As more businesses embrace remote work, many are choosing to hire employees in different parts of the world. However, employing a remote worker in a foreign country can be challenging and time-consuming, especially if you're not familiar with local employment laws and regulations. That's where Employer of Record (EOR) services come in. In this blog post, we'll explain what EOR services are and discuss the advantages of using EOR services for remote employees in the Philippines and Mexico versus direct hire.
An EOR is a third-party organization that acts as the legal employer of your remote workers. They handle all administrative tasks, such as payroll, benefits administration, tax compliance, and employment contracts, so that you can focus on your core business activities. Essentially, an EOR takes care of everything related to your remote employee's employment, from hiring to termination.
The reality is that many companies hire remote employees in the Philippines and Mexico directly. They bypass all legal compliance. Why does this happen? Non-compliance is cheaper, and the companies can pass that savings on to the free-lance employee in higher wages.
While it is no more legal to do this in those countries than it is in the U.S., companies are less likely to be “found out” in the Philippines and Mexico.
You might be able to avoid the local and federal laws in the Philippines and Mexico, but what does that say about your company if you do?
Advantages of using EOR services for remote employees in the Philippines and Mexico versus direct hire
Legal compliance
Employment laws and regulations can vary widely from country to country, and it can be challenging to navigate them on your own. By using an EOR, you can ensure that you are compliant with all local employment laws and regulations in the Philippines and Mexico, including labor laws, payroll taxes, and social security contributions. An EOR can also handle all legal and administrative tasks, such as registering your company, obtaining work permits, and drafting employment contracts, so you don't have to.
Reduced administrative burden
Hiring an employee in a foreign country can be a time-consuming and complicated process, especially if you are not familiar with local laws and regulations. By using an EOR, you can delegate administrative tasks such as payroll, benefits administration, and tax compliance to a third party. This can help free up your time and resources so that you can focus on your core business activities.
Risk management
Employing a remote worker in a foreign country comes with risks, including legal, tax, and compliance risks. An EOR can help mitigate these risks by providing guidance on employment contracts, ensuring that your company complies with local laws and regulations, and providing liability insurance coverage in case of any legal disputes.
Cost-effective
Using an EOR can be a cost-effective solution compared to direct hire, as it eliminates the need to set up a legal entity in the Philippines or Mexico or to hire additional staff to handle administrative tasks. An EOR typically charges a monthly fee, which covers all employment-related costs, including payroll, taxes, and benefits. This can help you save money and reduce overhead costs.
Faster hiring process
Hiring an employee directly in a foreign country can be a slow and cumbersome process, as it involves multiple steps such as obtaining a work permit, registering your company, and setting up payroll. By using an EOR, you can bypass these steps and start hiring immediately. An EOR can help you find qualified candidates, handle all administrative tasks, and ensure that your employee is legally authorized to work in the Philippines or Mexico.
Happier, Long-term Employees
Remote employees are part of a professional organization in THEIR countries. They know they are compliant with local and federal laws and they are treated respectfully with benefits, bonuses, salary increases and promotions. They are also paid professionally directly into their bank accounts with paystubs not via online payment systems like PayPal, Wise, Xoom, etc.
In conclusion, Employer of Record services offer many advantages for businesses looking to hire remote employees in the Philippines and Mexico. They can provide legal compliance, reduce administrative burden, manage risk, offer cost savings, accelerate the hiring process and produce happy employees. If you're considering hiring remote workers in these countries, using an EOR can be a smart and efficient solution.
