Why are companies seeking an Employer of Record?
Feb 22, 2021 | Jim Bernier
When considering adding on temporary, contract personnel, many employers do not want added tax withholding liability nor the insurance liability associated with internal staff. Many times the company has already located the person they need for the temporary contract role, but they would like an Employer of Record for the reasons above.
An employer of record serves as an employer for tax purposes while an employee performs work for the client, such as a staffing firm or other business. An employer of record handles all personnel functions, including payroll processing and funding; tax deposits and filing; and employment contracts and paperwork.
The company legally responsible for paying an employee, is the Employer of Record. This responsibility entails dealing with employee taxes, benefits, insurance, and a great many other transactions and operations concerning human resources.
Using an Employer of Record is an invaluable outsourced service keeps a business in compliance with labor law, tax reporting, workers compensation, employer liability and general liability insurance.
In international scenarios, regulations regarding benefits and taxes can vary and be
So, what is the draw to partnering with an Employer of Record?
Hiring an EOR gives the client’s company the opportunity to manage their time more efficiently and effectively.
The client can see immediate effects in terms of cost structures, human resources operations, employee benefits, payroll, and overall compensation, not to mention compliance issues all rolled into one hourly rate for the temp employee added to payroll.
Employer of Records and Liabilities
When using the EOR model, the client companies maintain a certain control over all their business operations and assume responsibility for workplace safety and related on-site regulatory compliance.
However, the employer of record takes on all the responsibilities and liabilities for issues regarding employment relationships such as administrative operations, payroll, taxes, employee benefits, and record compliance.
To sum things up, using an Employer of Records has three main benefits:
- Time and indirect costs savings
- Increased regulatory compliance with tax withholding, tax reporting and insurance
- Reduced risk, as the risks of being an employer fall almost completely on the employer of record.
Several companies in the Utility Sector, Foods Production, Oil & Gas, Controls & Automation and Building Automation have opted to use Black-Peak for their on demand ability to perform the duty of Employer of Record for temporary and contract employee hiring needs.
Contact us today.