Many businesses, in the wake of the pandemic lockdowns, have adopted a “hybrid” work model in which workers spend significant time away from the headquarters. Some businesses have opted for a totally remote workforce, with employees having the freedom to do their jobs from anywhere in the globe. Some employers have felt the heat from staff members who are unwilling to return to the UK, while others have seen a need to address skill shortages by bringing in workers from outside.
This is the context in which we have observed a rise in the number of customers opting to work with us as the employer of record.
What is a Global employer of record?
Typically, a company must be located in the same nation as the individual they are hiring. They operate as the employee’s or consultant’s employer, per the terms of the contract, and pay the worker and any applicable taxes or other fees required by law in the nation where the job is being performed. As a customer, you are also protected by a legally binding agreement that details the responsibilities of both parties.
How does it work an Employer of Record UK?
Legal entities that are designated as employers provide a plethora of benefits to their employees. Their prices can vary widely depending on the specifics of your needs, so it’s important to go in with that knowledge. Employer of record, in the most fundamental sense, refers to the person legally recognized as the worker’s superior. This individual must provide the worker with a legally compliant employment contract and ensure that they are paid by the local government and the employer. If you don’t know the local laws, some groups will also assist with immigration regulations and government registration. To a larger extent, you may delegate tasks like talent acquisition and performance management to others.
In most cases, you will sign a primary contract with your employer outlining the terms of your employment. You negotiate the specific guidelines for each employee when they are assigned to you. Then, the official employer hires them under such conditions.
What’s good and bad about it?
There are three primary advantages of having an employer of record agreement in place:
Even if you don’t have a local office in the nation, you may still recruit locals to work for you. The company you work for does not share any legal status with you. As a result, the likelihood of you or your organization being subject to that country’s corporate tax is greatly reduced. In addition, it facilitates the recruitment of international candidates. You can locate people with the talents you need during the Great Resignation, and pay them less for their time. There’s no need to become an expert in the employee’s country’s legal system. The employer of record is responsible for drafting the employment contract and must comply with all applicable regulations.
Some drawbacks include: –
You will have no claim to the employee’s original ideas or creations. Workers in the UK must acknowledge that you, the employer, own all rights to their own code, designs, and other creative works. The transfer of ownership to you is necessary to safeguard your interests because this individual is not an employee. The charge for this arrangement might be a flat rate or a percentage of the employee’s annual income.
This is in addition to the package, pension, vacation, and social charge that the official employer is responsible for paying.
The possibility that things won’t work out with the official employer. In the end, they’ll be working for you, reporting to your team, and under your supervision.
When you use this lever, you increase the odds that the English legal system will recognize you as their superior. In light of Uber’s case, courts in Europe and North America are starting to look beyond legalese and examine how things really work[1]. You may be responsible for paying the awarded damages if the claimant proceeds with legal action.
Our best advice
Verify your understanding of the required services and ensure they are accurately reflected in the necessary documentation. The company may not be able to help you with the hiring process if the only services they provide are an internet portal or payroll processing. Even though the service provider claims on their website that their offerings are straightforward, it doesn’t mean the services they supply must meet your specific requirements. Our customers often discover in the small print that the service provider was not guaranteeing to provide the service for which they were paying.
Participate in the contract between the employee and their primary employer. There are two causes for this. Your goal in requesting a copy of the prospective employment contract is to verify that all of the expenses you’ll be covering will be commensurate with the salary the employee will be receiving. Verify the legitimacy of the transfer of any intellectual property (and if not that you can put your own agreement in place)
Do not commit to working with this individual (unless you intend to). You deny yourself the perk of having a documented employment.
Learn more about your coworkers. Having many possible choices is becoming more common as the number of employers of record increases. Be sure the firm you do business with is legitimate and well-versed in the relevant regulations in the area. You are placing your faith in the continued existence of the employer of record and their financial stability to cover any expenses associated with a claim filed by the employee in the event of the worst case scenario.
