EXPLAINED: Employer of Record (EOR) Services

Expanding to a new market is an exciting time for any business. There is plenty of opportunities in the Netherlands, but also plenty of room for risk and costs. One way to mitigate some of this risk, while also taking full advantage of the potential for new business, is to partner with an employer of record. In this article, we are going to explain the basics of the services an employer of record provides to businesses. 

In this article, the following is explored: 

• What is an EOR?
• Why would a business need an EOR? 
• The top 5 benefits of an EOR

What is an Employer of Record (EOR)?

An Employer of Record is the legal employer of an employee when it is different from the organization who sets the employees’ day-to-day tasks and responsibilities.  

An EOR (Employer of Record) offers businesses HR, Payroll, and Tax Compliance support for seamless operations in local markets. They are an already established business entity in a local market, working to enable companies to enter foreign jurisdictions with minimal complications.  As expert service providers, EORs ensure compliance and efficiency, allowing businesses to focus on their core activities. Having already set up their local presence in the market, an EOR simplifies the process of entering and navigating new territory by handling complex labour laws and compliance. An EOR is able to help with such tasks as tax administration, employment contracts, payroll processing, recruitment and more. 

Why would a business need an EOR?

Businesses need an EOR to support them with the administrative, legality, and compliance issues that come with employment in a country. 

Working with an EOR is a prime method to aid business expansion in new global markets. New commercial sectors provide access to a wider customer base, a global talent pool and the potential for increased revenue. Businesses are drawn to these opportunities, however, accessing this international market comes with a set of challenges. The landscape of local labour laws, employment compliance and payroll regulations are complex. 

To tackle the marketplace’s complexities, working with an EOR is a top-tier course of action. EORs are prepared to support businesses as they navigate their new global environment, with a list of benefits you will find below. 

The Top 5 Benefits of Hiring an EOR

There are several benefits to working with an EOR when expanding to a new country. Especially when expanding to the Netherlands, an employer of record can simplify the entire process. 

Reduces expenses

Setting up legal entities in a new economy can be incredibly costly. The high costs can be in direct relation to hiring employees directly and setting up a new legal structure. Working with an EOR eliminates the long and costly process of building and hiring an in-house HR and payroll department with local knowledge. Instead, costs and time can be redistributed to operations.  

EOR services consolidate employee-related expenses, reducing overhead and offering predictable budgeting. Further, they can help to avoid fines and penalties with their extensive knowledge, which helps in cost management by leveraging EOR expertise. 

Offer local knowledge

Understanding and managing cultural differences can significantly impact business success. A locally operating  EOR is a great way to obtain local expertise in the market of interest. Though employment regulations might be formalised and available to understand, there are cultural informalities and nuance that a local organisation can prepare you for. The informalities of a country, as well the scope of compliance needs can be very intimidating. Working with an EOR remedies the daunting feeling, offering the needed support and knowledge to enter the new market and remain compliant with local regulations.  

Enable business agility

The changing conditions of new markets are often a challenge for new businesses. The consequences of these changes can require being agile, scaling up or down operations to adjust. An EOR can support in these cases, their local know-how delivering support and guidance in the new environment. This enables businesses to focus on their core activities, without the risk of non-compliance. 

Having the flexibility to move seamlessly with the market can maintain a business’s competitive edge. The edge coming from the capacity for quickened response times and the avoidance of operational delays common during market fluctuations. 

Risk mitigation

Reducing risk is a key component when entering a new territory. In fact, non-compliance is the biggest risk businesses face when expanding to a new business. Organisations are made vulnerable to easily avoidable risks when they don’t prioritise meeting local compliance regulations. To avoid potential liability, an EOR works with a business, taking on legal responsibilities associated with employment. Having an EOR taking on the responsibilities and liabilities ensures that you are always compliant and therefore protecting your business from this risk area. Consequently, the EOR minimises risk and reduces initial expenses, especially during the orientation period in the new economy. 

Streamline operations

As a new entity in the market priorities should be directed towards core business needs. An EOR lessens the operation strain business expansion can stress. An EOR is able streamline the focus away from laborious compliance necessities and towards core business goals in the new environment.  

HR and Payroll Operations can be handled by the EOR, speeding up market entry and having the business swiftly establishing a presence in the local environment. All of this done without the hassle of building an internal HR and compliance team. In addition, hiring talented local staff is a task that can be absorbed by an EOR. The EOR providing access to a larger talent pool and knowing the right benefits packages to attract top candidates. 

Expanding a business to the Netherlands?

When it comes to employing staff in the Netherlands, your success depends on partnering with someone who can cater to your specific needs and requirements. You will not need to establish an entity in the Netherlands to hire the personnel you require. Meanwhile, your focus can remain on setting up your new venture in the Netherlands. 

As an Employer of Record, Octagon Professionals will take care of payroll administration, social security contributions, employment contract management, and employee pension schemes. Our Intuitive Cloud and App-based HR Portal for timesheets, expenses, and leave requests ensures the accuracy and transparency of your employees’ data. 

Schedule a consultation with us today and take the first step toward full compliance with Dutch payroll and HR requirements.