Every kid has a core memory. Be it going to the carnival or playing outside all day during the summer.
But ask someone who grew up with a sibling, and it'll be a different story. They will tell you about sisters bickering about stealing each other's clothes, fighting over the television remote, brothers practicing MMA moves on each other, and many other chaotic recounts.
But no matter their differences, siblings will always have each other's backs. They are related to each other, after all.
Something similar exists in the HR world as well. How, you ask?
Payroll and Employer of Record (EOR)! The honorary "siblings" of the HR world are proving to be game changers in aiding companies to expand their global footprint.
With remote and hybrid work on the rise, it is only viable for companies to reach out to the global talent pool to have a competitive advantage.
Payroll service providers step in to ensure that every employee gets paid on time, regardless of which country they are working from. They ensure compliance with local laws and accuracy and punctuality with respect to input data and data validation.
EOR service providers, on the other hand, are a third-party company that hires employees on behalf of another organization when they don't have a legal entity in the employee's country.
Know more here | What is Employer of Record?
How vital are payroll and EOR?
They ensure critical global operations for employee management. It is important to ensure accurate and timely pay slips to all employees. Failing to do so can result in internal turmoil, leading to low employee engagement and productivity. On the legal side, failing to remain compliant with tax obligations can lead to a company being penalized.
EOR is an equally essential yet cost-effective solution for an organization looking to expand globally. From onboarding to offboarding, an EOR service provider takes care of all critical processes in the life cycle of an employee. Organizations can minimize the hassle of establishing a legal entity to hire an employee. EOR also helps them reduce compliance risks and administrative burdens.
They both play a crucial role in the cross-border functioning of organizations. Then comes the question of how these two solutions overlap.
How do they go hand-in-hand?
Employees, especially those working remotely, expect prompt payments and resolution of queries in case of payroll errors. And employee management can have hassles without an efficient EOR provider.
Businesses must understand the relationship between payroll and EOR because it can significantly affect their operations.
They are both critical for ensuring compliance with employment laws, regulations, and tax requirements. Even though they are separate functions, they are closely related to global employee management.
When a business engages an EOR provider, the provider becomes the legal employer of the business's employees. This means that sometimes the EOR provider takes up the responsibility of handling all payroll-related tasks and ensuring that all employees are paid accurately and on time, which is essential to their legal and compliance obligations.
The EOR process is built on the foundation of HR processes like onboarding and benefits administration. However, these tasks may overlap with payroll administration to the point where payroll is directly affected by specific HR changes.
Also read | 4 reasons why Global Payroll is the Bedrock of EOR
Payroll and EOR are essential functions for global companies. Companies need to understand the relationship between them to ensure compliance with employment laws and tax regulations and maintain positive relationships with their employees.
There is definite interdependency in terms of employment management and employee satisfaction at a global scale by ensuring compliance, providing strong data security, and timely and accurate payroll delivery.
And a solution provider who offers both global payroll and EOR under the same roof is nothing short of a blessing for businesses.
This is where Neeyamo steps in. Its hyper-automated Global Payroll Tech Stack covers every corner of the world, providing not one but both Global Payroll and Global Work for a seamless employee management experience. And no, unlike your sibling, there is no bickering here.
Reach out to the experts today.
