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An Employer of Record (EOR) is a third-party entity or service provider that takes on the responsibilities of being the legal employer for a group of employees. This offshore hiring solution allows businesses to outsource certain employer obligations, enabling them to focus on their core activities without the administrative burden associated with employing staff : the EOR manages various employer-related tasks, including payroll, benefits administration, tax withholding, compliance with labour laws, and other HR functions.
In which scenarios EOR can be used?
- When you need to begin Staffing before a legal entity setup in China: Traditionally, establishing or expanding a presence overseas requires that a company be established as an entity legally registered, which is the precondition to hire and develop its business local. However, in some situations, this approach is slow, costly or may not offer the advantages needed for a company to realize its objectives in China efficiently.
- When you need to keep Staffing after deregistration of a legal entity in China: Due to the strategic restructuring your business, it could be costly and risky to keep a legal entity in China. Business globalization methods need to be flexible and access to affordable remote talent hiring, which is essential to internationalize your operations.
Through this co-employment model, EOR helps companies quickly expand their presence in multiple locations and enable companies to hire talents in China without handling day-to-day HR operations. This includes their salary payments, reimbursements, leave, and regulatory employee declarations, as well as compliance issues.
How to implement this EOR solution?
Three simple steps to establish your local team in China through EOR:
- Establishing EOR service agreement
When a foreign company have a request to employ someone in China without having a legal entity, ORBIS EOR service can help the company employ this person under the name of Orbis by signing EOR service agreement with the foreign company.
- Sending Employment notice
After the signing of the EOR service agreement, when any new employees get on board, the foreign company just needs to send a written notice named Employment Notice to us and our HR team will handle all the employment procedure.
- Signing the labor contracts
Under EOR service agreement, upon receiving an employment notice, ORBIS team prepares a fixed-term labor contract according to the Chinese Labor Law with the new employee, stipulating Salary, Employment Period, Social Security Arrangement, Job Title etc. which have been agreed in advance with the foreign company for which the employee works for.
Upon the signing of the labor contract, we start the employment formalities and social security contribution for the employee under the name of ORBIS’ legal entity in China.
What are the EOR solution main advantages?
- Faster: Hire local employees and enter new markets within short delay.
- Cheaper: Avoid the larger and premature costs associated with investing in the establishing and managing of an overseas corporation – until the timing makes sense to do so.
- Compliance: Easily comply with country-specific labor laws and practices and minimize the compliance risks associated with an overseas employment relationship.
- Lower Risk: Test one or many markets and then scale as required – hedge against fast growing but challenging business environments.
Should you be interested by exploring this external HR solution, please contact our dedicated team by email via contact@orbis-alliance.com. In addition to our Employer of Record service, we offer a full range of support, including accounting, tax, and advisory solutions.