What is an Employer of Record?
Employment is a complex business (it’s also completely different from managing your work and employee experience, but more on that in a minute). To employees, employment may seem relatively straightforward at the front end – sign a contract, get paid once a month, receive a payslip, take some time off when needed. Managing the back end is where the complexity begins.
I used to think that getting my salary was just a click of a bank transfer button. Since joining Boundless, I have found a new appreciation for the work that HR and payroll professionals do. People need to be paid on time, and correctly, after all! Beyond payroll, there are numerous employer obligations to keep up with, and a host of employee rights to extend and maintain. It’s a lot of work, but that is why companies have HR and People departments, led by C-level executives. Read more about 7 wonder city.
When a person is being employed in a different country, this process becomes a different beast altogether. The rules, regulations, taxes, registrations and everything else change, yet the need to comply with them doesn’t. Asking a small, medium and, sometimes, even an enterprise business, to go through all the motions for a couple of remote employees is unrealistic. At the outset, it seems to make complete business sense to want to skip all that and ask an employee to be an independent contractor. While it appears to be an “easy” way out, that is often an illusion. Not only is it ethically wrong to transfer all the admin burden onto workers, but it’s also risky, as my Irish accountant correctly pointed out.
Availing of an Employer of Record model is the middle ground – the company you work for does not have to labour through the motions of doing everything themselves, yet you do get the full employment you rightfully deserve. This happens through a shared responsibility for you as an employee, mandated by the agreement between two sides working together. The Employer of Record is simply an extra pair of hands in the process of employment. They own and operate a fully compliant organisation that acts as your legal local employer and takes care of everything related to your employment. It’s their job to understand what it takes for you to get the employment you deserve in exchange for your full time and attention. The Employer of Record registers you with the right authorities, runs your payroll, files and pays your taxes, provides you with a payslip, etc.
What is required of me?
After your employer decides to use Boundless’s services, we will invite you to our platform to create a profile and provide a few necessary personal details. You are given access to the app through your personal email. We do this purposefully, so even after you no longer work for the same company, you will still have access to your data and documents. Afterwards, you sign your employment contract, and you are good to go.
But who is my contract with?
You sign an employment contract with both Boundless and the company you work for, which is now our client. The agreement, which is compliant with local regulations and often bilingual, outlines all employment basics – your role, salary, responsibilities, statutory time off, a probation period, severance pay, notice period, etc.
What happens each month?
You do your work, and Boundless carries on with all of the behind the scenes HR and tax work that would be happening anyway. Every month, our payroll team carefully calculates your gross to net salary, applying all relevant taxes and allowances, as well as anything that may have changed since the previous month. We directly pay you your net salary, and we file and pay your taxes to your country’s tax authority.
So, how do benefits work then?
You get all statutory benefits that are mandated by your government automatically. Depending on the country you reside in, that is usually a mix of social security, time off, flexible working, training, etc.
Then there are the fringe benefits, also known as perks or benefits in kind which the company you work for extends voluntarily. These will either be provided through selected local suppliers or as a monetary stipend. You may have to choose from a pool of options or find your vendor in the latter case. For example, if the company has a well-being budget, you might use it with your choice of studios and activities. You may not realise that while the cost of benefits-in-kind is covered, you still have to pay income and other relevant taxes on it in most countries. This is the case regardless if Boundless is involved in your employment or not.