Exploring the costs of an Employer of Record (EOR) partnership is crucial for fostering efficient and compliant business expansion. Leveraging an EOR enables the seamless global onboarding of top-tier talents while optimizing both time and finances. Nevertheless, this advantage comes with its associated costs.
EOR service providers feature diverse pricing structures and cost brackets, ranging from budget-friendly options to premium-tier services. Consequently, pinpointing the exact EOR expenses proves challenging. However, an array of prevalent EOR fees and expenditures can be anticipated. Let’s delve into an in-depth analysis of these costs.
An Analysis of Anticipated EOR Fees and Expenses
EOR Setup Fee
Initiating collaboration with an EOR frequently often involves a one-time setup fee for newly recruited employees. This expense encompasses contract establishment, employee onboarding, and payroll enrollment. The actual value of this setup fee varies based on the selected EOR provider.
EOR Security Deposit
EOR entities generally require a security deposit for each employee as a safeguard measure. This deposit can take the form of a lump sum or a percentage derived from the employee’s salary. Throughout the employee’s tenure, this deposit remains withheld and serves as a contingency in case your company faces financial difficulties, such as insolvency, affecting salary payments. If unutilized, the deposit is refunded upon the employment contract’s termination.
Employee’s Salary & Local Employer Costs
While EORs handle payroll processing, your enterprise remains accountable for reimbursing the EOR for employee salaries and essential employer expenditures, often termed “contributions.”
Distinct jurisdictions impose unique guidelines for employer contributions, engendering cost disparities between countries. These costs generally contribute to local social programs and mandatory employee benefits like retirement funds.
Every country mandates a baseline of employee benefits. However, to retain competitiveness and meet expectations, considering supplementary benefits like health insurance or augmented pension contributions is prudent. EORs managing these benefits will invoice your company for the associated expenses, potentially accompanied by a benefits management fee.
Compliance dictates that employees should receive salaries in their respective jurisdiction’s currency. Nevertheless, several EORs facilitate invoice payments in a currency of your preference. Consequently, covering currency exchange may necessitate an additional fee.
It’s imperative to acknowledge the distinct billing approaches employed by various EORs. Some consolidate charges within a solitary monthly invoice, whereas others don’t. The timing of charges can also differ based on the EOR and specific fee category, encompassing advance or arrears payment models.
While EORs exhibit diverse pricing models, evaluating the holistic impact on your business is paramount. The total cost transcends the numerical representation on invoices, encapsulating elements such as time savings, flexibility, and precision.
Understanding Employer of Record Pricing Structures
Now that you comprehend the diverse factors influencing EOR pricing, let’s delve into the primary pricing models employed by various EORs to establish their charges.
Percentage of Employee Payroll
Within this framework, the EOR levies a percentage of the employee’s salary as the fee. However, this approach can discourage employers from increasing salaries or expanding their workforce, as it involves additional EOR expenses for bonuses or raises.
Although the allure of a percentage-based system might be strong initially, particularly for limited hires, a flat-fee structure generally proves more versatile and economical over the long term. This empowers you to reward team members and expand without incurring extra charges.
EOR Fixed Fee Per Employee
This prevalent model involves a set fee for each employee, independent of their salary. This pricing structure is favored by businesses with smaller or fluctuating workforces, enabling them to pay solely for necessary services rather than a portion of the payroll. The fixed-fee model enhances cost transparency, predictability, and budgeting accuracy.
The fixed-fee model’s industry rates exhibit considerable variance. EOR service providers like Horizons, Papaya Global, Remote, or Deel have fees ranging from $299 to over $1,000 per employee per month, contingent on factors like role and employment location. For more information, see our 2023 pricing table at the bottom of this article.
EOR Fixed Pricing Model
This structure encompasses a specific employee count and a defined scope of services. Popular among businesses with stable workforces, it facilitates precise prediction of HR-related expenditures. This model bestows greater cost control to proprietors and can be tailored to meet specific needs.
EOR Customized Pricing
Tailored pricing accommodates unique client requirements, enabling businesses to select the precise services needed without paying for extraneous offerings. Custom pricing suits businesses with distinct HR needs or those necessitating extensive HR management customization.
How to find the Best EOR
Navigating the decision to partner with an Employer of Record (EOR) demands careful consideration, encompassing various factors before finalizing any commitments. Here are key considerations to bear in mind as you explore EOR providers and their pricing structures.
Thorough EOR Comparison
Solicit comprehensive pricing quotations from multiple EOR providers, you can simplify this assessment by reading our comparison of the best EOR Providers. This empowers you to juxtapose their pricing models, fee breakdowns, and potential supplementary charges. Amassing a wealth of information facilitates informed choices, shielding you from unexpected concealed costs.
Evaluate EOR Offerings
Scrutinize the services and features integral to each pricing proposal. Beyond cost, contemplate aspects such as service scope, customization flexibility, and the technological tools furnished by the EOR company.
While cost is pivotal, other dimensions of the service warrant consideration. Look into:
Reputation and Track Record
Investigate the EOR’s reputation, client feedback, and testimonials. Gauge its industry experience and capacity to deliver dependable, efficient services consistently.
Ascertain the level of customer support and responsiveness offered by the EOR. A dedicated account manager or reliable customer service can significantly elevate your experience and overall value.
Evaluate whether the EOR can accommodate your business’s expansion plans. Assess its ability to manage increased employee counts or ventures into new markets while upholding quality standards.
Some EORs might impose concealed or supplementary charges not immediately evident. Beware of the following:
Inquire about any one-time setup fees linked to onboarding your company and workforce onto the EOR platform.
Comprehend the terms surrounding contract termination or cancellation. Ascertain whether ending the partnership with the EOR involves any penalties or charges.
If specialized services or customizations are required beyond standard offerings, ascertain the related costs. Ensure clarity on what the base fee encompasses and what necessitates an extra charge.
Prices for Leading EOR Providers in 2023
As discussed above, it is important that you don’t choose your EOR provider on price alone. Nevertheless, price is an important factor. In 2023 the leading Employers of Record set their prices as set out below:
|Employer of Record|
|Velocity Global||Not publicly disclosed|
|Globalization Partners (G-P)||Not publicly disclosed|
Choosing the right EOR — it’s not just about cost
It is important to weigh up both the cost of a provider, and the quality of their service, when choosing your EOR company. Exceptional user and employee experiences foster enhanced productivity, heightened engagement, and superior employee retention rates, all of which influence long-term profitability for your business.
The cost typically ranges from $290 to $1000 per employee, depending on the specific services and the EOR company you partner with.
Yes, it's possible to employ international workers directly. However, employing full-time international workers often necessitates establishing legal entities in their respective countries.
Most EORs handle a range of responsibilities including employee management, payroll processing, and various HR tasks. Additionally, they can assist with international legal and tax compliance, provided they have operational entities in the relevant countries.
Absolutely, EOR services can also be extended to onboard and compensate independent contractors. Remote EOR services are particularly advantageous for hiring independent contractors on a global scale.
Employer of Record services can be beneficial across all industries, offering both local and global solutions.