An Employer of Record (EOR) facilitates the compliant hiring and payment of employees and contractors globally, offering a cost-effective solution for businesses not registered in their hires' countries. This blog post explains the roles and differences between contractors and employees, and outlines when to hire each, how an EOR can assist in transitioning contractors to permanent employees, and the termination process management.
An Employer of Record or EOR helps companies in hiring both Employees and Contractors. We have the necessary tools, partners, and vendors needed to send payments, hire compliantly and process benefits on a global scale. This is important for businesses that aren’t registered in the country their new hire resides in. EOR serves as a cheaper alternative so that you as the Employer don’t have to worry about allocating time and resources to building incorporations, understanding the country’s employment law, or building relationships with local payroll and benefits providers.
Many countries ensure that there are strict lines that separate and define Contractors and Employees separate from one another. If you believe some of the “Employee” definitions describe the relationship your company has with your Contractor, read below on how to transition them to permanent employees to avoid any misclassification risk.
Employees have been proven to work with companies for a longer period of time. There is some correlation between time spent at a company and the benefits they’re provided, and as seen in the table above, there aren’t many Employer-provided benefits for Contractors. In addition to these benefits, employees also feel more protected by the local legislation related to labor law.
With this being said, hiring Contractors is never a bad idea. Your business may have needs in specific countries that are too expensive to incorporate into, especially if the need is for a short-term project. A lot of testing and preparation can be done by hiring an Independent Contractor in the country of your choosing to see how the individual works and whether or not there is enough business in that country for your team to invest more resources into. However, your team will also have to manage payments through invoicing, currency/foreign exchange conversions, and any country-specific legislation for Contractors.
An EOR that operates nationally can help to advise on the best route for you and your team; however, the decision of Contractor vs Employee is ultimately going to be based on your business needs.
An EOR can help make the transition process for Contractors becoming permanent Full-time employees easy to manage. Everything from Payroll and tax registrations to benefits and pension enrolments plus any other country-specific compliance requirements are covered by the EOR. We simply need you to handle most of the communications and training while we take care of the rest.
The first step in processing this transition is communication. Is your Contractor aware of the changes to come? Some examples include:
Once you’ve aligned with your Contractors on the transition, the EOR will be ready to guide you and your hire through the rest of the onboarding process from early welcome emails all the way up to the Employment Agreement execution.
The EOR as the legal employer is responsible for terminations and the processes associated with it, including final pay, vacation payouts, benefits continuation or termination, and record of employment. Similar to the onboarding process, the EOR will be responsible for communicating all steps of the termination process in relation to the country’s labor laws and will manage all expectations before anything is communicated to the employees.
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For Every customers with deposit accounts on Thread Bank, your deposits qualify for up to a maximum of $2,500,000 in FDIC insurance coverage when placed at program banks in the Thread Bank deposit sweep program. Your deposits at each program bank become eligible for FDIC insurance up to $250,000, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. You can access the terms and conditions of the sweep program at go.thread.bank/sweepdisclosure and a list of program banks at go.thread.bank/programbanks. Please contact customerservice@thread.bank with questions on the sweep program.”
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***Your deposits qualify for up to $3,000,000 in FDIC insurance coverage when placed at program banks in the Thread Bank deposit sweep program. Your deposits at each program bank become eligible for FDIC insurance up to $250,000, inclusive of any other deposits you may already hold at the bank in the same ownership capacity. You can access the terms and conditions of the sweep program at https://go.thread.bank/sweepdisclosure and a list of program banks at https://go.thread.bank/programbanks. Please contact customerservice@thread.bank with questions regarding the sweep program.
[1]Yield is an annualized 4-week T-bill rate when held to maturity as of [08/21/24] [date must be within the last 7 days] . The rate shown is subject to price fluctuation and is net of fees. T-bills are purchased at a discount to par (par= $1,000), with the price being subject to market fluctuation. The amount of T-Bills available at a particular yield will depend upon the sellers’ offer size; any remaining cash balance after the purchase may not earn the same yield. In general the bond market is volatile, and fixed income securities carry interest rate risk. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income securities also carry other risks, including inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties.
[2]Yield as of [08/21/24]. The SEC yield for a money market fund is calculated by annualizing its daily income distributions for the previous 7 days. You should consider the investment objectives, risks, charges, and expenses of a money market fund carefully before investing. This and other information is found in the fund’s prospectus. Please read the prospectus before investing. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund. Yields fluctuate and past performance is no guarantee of future results.
[3] Atomic Invest LLC (“Atomic”), through a clearing relationship with Pershing LLC (“Pershing”) offers a cash sweep program. Funds in transit to or from Program Banks are generally not FDIC-insured. The Sweep Program is administered by Pershing, LLC. Deposits at each Program Bank are insured by the FDIC up to $250,000 for each insurable capacity. Based on eligibility criteria, the two FDIC-insured programs (“Bank Deposit Programs”) offered are 1) Dreyfus Insured Deposits (DIDI) and 2) Liquid Insured Deposits. Funds deposited into each sweep program, in aggregate, are eligible for up to $2,500,000 of FDIC insurance. The sweep programs can be configured so that once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity at up to ten Program Banks), then the next Bank Deposit Program is initiated. Although certain types of accounts, such as trust accounts may be eligible for additional FDIC insurance based on the number of beneficiaries, funds will be allocated to each Program Bank in such a way that provides up to $250,000 of FDIC insurance for individual accounts and $250,000 of FDIC insurance for trust and other corporate account types, in each case per Program Bank. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through the Atomic Invest account may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of the Atomic Invest account, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see Pershing’s Terms and Conditions and the Atomic Invest Form ADV Part 2A.
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