According to some research, 52% of small businesses said it is now harder to find the best talent. 

If you’re also struggling to hire employees, you might benefit from using the services of a staffing agency or an Employer of Record. However, there are a few differences between the two.

Hiring an employer of record over the staffing agency has many benefits, but keep reading to discover what factors you should consider before hiring one of them!

What Is an Employer of Record?

If you’re going to be hiring internationally, it’s best to have an Employer of Record. An EOR solution will be legally responsible for paying your international employees and handling all of the employee’s taxes, benefits, and insurance. 

If your employees are going to move between different countries, they’ll also manage the sponsorship applications and collect visas. 

What Is a Staffing Agency?

You can also use a staffing agency to grow globally, but this agency will work to match employees with open positions at your company. 

These pairings are generally temporary or on a contractor basis. The staffing agency will manage resume databases and facilitate communication between employees and employers. 

They’ll also collect all the feedback from their most recent job placements to provide the best candidates for businesses.

The Main Difference

The main difference between these two types of businesses is the role that they’ll play in your company. An employer of record will serve as an employer for a group of employees. While the employees don’t work for them, the employer of record will handle all of the HR functions for the individual.

They will manage all the streamlined processes, like onboarding paperwork, I-9 forms, payroll processing, verifying backgrounds, and handling unemployment insurance. 

When you hire a staffing service, they’re responsible for finding, recruiting, and placing employees. However, these employees will generally be temporary, but they can be permanent. 

Staffing agencies might handle payroll services, but they usually don’t handle the other human resources tasks. 

Finds a More Permanent Role

Some of the benefits of using an EOR over a staffing agency will be providing an employee who will fill a more permanent role. 

There is more of a collaboration between the EOR and the client. The employee will work for the client, but the EOR will handle all human resource functions. 

They’ll also manage all the paperwork that comes with hiring a permanent employee, like running background checks, drug testing, terminating employees, or managing benefits. 

On the other hand, a staffing agency will only recruit candidates to fill your open positions for a short time. 

Assumes Liability

When you partner with an EOR, you will still retain control over your business operations and workplace safety. However, the EOR will assume liability for any employment issues that HR would generally be responsible for. 

They’ll be responsible for issues like: 

  • Taxes
  • Benefits
  • Maintaining employee records
  • Administration

The employer of record will assume responsibility, which can be helpful when you’re hiring in other countries where you’re not familiar with the laws. This will give the business peace of mind to know qualified professionals are following all the rules.

Saves Time and Money

In the long run, outsourcing all of these tasks will save you time and money. You can delegate all of those functions to another company so that you don’t have to have an internal team dedicated to those functions. 

You won’t have to worry about spending so much money and time on resources trying to find great talent, and you can spend time focusing on growing your business. 

With an EOR, they’ll handle all of the onboarding and the paperwork. They can do all the background checks and screen the candidates to know you’re hiring the best person for the job. 

Plus, most of these human resources tasks are primarily administrative, consuming a lot of time and money. By outsourcing those roles, you can let your internal teams do other jobs to bring value and support to your company. 

Plus, most EOR providers offer these services at a very competitive cost, which allows you to quickly compare this with the price it would be to do all of those tasks internally. Some solution companies will also let you convert the resources from their payroll onto your staff with no extra cost.

Manage Terminations

According to some research, 74% of employers said they have hired the wrong person. It’s inevitable, and you’ll need to terminate those employees at some point. 

When you need to hire an employee in another country, the requirements for firing them can change, and if you violate those requirements, you’ll have heavy consequences. 

For example, if you hire in the United States, the employment is based on the at-will status. That means that an employer can fire an employee at any time. However, if you were to fire an employee in the Czech Republic, you would have to provide that employee with a two-month notice. 

An employer of record will know all of the rules for each country before they fire an employee. They will draft all employment agreements and manage all notice periods and severance. 

They will also manage your data and provide greater security to ensure that your data and intellectual property are safe after they terminate an employee. 

Discover More Benefits of Hiring an Employer of Record

These are only a few benefits of hiring an employer of record versus a staffing agency, but there are many more advantages!

Before you hire an EOR, you need to ensure that you do your research before picking one.

Thankfully, we’ve made it easy for you. We can help you expand your team worldwide, so work with us today!