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EoR/AoR

Employer of record (EoR) and agent of record (AoR) solutions let you hire the best people, wherever they are. Read our guide to find out more.

Engaging contractors comes with a lot of work, costs and risks.

You need processes in place to compliantly engage, efficiently onboard and effectively manage your workers — all of which take time and money to put together. Plus, if you want to hire across borders, you usually need to set up a legal entity in the country you want to hire in, which is a whole other hassle to deal with.

Thankfully, there’s another solution. One which allows you to both skip the hassle and expense of setting up entities and avoid the risks associated with the contingent workforce. Read on for our full guide to our employer of record (EoR) and agent of record (AoR) solutions.

What is an employer of record (EoR)?

An employer of record (EoR) is a company that takes on the legal responsibility of employing workers on behalf of other organisations. An EoR handles payroll, taxes, benefits and other HR tasks on your behalf — but you retain full control of your actual operations. That means that the only difference between a worker engaged through an EoR and the rest of your workforce is who their legal employer is. Using an EoR is a common solution for global organisations, since it allows you to hire workers in different countries without setting up a legal entity.

What is an agent of record (AoR)?

An agent of record (AoR) is an organisation that helps businesses to ensure compliance when they take on independent contractors. The AoR ensures that workers are correctly classified, and acts on its clients’ behalf to engage, onboard and pay them. In this way, an AoR is quite similar to an EoR, although the HR functions it provides are less extensive.

What does an EoR/AoR do?

While EoRs and AoRs are different, they provide similar services. Both types of organisations typically fulfil three main functions that help you to easily engage workers in a different state or country from your HQ.

Acts as an intermediary between you and your workers

An EoR is your workers’ employer for legal and tax purposes. However, in practice, they report to and perform services for your company.
This means that you can easily use an EoR to hire employees in countries where you don’t (yet) have a legal entity, without losing control over your workforce.

While an AoR isn’t your contractors’ employer, they still play the role of intermediary between you and them. They usually handle things like contractor payroll, expenses and record-keeping on your behalf.

Handles HR tasks so you don’t have to

AoRs perform a number of different HR tasks to help their clients compliantly engage contractors.

For example, they prepare compliant local contracts and agreements, and assist in the onboarding process by gathering the documents and information that are required by law.

With an EoR, the HR services provided are typically much more extensive. For example, they may handle things like benefits, onboarding and training, and even acquiring visas and permits for foreign workers.

Pays your workers, wherever they are

Both EoRs and AoRs ensure that all workers are paid accurately, on time and in their own currencies.

Employer of record payroll services also include handling things like tax withholding and reporting, deductions for social security and pensions and providing your workers with payslips and other documentation.

Similarly, an AoR typically handles handle contractor invoices, expenses and record-keeping. One advantage of using an AoR is that they can consolidate all contractor invoices into one single payment — simplifying administration for their clients.

When to use an employer of record

You can use an EoR to hire employees in your own state or country while outsourcing the HR admin involved. However, the most common use case for working with an EoR is when you want to hire workers in a different country. For example, you might use an EoR if:

You want to expand to new markets without setting up a legal entity

You need an intermediary solution while you set up a legal entity

You want access to top talent, anywhere in the world

You want to allow a current employee to work from a different country

When to use an agent of record

Businesses use AoRs when they want to take on contractors without having to deal with the back-office activities that this usually entails, while ensuring total compliance with labour laws and regulations. Specifically, you might want to consider using an AoR if:

You want to engage international contractors without the compliance risk

You want to avoid misclassifying employees as contractors

You need help managing payroll for your contractor workforce

You want to outsource time-consuming tasks like timesheeting and managing invoices

Employer of record vs. agent of record vs. staffing agency

A staffing agency is a company that helps other organisations to source and engage talent for contingent roles. They can often help organisations to fill roles quickly because they have their own pools of pre-vetted, pre-qualified candidates to pull from.

It’s easy to get confused between staffing agencies, EoRs and AoRs because staffing agencies sometimes provide EoR or AoR services for the workers they place with client companies, and both EoRs and AoRs sometimes provide staffing or recruitment solutions as well.

However, the easiest way to think about the difference between the two is that a staffing agency’s focus is on sourcing workers, whereas an EoR or AoR’s role is to compliantly engage them.

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CXC’s EoR and AoR services

We understand that the best people for your business aren’t always located where you are. That’s why we’ve designed our EoR and AoR services to enable you to engage the right people to solidify your global presence and move your business forwards — wherever they are. Want to find out more?

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If you’re interested in seeing what CXC can do for you, or if you have any questions about how to improve your contingent workforce program, please contact us today.