Frequently asked questions about EOR (Part I)

Frequently asked questions about EOR (Part I)

Frequently asked questions about EOR (Part I)

More and more companies are hiring us, but at the same time there are more and more doubts. We invite you to read the first questions. We will answer more in the next days, so: stay tuned!

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1. Are you an international PEO?

Professional Employment Organizations (PEOs) provide their services in most cases by co- employing the workers with their clients. Co-employment does not exist in an identical format outside of the US. Our EOR service is designed exclusively for companies with the need to hire employees outside of the US. So, while the service is modeled after PEOs in the US and does provide many of the same benefits of a PEO, we are not an international PEO.

2. How can we engage a worker in a country where my business has no presence or establishment?

We can employ foreign workers in many countries on our client’s behalf. This means that in countries where your company does not have a business entity, you can still legally employ local workers. Our clients do not have to form a local entity. That is one of the core benefits of our EOR service delivery mode.

3. Will we need to set up bank accounts in the country we wish to engage a worker in?

No, foreign banking facilities and local funds are not required. We manage the foreign payments in the local currency, and then invoice the client in GBP, Euros or USD. However, in most countries, the worker being paid will need to have an in-country bank account to receive funds in the local currency.

4. How do we know what benefits we must provide for the worker?

The laws on benefit provisions are completely unique to each country. By becoming the employer of record, become responsible for ensuring all statutory benefits are provided to the worker. In addition, we can offer clients insights into what is customary in each country and in many cases, will provide referrals to benefit experts who design supplemental packages, if desired. Our clients find that this is a great way to help workers feel unaffected by the alternative arrangement, which results in higher worker retention.

5. How can I pay my foreign worker compliantly?

All you need to do is to agree what to pay the worker, have them sign the approved in-country worker contract, adhere to the agreed upon payroll schedule and leave the rest to us.

Do you still have doubts?

With our services our clients no longer need to own a local entity to employ talent compliantly. We offer the most cost-effective way of growing internationally while maintaining legal compliance within the countries your experts work in. Contact us

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What is an Employer of Record?

The solution to hire people from all over the world. Do not miss this article!

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What is a Employer of Record (EOR)?

Employer of Record is a company that takes on all employer-related responsibilities for small to large enterprise-sized businesses. The Employer of Record handles state-specific onboarding, payroll, taxes, payroll compliance, benefits administration, unemployment claim reporting, and other HR-related tasks.

Some important things to have in mind…

1. Full legal employer: An Employer of Record is liable for all employer-related responsibilities—from benefits and payroll to insurance and taxes. Working with an Employer of Record allows you to focus strictly on day-to-day oversight of your workforce.

2. State registration not required: With an Employer of Record partner, your company can expand its talent pool and compliantly recruit talent in any state—without going through the time-consuming business registration process.

3. Compliant, cost-effective benefits: When you bring on talent in new markets, your Employer of Record partner ensures you provide benefits that adhere to local regulations. An Employer of Record pools your talent with workforces from other companies, so you get access to lower-priced group rates from insurance providers.

 

What is a Professional Employer Organization (PEO)?

A PEO is a company that partners with small and medium-sized businesses to provide comprehensive HR services, including payroll processing, benefits administration, regulatory compliance, tax filings, and more. A PEO acts as a company’s outsourced HR department so internal teams can focus on their core responsibilities.

Some important things to have in mind…

1. Co-employment: When your company partners with a PEO, you are both legal employers of your workforce. However, you remain responsible for the day-to-day oversight of your talent.

2. State registration typically required: Working with a PEO usually means you must register your business in every state in which you hire.  As a result, it makes the most sense to partner with a PEO when you plan to hire in states where you’ve already registered your business.

3. Boosted benefits packages: A PEO helps small and medium-sized businesses provide the same robust employee benefits plans offered by larger companies. Like an Employer of Record, a PEO partner pools your employees with those from other organizations to qualify for more favorable group rates from insurance companies.

The critical difference between an Employer of Record and a PEO: An Employer of Record is the full legal employer of a company’s distributed workforce, while a PEO remains a co-employer.

If your goal is to quickly and compliantly hire top talent no matter where they’re located, partnering with an Employer of Record gives you the flexibility to easily enter to any country.

Working with an Employer of Record also gives you peace of mind knowing that experts compliantly handle every HR and employer-related responsibility, so your teams can focus on their core responsibilities. As a result, Employer of Record providers reduce the time, hassle, and cost required to build a distributed workforce across the world.

Are you interested in expanding your work team?

Roots EOR brings your company a turn-key solution to allocate staff abroad to be compliant with local labor requirements without forming a local legal structure. Contact Us

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Three changes to work in 2022

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Three changes to work in 2022 

As the pandemic stretches on into a third year, the way offices look and the way we act within them will still look nothing like they did in 2019 

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Despite many employers’ hopes, a full-time return to office-based work is looking highly unrealistic as the omicron variant pushes back return-to-office plans once again for millions of workers. And, given the way the current labour market shifted power to employees, pre-pandemic work structures are likely to become a relic. 

