For North American businesses ready for European expansion, the chances of success are in the details. Compliance with different labor laws and employment regulations, talent acquisition, and other Human Resources (HR) challenges may feel daunting.
Pain-stakingly detailed business strategies and HR policies and procedures can mean the difference between seamless transition and insurmountable obstacles.
For some companies, hiring an employer of record (EOR) may help alleviate the stress of expansion. For companies with a direct employee base in Europe, an outsourced HR team could be the key to success and smooth cultural transition.
Let’s take a look at both of these options.
A guide to EORs and HR services
Your European success shouldn’t be hindered by geographical borders. If you’re a business owner looking to establish operations in a European country, it may prove difficult to do so without outsourced help.
When considering your options, a guide to EORs and outsourcing HR may help you choose the right support to meet your needs.
The definition of EOR
An EOR is a third-party company hired to manage all administrative and legal responsibilities of employee HR. The EOR becomes the legal employer of your team and takes care of detailed tasks. However, you still maintain control of your daily operations and onsite leadership.
In European expansion, a global EOR is hired to help U.S. companies remain in legal compliance when engaging with international employees. Global EORs work similarly to international HR departments. Global EORs tackle the nuances and complexities of local and regional labor laws to ensure you don’t hit legal snares when you expand.
How employers of record work
When you hire an EOR, this third party will take over administrative and HR tasks for the duration of your European operations. This will also prevent you from having to file as a foreign entity as you expand your business internationally.
You can expect to delegate the following tasks to an EOR:
- Immigration requirements for any workers relocating for the expansion
- Creation of compliant employee contracts and other legal documents
- Payroll coordination for contracted or remote employees
- Policies that account for culture differences
- Management of tax withholdings
- Implementation and administration of employee benefits packages
- Ensurement of legal compliance in overall business operations
Challenges of an EOR
An EOR may prove beneficial for companies that are transferring North American-based employees to Europe, and, especially helpful for larger corporations with 500 or more employees. However, there are some challenges associated with EORs as well, including the following:
- Compliance:
Compliance with local labor laws is vital for all EORs, but there are variances in employment regulation within every European country. If you hire an EOR without expertise in a specific European region, your risk of legal liability could increase.
- Employee miscategorization:
If you build a hybrid workforce (for example, employees, independent contractors, and remote workers), and you miscategorize an employee, payroll and benefits mistakes can occur with an EOR which may take time to solve, and could become expensive.
- Reduced control over operations:
An EOR is more of a partner than a contractor. You may not be consulted on every decision your EOR partner makes, and any desired changes to payroll, policies, and procedures, or other administrative tasks will have to go through the EOR first.
Outsourcing HR vs an EOR
Although an outsourced HR team takes care of many of the same services an EOR provides, there are some fundamental differences between the two third-party services. Some of the largest differences between outsourced HR and an EOR include:
- Cost and contracts:
Outsourcing your HR may save more money than partnering with an EOR. You can build a relationship with an outsourced HR team while still saving money and hiring them for a set contract or on a project-to-project basis.
- Compliance:
A global outsourced HR team has worked with companies expanding into multiple countries. The team members may have a better grasp than an EOR on how to ensure compliance with each region’s labor laws and employment regulations.
- European legal entities:
An EOR helps companies bypass the need to set up a legal entity, which may have short-term benefits (such as quickly setting up operations), but could prove challenging in the long run.
The right outsourced HR team can help you to correctly create a European legal entity, and help you expand branches, foreign employer structures, or multiple legal entities in the future.
- Collaboration:
Once you’ve partnered with an EOR, they take over your administrative duties. Outsourcing your HR to the right team may allow you to brainstorm and collaborate with HR professionals on what you want your procedures, processes, and policies to look like.
- Customized solutions:
The right HR team will provide customized solutions to meet your specific needs. An EOR may have standard procedures to follow, regardless of the market niche and size of your organization.
How Europe HR Solutions can help
Europe HR Solutions has helped numerous small and mid-sized North American businesses seamlessly transition into their European operations. If you’re expanding your business in Europe and have a direct European employee base of 5-250 employees, our services may fit your needs better than an EOR.
By outsourcing your HR on a contractual basis, you may find you can save money and gain peace of mind. Here are some of the services we offer that are similar to those offered by an EOR, yet still customized for your business.
Strategies to hire European employees
Part of your expansion may require building a local, European workforce and hiring overseas talent. Europe HR Solutions is based in Belgium and has helped companies expand throughout Europe, including in Denmark, Germany, France, and Sweden.
We understand the trends surrounding European talent acquisition and the employee regulations that impact your hiring choices. We can offer developed strategies to ensure you’re hiring the perfect candidates and that your business remains within compliance while doing so. Here’s a look at some of the services we can provide that are similar to an EOR.
Register legal entities
We’ll help you register your business as a foreign legal entity as a cost-effective solution. For example, if you launch your European operations in France, but would like to hire team members from Italy and Denmark, registering as a legal entity will help to cut through geographical red tape and hire quickly.
Develop HR policies and procedures
We can take care of all of your HR administrative tasks— including the creation, development, and implementation of fundamental HR policies and procedures.
Adherence to legal compliance
At Europe HR Solutions, we understand the complex nuances and variances of local, national, and European Union (EU) labor laws and employment regulations. We can support you with management compliance training, and ensure that your operations adhere to legal compliance.
Ad hoc solutions
Once you connect with our team, we can get started right away. We’re used to fast-paced and high-pressured work environments. We’ll send you answers to questions in less than 24 hours and can provide ad hoc solutions in a timely manner.
Payroll coordination
We can help to ensure your employee classifications are correct and will implement payroll procedures for the taxes your business pays for employees, as well as ensure that you aren’t paying the taxes of the independent contractors you may hire.
Connect with Europe HR Solutions
We can provide EOR services without the need for an EOR contract. When you outsource your HR to Europe HR Solutions, we can work alongside you on an ad hoc, interim, project, or retainer basis. We’re here when you need us, for as long as you need us.
Our HR consultants have decades of experience working with companies expanding into, or launching startups in, Europe. Connect with us today for a free consultation, and visit our blog for the latest HR insights, trends, and tips. Your European expansion is just a step away.
