Agent of Record Vs Employer of Record – Which one and why?

What is the difference between an employer of record and agent of record.? When should you use them? Read our CWS Summit roundtable recap.

CXC Roundtable RECAP – EOR vs AOR

CXC Global’s Senior Global Solutions Manager Konner Scherry hosted a round-table discussion at Staffing Industry Analysts’ CWS (Contingent Workforce Summit) last week in Dallas, with focus on the differences between EOR (Employer of Record) and AOR (Agency of Record) solutions and the best time to utilize each solution. Broken up within three discussions, industry experts and contingent workforce buyers came together to discuss the key differences and how their organizations are currently utilizing Employer of Record & Agency of Record solutions in their current programs. 

The conversation began with a detailed explanation and subsequent discussion behind exactly what an Employer of Record provides and the reasons an organization would look to an EOR solution provider to assist with their global expansion journey.  

Employer of Record (EOR)

An EOR (Employer of Record) solution carries the liability of your employment relationship and manages all the administrative back-office tasks such as payroll, benefits, onboarding and termination for your organization. If you use an EOR provider, they are the legal provider and employ your identified workers on your behalf while managing all the responsibilities. This is pertinent to organizations who are looking to expand their workforce & engage employed workers throughout the world. These workers are tax burdened, have access to social programs, and are provided with PTO in accordance with the employment legislation in the country the worker is performing services.  

LEGAL IN-COUNTRY PROVIDER 

  • Employment contract review
  • Benefit comparison (social standard to what internal Full-Time Employees are receiving)​ 
  • Access to excess/additional private medical, travel, life insurances​ 
  • Ensure all tax and pension contributions are made, potential assistance with tax planning & preparation​ where compliant 
  • Effective global onboarding with proactive updates 
  • Client specific forms where compliant (confidentiality, IP) 

Agent of Record (AOR)

An AOR (Agency of Record) service provides compliant worker engagement for independent contractors, Corporation to Corporation, and other freelancer models. An AOR company assumes responsibility for ensuring your contractors are paid compliantly with all applicable regulatory and tax considerations in the country the worker is performing services. 

Global Governance

As governments across the world are putting a magnifying glass to the governance of how workers are classified, and the taxes due for work performed in-country; organizations are required to dive into their domestic and global workforce to ensure proper classification, local adherence to statutory requirements, and compliant engagement all while trying to source and retain the best talent. While the “work from anywhere” movement has allowed organizations to expand their business operations throughout the world, tax authorities and governments are also taking a more managed approach to ensure that proper taxes are being paid and workers are being treated correctly.  

Centralized Solutions

It was clear from the discussion between the three sessions that more organizations are exploring capabilities to expand their workforces globally or were more interested in the compliant engagement of their workforce. One individual from a leading Management and Consulting firm spoke on their organization’s current engagement of AOR’s throughout the world, and their efforts to consolidate a around 15+ organizations who were supporting independent workers on their behalf to audit their compliance engine and avoid misclassified workers. This organization was concerned primarily with compliance qualifications and how they were diversified due to the number of different providers and were not confident in the adherence to local requirements. Utilizing a central trusted partner to maintain uniformity and adherence to in country requirements for proper classification allows organizations who are not experts in global employment law to develop their teams while limiting their risks.  

Jan-Willem Weijers with Adevinta spoke on his implementation of EOR & AOR solutions in his current role and how the outsourcing of these solutions enabled his team to maintain focus on their own business needs. While having a trusted partner to ensure and consult on the engagement of their workforce, Jan expressed how it has allowed his team to grow into new regions simply and compliantly without the need to set up local entities or paying in several different currencies.  

Global Expansion

With talent demand at an all-time high, the ability to hire across borders is a competitive advantage that can be enabled through the utilization of a trusted EOR/AOR provider. Organizations who do not have local/global presence and are not experts in entity set-up are able to leverage these solutions in their global expansion.

Connect with Konner on linked-in and follow CXC Global to keep up with latest insights, trends and news about the world of work.

 

 

CXC is a global HR outsourcing organization with 30 years of experience in workforce management. Our innovative and cost-effective solutions help companies gain a competitive advantage by improving efficiency while reducing risks.

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