Yet for all that seems certain, there is still so much we don’t know about how our working environment will evolve in 2022. This time last year, many people expected 2021 to bring a degree of stability, perhaps even the smooth rollout of hybrid work. The emergence of new variants of the virus blocked this – and may well continue to do so in the months ahead. 

Amid constantly shifting circumstances, it’s hard to pin down where we might find ourselves in 12 months’ time. But experts who study employment and the workplace have identified a few trends that are already giving shape to the way we’ll be working in the coming year, and may just be a window onto the future of office life. 

 

1. Shorter workweeks may happen  

A call for shorter workweeks and condensed hours has been gaining traction around the globe, with companies and entire governments alike already exploring this alternative.

 

2. Workers won’t be heading back to the same offices 

When some workers finally do return to the office – whether in 2022 or down the road – many will find the layout and function to be completely different. Nicholas Bloom, a professor of economics who studies at Stanford University said in an interview that companies will reconfigure spaces this year to meet the needs of a newly hybrid workforce, and accounting for how people want to work when they’re together in person: collaboratively.

Bloom, who has studied the future of the office for years, says the transition back to in-office days has so far been awkward and clumsy. He says he’s heard “horror stories” from workers whose companies have called them back into the office – for instance, sitting in half-empty offices on the same Zoom calls they would at home (and listening to colleagues do the same). 

In other words, the pre-pandemic office doesn’t work the way employees in 2022 need it to.

Since some companies that have rolled out hybrid models bring in certain teams into the office on the same day each week, Bloom says co-ordination is going to be the name of the game this year, and more offices will make permanent layout changes to facilitate this.

 

3.  Employee turnover will continue to increase as hybrid and remote work become the norm for knowledge workers.

Flexibility around how, where, and when people work is no longer a differentiator, it’s now table stakes. Unfortunately for many organizations, increasing flexibility will not slow turnover in today’s tight labor market; in fact, turnover will increase, for two reasons.

First, there will be weaker forces keeping employees in seats. Employees that work hybrid or remotely have fewer friends at work and thus weaker social and emotional connections with their coworkers. These weaker connections make it easier for employees to quit their job by reducing the social pressure that can encourage employees to stay longer.

Second, there will be stronger forces enticing employees away as the pool of potential employers increases. With hybrid and remote work as the norm, the geographic radius of the organizations that someone can work for also expands. This increased attrition risk remains even in a hybrid model where employees are expected to come into the office at least once a week. Employees are much more willing to take on a longer commute when they must do so less frequently; the pool of potential employers expands alongside employees’ commute tolerance.

These factors will lead to sustained; higher turnover rates compared to any historical norms. The great resignation will shift to the sustained resignation. 

hire employees from anywhere

It is evident that work has changed and will never be the same again. This gives us many advantages, one of them is being able to hire employees from anywhere in the world, because as we prove, it is not necessary to be physically in the same place to be able to work as a team. You know how to do it? 
Contact Us

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1. Develop an adjustment plan after recruiting abroad

Once you’ve put in the time and resources to recruit abroad, it’s crucial to ensure your new global employees adjust properly. Having a global team means that your relationship with those employees will be different than with your local teams. Plan to bridge the social distance, make both teams feel important and supported, and provide enough space for the new team to make decisions.

Focus on defining your company so you can communicate those values to new employees. When you bring a local hire into the company, it’s much easier to catch onto the business culture. When someone is far away, even on the other side of the world, it’s crucial to be more communicative.

 

2. Understand local labor laws

Local labor laws can be complex and counterintuitive. Every country has its own set of labor protections and regulations. They can differ between regions or cities within a country, too. Without an in-depth knowledge of local laws, you can write contracts that are unenforceable, mishandle tax information and collection, and other errors.

Misclassifying workers is a frequent error for companies hiring overseas. It can be tempting to label every new hire an “independent contractor,” which keeps costs down. The employer pays fewer fees, taxes, and has fewer responsibilities when dealing with contractors.

However, most labor systems have strict tests for whether a contractor is actually an employee. Misclassifying someone as a contractor who should be an employee can result in huge expenses and lawsuits. The best way to ensure compliance with local labor laws is to use a trusted partner who is familiar with it so you can focus on developing your business.

 

3. Recruit smarter

While there is no shortage of people looking for a job, there is often a shortage of qualified, hard-working candidates. It can be difficult to find workers with the skills you need.

Many companies use their social networks to recruit good workers. You can also expand your reach by engaging with strategic partners that have established international networks to help find qualified employees.

RECRUITING ABROAD IS POSSIBLE

Expanding abroad is a big undertaking, but you don’t have to go about it alone. Work with a trusted team that has the experience to hire talent overseas, can help you manage compliance, and understands the culture. Get in touch with us today: 
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Communication skills

Employers understand the value of effective communication and actively look for this skill in potential employees. It’s important to show your competence in this area verbally, physically and through written communication. When responding via email, double-check the message before sending it to ensure that you are being clear and concise. Another key component to good communication is the ability to actively listen and provide thoughtful feedback, so be sure to stay engaged.

