Employer Of Record in the Philippines

Globalization has made the competition for entering into new markets fiercer for corporations vying for a spot in their respective industries. One of the obstacles that corporations have to deal with is the skyrocketing expenses incurred in setting up companies overseas. On top of that, registering a legal entity abroad is time consuming. Time is a valuable finite resource that cannot be bought.

This forces corporations to divert its resources into organizing and incorporating instead of developing new ways to improve the products they are selling or the services they are offering. Fortunately, companies can turn to an Employer of Record to remedy this predicament. But what exactly is an Employer of Record? The Cambridge Dictionary defines an Employer of Record as “a company or organization that is legally responsible for paying employees, including dealing with employee taxes, benefits, insurance, etc.”

(1) Specifically, an Employer of Record is a “third-party organization that hires and pays an employee on behalf of another company and takes responsibility for all formal employment tasks.” (2) Essentially an Employer of Record will act as an intermediary between a foreign corporation, that wants to set up shop in a foreign country, and the employees from that foreign country. The Employer of Record will be the “registered employer of the employees in paper,” (3) as such it is legal entity registered in the foreign country. The Employer of Record provides services which includes but are not limited to the processing of workers’ payroll, complying with necessary documents required by the government, hiring and termination of employees on behalf of the company, and other services that the company may request.

This arrangement will benefit the foreign corporation in various ways, one of which is that it allows the company to save a lot of time. Instead of dealing with all the requirements that are asked by the government, compliance of which can be done by the Employer of Record. Another advantage of engaging the services of an Employer of Record is the reduction of the company’s liabilities as it is the Employer of Record that will take care of the legal issues if and when they arise. Ultimately, when a foreign corporation partners with an Employer of Record, the company will save a lot of resources and the added benefit of a hassle free transaction of starting a business in a foreign country.

In sum, an Employer of Record is an equalizer that will level the playing field between small and medium size corporations, which relatively have lesser resources compared to large corporations which can afford to establish a branch office in a foreign country. It is highly advised for foreign corporations that wants to expand their business, especially here in the Philippines, where there are lot of laws and documentary requirements to comply with when starting a business, to engage the services of an Employer of Record.

1 https://dictionary.cambridge.org/us/dictionary/english/employer-of-record (date accessed: 24/06/2022)

2 https://shieldgeo.com/what-is-an-employer-of-record/ (date accessed: 24/06 2022)

3 https://kmc.solutions/employer-of-record-eor/ (date accessed: 24/06/2022)

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