Why use Employer of Record?

Employer of Record services are gaining popularity in a huge way across the world. This is evident in the number of professional employer organizations or PEOs that are popping up. And why not? In today´s world professionals are very mobile, especially in the IT sector. It´s hard for companies to keep up if they are still thinking about establishing their own legal entities in the places where they wish to employ their talent. If the organization´s requirements regarding intellectual property rights or trademarks are very specific, then it may make sense to start off by establishing a company. However, in most cases using EOR services is a great way to kick off.

Let´s take an example of a European IT company that has found a small team of five developers in Belarus and would like to employ their talent in their projects. The traditional way of going about this would be establish your own company, usually an LLC, in Belarus. The costs involved are usually at least 2500 euros and 2-3 months spent to establish the LLC, and afterwards somewhere between 1000-1500 euros minimum per month spent on accounting and payroll services, administrative and management services, a legal address, and so on. Not to mention the fact that you are taking on additional liability in the form of owning a legal entity in a country that you may not know so much about. A cautious CEO or CFO might consider the pluses and minuses and decide to hire back at home instead.

Another example that we see frequently are companies that have employed a Belarusian developer, say, in their company back in the U.S. for years. At some point the developer decides to move back home to Belarus, and the loss of that talent is very unfortunate for said company. The costs mentioned above are prohibitively expensive to justify just to keep employing one person, however critical they might be for the business.

Using Employer of Record services is an elegant solution to these kinds of situations. Your talent is employed in a fully legally compliant local entity in Belarus, works for you, and all you have to do is pay a monthly invoice. You take on no additional financial or legal responsibilities by having a local legal entity. Not to mention that you do not need to worry about the highly voluminous and specific HR document flows that are involved when employing in a country as bureaucratic as Belarus.