one, and not putting the cards on the table for “speed” can put the employment relationship at risk later.

A personalized solution makes the success of the working relationship more likely since things you need are specifically considered, and others that will only stop or encourage processes are ruled out.

Differences between the real talent skills and the one you need

Sometimes, assurances are made that you’ll be provided with a seasoned developer proficient in a specific technology, for which you pay accordingly. However, upon commencement, you realize you’ve been assigned a junior developer just beginning to work with that technology. It’s crucial to recognize that this discrepancy isn’t the developer’s fault; they may be unaware that they’re being marketed as a senior developer while being compensated at a junior level. In such instances, Employer of Record (EOR) companies retain a significant portion of the payment, resulting in a huge disparity and loss of trust.

Choosing Aviada for EOR Services

At Aviada, we believe in offering a fair deal to both employers and employees. We guarantee that most of your payment directly goes to your employee, while we take a small fixed fee. Other platforms charge almost 30%, but we keep it low and affordable. We focus on providing training and motivation to your employees and their families, resulting in a low turnover rate.

We have a wide range of services we can customize according to your needs. Need part-time or full-time? With a Product Manager or not? We can provide a team, just one talent, a temporary contract, or full-time.

We maintain complete transparency with our partners regarding the candidate they are hiring. As a partner, you can have complete trust that you are getting the right person for the job without exaggerating their skills or abilities, which could lead to an inflated cost and a waste of everyone’s time.

We focus on providing training and motivation to your employees and their families, resulting in a low turnover rate.

Comparison of Aviada and other EOR Services

Metric Aviada Typical EOR
Hiring Process Highly transparent and flexible to your needs. Total freedom to choose who you work with Agressive contracts with exclusivity clauses and limited choice of workers
Industry Expertise More than fifteen years of as employees and seven as administrators Varied
Cultural Fit Mexican people with compatibility and knowledge of American culture Uncertain compatibility due to significant geographic and cultural differences
Employee Benefits Vastly superior to Mexican law based on employees’ and families’ needs Those established (mandated) by law, and sometimes even less by engaging in tax evasion
Service Offerings Recruitment, Training, Payroll, Equipment Leasing, Procurement, Legal Compliance Costly project-based work
Health Policy Benefit Minor and Major Coverage for employees and family Only Major Coverage for Employee
Cost Structure Tiny Fixed Fee. Not a penny is taken from the salary of employees About 30%+ of workers’ salary, which puts the incentive in charging more and paying less
Flexibility and Scalability Diverse talent pool with highly skilled people to scale your teams Rigid framework, driven by maximum-profits mentality
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About Aviada

With Aviada’s expertise in staff augmentation, hiring professionals in Mexico has never been easier.
By providing us with a job description, you can harness the benefits of Employer Of Record Services and trust Aviada to locate the ideal candidate to meet your needs, seamlessly taking care of the entire process.

Aviada ranked #1 in Best Place to Code 2021

Best Place to Code® is a program to identify and award companies that make efforts to offer the best work conditions to IT Professionals. This award is operated by Software Guru.