South Africa’s labour market is attracting interest from around the world. An EOR can help you hire people as quickly as possible.
In today’s high-tech, highly competitive world, speed is everything. Companies need to be agile and capable of adapting to changes and opportunities in real time. An employer of record (EOR) is designed to help you do that. Rather than spend time seeking out new talent, putting them through the interview process, and onboarding them, an EOR allows you to quickly recruit new people and get them to work as soon as possible. It’s faster, easier, and means you can quickly bring people into the company that you need.
That speed can be critical. Employing people in a foreign country can be complicated at the best of times, but even more so when employing people in a foreign country. You may be hiring for all sorts of reasons – such as supporting a market expansion, outsourcing remote services, or seeking out new talent. Whatever the reason, managing your workforce is inherently uncertain. It’s impossible to know in advance how many employees you’ll need or when. Fortunes can shift quickly, and you’ll need to be in a position to react to change as soon as possible.
If you’re hiring people directly, doing this can take time. You need to find the right people, put them through an interview process, and integrate them into the company. A much faster approach is to use a third party, such as an EOR.
What EORs do
An EOR is a company that acts as the legal employer for all your workers in South Africa. That gives them legal liability surrounding compliance with legal regulations and means you don’t have to set up a legal subsidiary within South Africa to hire employees directly.
Using the expertise of its team, the EOR handles all the administrative details of the employment process, including:
•Onboarding
•PAYE
•Managing Employee Benefits
•Filing Reports with the tax authorities
•Paying employer-side taxes
•Managing contracts and terminations
In other words, it serves as the HR department for your South African workers, with you retaining control over the daily working routines of your employees. However, because the EOR is the legal employer, you are shielded from full legal liability. It’s a simple and safe way to manage overseas workers that avoids exposure to any compliance risks.
Each EOR will have its payment methods, but will generally involve either a percentage of the employee’s salary or a flat fee per employee. This might vary depending on the type of work being done, with more senior employees generally attracting a higher fee. The EOR will pay the employee’s salary directly, but will pass these costs on to you as the hiring company.
In short, you’ll pay the usual employment costs of the worker, together with an additional premium for the EORs.
Fast hiring with an EOR
One of the biggest things you get for those fees is speed. There are many reasons why you might want to hire an EOR. You might be looking to outsource services and need a local entity to manage your employees. You might be looking to acquire new talent by tapping the South African workforce, or you might be testing the waters to expand into the lucrative South African market. With each of those, it pays to be able to move quickly and adapt to evolving market situations.
With an EOR, you can increase or reduce your workforce as you see fit. For example, for a market expansion, you may initially want to hire a local marketing team to help you understand the South African marketplace, conduct research, and draw up an expansion plan for your product or service. As you move forward, you might want to increase the number of employees as your business picks up. Alternatively, if things begin to slow down, you might want to scale back.
With an EOR, each of those things can happen very quickly. When employing people directly, you’ll have full control over the working relationship, but you’ll take time setting up a legal entity, seeking out new talent, putting them through the full recruitment process, and embedding them into your business and operations.
You’ll also have to manage all the paperwork relating to that employment, such as paying taxes, managing PAYE, and overseeing the provision of benefits and annual leave. As the legal employer, you’ll also be held legally responsible for complying with all tax and labour regulations.
An EOR handles all that for you. It may have existing employees who can be assigned on an as-needed basis to your company, or it can assist in recruiting and onboarding staff of your choice. EORs may also specialize in certain sectors, giving them insights into the best talent in that industry and any differences in legal obligations.
By taking on the administrative responsibility for your employees, EORs also free you from all the cumbersome, but necessary, administrative duties relating to employment. Without that, you can focus your time and efforts on much more profitable tasks, such as driving your business forward and delivering services for customers.
An EOR, therefore, is an affordable and flexible way to adapt your requirements to your situation. By keeping your focus on your work, you increase the amount of time you spend on
high-value tasks, which drive revenue and profit for your business, rather than time-consuming low-value tasks that ensure compliance but do nothing to grow your business.
In an uncertain world, it’s also less risky, reducing the need to invest up front in office premises. These come with high costs and uncertain returns, which can be difficult for small businesses to shoulder. Any move into a foreign market is risky. Working with an EOR is a way to minimize those costs and risks and ensure you’ll be able to move quickly enough to adapt to evolving market opportunities or threats as and when they arise.
