Transitioning your employees from EOR to your own entity

Previously on Business Development : We explored the real pro’s and con’s between employing on your own entity, versus using an EOR (Employer of Record) provider. There are many great advantages to both, especially starting with an EOR to explore your chances abroad before realising your own footprint. Many EOR providers will discourage advancing from the only service they provide for obvious reasons, taking advantage of your fear of the unknown. At Parakar we have the tools to support both. This is really a journey that has to be thoughtful to our customers own needs. Plot those milestones of achievement together to make the right customized solution for your business.

Transitions are one of the riskiest elements for employees, and can be problematic unless well managed. At Parakar we offer smooth transitions developing a transfer plan, with HR specialists, ensuring your people are well managed throughout. With a fully enabled client entity, contracted benefits, insurances, and licenses. Navigating the compliancy of employment contracts and payroll. Making the smooth transition uneventful, and enable our clients entity to hit the ground running. This is why it makes sense using a trusted provider whom has your best interests at heart, and the services to support.

Managing your employees through transition from EOR to your own entity, and why you need the right provider

Transitioning employees from an Employer of Record (EOR) arrangement to your own entity is a significant process that requires careful planning and execution. Here are some points to be mindful of.

Employee protection

• Job security: Transitioning from EOR to your own entity can be a period of uncertainty for employees. They may worry about job security, changes in benefits, or potential disruptions to their employment. It is crucial to protect their interests during this transition to maintain morale and productivity.
• Benefits continuity: In many EOR arrangements, employees enjoy certain benefits, such as healthcare, retirement plans, or other perks. During the transition, ensuring that these benefits are seamlessly transferred or replicated in your entity is essential. A well-managed transition can prevent disruptions in these areas.
• Compliance: Compliance with labor laws, including wage and hour regulations, tax withholding, and employee rights, must be maintained throughout the transition. Any errors in this regard could lead to legal issues and damage the employer-employee relationship.

Streamlined transition process

• Expertise: Using the same provider for both EOR and entity formation often makes sense because they already have a deep understanding of your business and your employees. This can streamline the transition process, making it more efficient and less prone to errors.
• Knowledge transfer: Providers who handle both EOR and entity formation can transfer employee data, payroll systems, and compliance knowledge seamlessly. This minimizes the learning curve for your new entity and reduces the risk of mistakes that can occur when changing providers.
• Consistency: Consistency in HR practices and payroll management can be maintained when using the same provider. Employees are less likely to experience disruptions in their paychecks, benefits, and other HR processes.

Risk mitigation

• Legal compliance: A single provider can help ensure that the transition is compliant with local, state, and federal labor laws. This reduces the risk of legal complications, penalties, or employee claims.
• Data security: Transferring employee data between providers can be risky in terms of data security and privacy. Using the same provider for both services can mitigate these risks.

Cost efficiency

• Economies of scale: A single provider can often offer cost savings through economies of scale. They may provide bundled services at a more competitive price than two separate providers.
• Reduced administrative burden: Using one provider simplifies administrative tasks associated with the transition. This can free up HR and management resources to focus on other critical aspects of your business.

Transitioning employees from an EOR to your own entity is a complex process that requires careful consideration and planning. Protecting your employees’ interests, ensuring a smooth transition, and minimizing risks are critical. Using the same provider for both services can often make sense as it leverages their expertise, streamlines the process, and helps maintain consistency, all of which contribute to a successful transition. However, the decision should be made after evaluating your specific business needs and goals, as well as considering the expertise and capabilities of the provider in question.

Contact us

At Parakar, we can support your business needs throughout, providing business and employment excellence with our in-country experts to support exploring with EOR, creating and enabling fully compliant client entities, plus supporting your transition and ongoing employment services. Why not book a consultation today and lets explore your business development together.

Blog written by Simon R. Burney – Parakar Business Development