Honesty

Is key quality that employers want in their staff. Some applicants are tempted to exaggerate their qualifications to secure a job, but this is inadvisable. Though it may help you progress through the hiring process, if your potential employer discovers your dishonesty you will never recover their trust.

This quality is also an important characteristic to have beyond the interviewing process. An employee that admits mistakes and learns from them is an asset to any company. 

Loyalty

Honesty and loyalty are two traits that can’t be taught, which is why they are key attributes that employers look for. Prove yourself trustworthy and committed to the success of the company, and you will be invaluable. 

Dependability

The ability to consistently follow-through is an important work trait that employers seek, and one that you can prove you have throughout the interviewing process. Show a commitment to following deadlines by completing tasks as they’re assigned. 

Teamwork

Though not every job requires collaboration, the ability to work effectively and harmoniously in a group is a strength that employers want their employees to have. In fact, they will likely ask you how you function in a team during the interview process, so come prepared with an anecdote that highlights your ability to compromise and collaborate.

Flexibility

The ability to adapt is an important quality that employers want. Prove to them you can tackle tasks and changes as they come. You can also show this skill by addressing improvements that need to be made and developing systems or solutions to the issues.

Confidence

Being self-assured is a key characteristic that employers look for. They seek people to join their team that are confident in their abilities and that know what they want. Confident employees are friendly, engaging and have a clear (and honest) idea of what makes them a valuable asset.

A key component of confidence is having clear goals. Communicating your dreams to potential employers will prove that you are striving for something bigger, and not just looking for a job to pay your bills.

Work ethic

Another top quality that employers look for is a good work ethic. Employees that work hard are always on time and on target. Take pride in your work and others will take notice.

Problem-solving skills
Employers are looking for more than brainless drones to do their bidding. They want people on their team that can pinpoint a need and address it, so be sure to recount instances when you recognized an issue and developed an effective solution.

Ambition

Is a key trait that employers look for because of what it communicates about the worker. It means that they have something they’re working towards, and they are on a path of betterment for both themselves and their circumstances. Don’t be afraid to share your big dream with potential employers. They’ll likely find value in it, and it will positively impact your worth.

Are you looking to expand your staff?

Would you like to hire employees from other parts of the world with these qualities but don’t know how? Contact Us

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Hiring Colombian employees

Hiring Colombian employees

Hiring Colombian employees

Do you want to know how to hire them without bearing the costs? Read this article.

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Low wages and modest annual leave requirements make Colombia an attractive hiring destination for international companies looking to grow their remote teams. With an average weekly working time of 48 hours, employees in Colombia are used to working more than employees in other countries and are generally known for their good work ethic.

 

Working time

An employee’s standard working week should not exceed 48 hours, i.e. eight hours per day over a six-day workweek. Every employee must have one day off per week which is usually Sunday but may be shifted to another day if detailed in the employment contract.

 

Overtime

Overtime work must not exceed two hours per day, i.e. twelve hours per week, and must be paid at a rate of at least 125% for daytime work and 175% for work at night or on public holidays.

 

Payroll

Colombian law distinguishes between three different types of payment: minimum wage, ordinary salary (payments higher than the minimum wage which do not include any additional payments such as bonuses or other) and integrated salary (fixed monthly salary which is higher than ten times the minimum wage and set at a rate 30% higher than usual, thus including all additional payments such as bonuses).

 

Minimum Wage

In 2021, the national minimum wage in Colombia is set at COP 908,526 per month (not including transportation allowance).

 

Sick Pay

If an employee is unable to work because of sickness or injury, the employer is obligated to provide sick pay equal to the employee’s usual wages for the first two days of absence. Starting with the third day of sick leave, sick pay is covered by Social Security at a rate of 66.67%. However, payments are limited to 180 days.

 

Bonuses

Except for those earning an integrated salary, employees in Colombia are entitled to a 13th salary (Prima de Servicios) which is to be paid out in two installments, one in June and the other one in December.

 

Taxes and Social Security Contribution

Employees and employers in Colombia are subject to the following tax and social security contribution rates (as of 2021):

EMPLOYER
31% corporate tax rate
19% VAT (standard rate)

EMPLOYEE
Individual income tax rates range from: 19% to 39% *

SOCIAL SECURITY
Around 30% of employee salary, of which:

  • 8.5% health insurance
  • 12% pension plan
  • 9% diverse social security funds (certain contributions only apply to income exceeding ten times the minimum wage)
  • Plus 0.522% to 6.96% for coverage against professional risks.

Please note that social security contributions for integrated salaries are calculated based on 70% of the employee’s income.

8% – 9% of employee salary, of which:

  • 4% health insurance
  • 4% pension plan (additional 1% on monthly income exceeding COP 3,634,000)

Employee Benefits

Leave such as annual leave, maternity, paternity, etc.
30 days of salary during the first year and 20 days of salary for every year thereafter, for termination of the contract without just cause.

Hiring in Colombia?

Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Colombia? ROOTS EOR makes things easier for you! being able to hire employees in Colombia without having to bear the cost. Contact Us

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