Using an Employer of Record (EOR) can have legal implications for both the EOR and the client company. Some of the key legal considerations include:
Compliance with labor laws: EORs are responsible for ensuring compliance with all applicable labor laws and regulations in the countries where they hire employees. If an EOR fails to comply with these laws, both the EOR and the client company may be held liable.
Liability for employee actions: The EOR is typically the legal employer of the worker and is therefore liable for any actions taken by the worker, including discrimination, harassment, and other employment-related claims. However, the client company may also be held liable.
Tax compliance: EORs are responsible for ensuring that all taxes for the workers they employ are paid and filed correctly. If the EOR fails to do so, both the EOR and the client company may be held liable.
Immigration compliance: EORs are responsible for ensuring that all necessary documents and permits are obtained for employees working in foreign countries, such as work visas and residence permits. If the EOR fails to do so, both the EOR and the client company may be held liable.
Employee benefits: EORs are responsible for providing employee benefits such as health insurance, retirement plans, and other benefits, but it's important to check the contract to make sure who is responsible for this.
Risk management: Using an EOR can help a company manage and mitigate the risks associated with employing workers, but it's important to choose a reputable EOR, as using an unqualified, inexperienced or unethical EOR can lead to legal and financial problems for the company and the worker.
