Does an employer of record take care of all the compliance when you hire abroad?

Summary

No. The EOR takes on the duties of the legal employer: the employment contract, payroll taxes and social contributions, statutory benefits, right-to-work checks, and the paperwork when employment ends. Under Remote's terms of service, you remain responsible for giving it accurate data, for making sure the employee holds any license the job requires, and for a safe place to work. If a tax authority decides your company has a permanent establishment in the country, Remote's terms say that is not Remote's liability either.

Read the customer obligations clause

Remote's terms of service ask customers who use its employment services to do four things. Provide accurate information, including paid time off, holiday balances, hours worked, overtime, and sick leave. Make sure employees have "the professional licenses, credentials, and qualifications required" for the work. Make sure their working environments meet occupational health and safety requirements. And do not sign side agreements with an employee that would put Remote in breach of its terms.

For on-site work, the terms add a duty to "identify, assess, and control workplace risks" to protect the employee from injury and occupational illness. Checking that the employee has the right to work in the country sits on Remote's side of the list, as one of its employer obligations.

When someone raises a complaint

Remote tells clients to contact it immediately if an employee raises a whistleblowing or harassment concern. What Remote's terms do not say is how liability splits if the conduct in question was your manager's.

Permanent establishment is carved out

An employee's activities can lead a tax authority to conclude that your company has a taxable presence, a permanent establishment, in that country. Remote's terms exclude its liability for losses or penalties that follow from such a finding. Remote's own blog says an EOR "does not eliminate permanent establishment risk altogether," and Deel's says that where the PE risk is clear, as with hiring C-level executives, "an EOR should not be used." SeatBill's piece on EOR and permanent establishment covers which activities raise the risk.

Intellectual property moves twice

Work product does not pass straight from the employee to you. Under both Remote's and Deel's model, the employment agreement assigns it to the EOR, and the EOR's terms with you assign it on to your company. Remote's terms make that assignment "to the extent permitted by law," so what can be transferred depends on the country.

Employee data leaving the EU

If you hire in the EU and your HR team outside the EU handles that employee's records, the data is being transferred out of the EU. The European Commission's standard contractual clauses are one legal basis for that transfer; the current, modernized set under the GDPR was issued on June 4, 2021.

Sources

• https://remote.com/policy/terms-of-service
• https://support.remote.com/hc/en-us/articles/4413629551501-What-does-an-employer-of-record-EOR-do
• https://support.remote.com/hc/en-us/articles/33686365924749-How-to-work-with-Remote-effectively-when-hiring-through-Employer-of-Record-EOR
• https://remote.com/blog/eor-peo/permanent-establishment-risk-for-remote-workforce
• https://www.deel.com/blog/using-an-employer-of-record-to-mitigate-permanent-establishment-risk/
• https://support.remote.com/hc/en-us/articles/4407329311245
• https://help.letsdeel.com/hc/en-gb/articles/4407745339281
• https://commission.europa.eu/law/law-topic/data-protection/international-dimension-data-protection/standard-contractual-clauses-scc_en

Related on this site

• If you hire through an EOR, who actually approves a raise or a firing?
• Does hiring through an EOR keep you from having a permanent establishment abroad?
• If someone you hire through an EOR invents something, does your company own it?
• Is an EOR your data processor, or a controller in its own right?
• What does an employer of record actually take off your hands?