Using a GEO to Hire an Employee Overseas: Pros and Cons
Hiring an employee in a foreign country carries risk, cost and time factors that may be new to your HR department, and an efficient solution has to be found that meets your business needs but also ensures compliance with unfamiliar laws. The initial challenge is: How can you assess the overall task of setting up foreign employment, especially if you don’t have a legal entity in the new location? Where do you even begin with a DIY approach to overseas employment?
Hiring an employee in a foreign country carries risk, cost and time factors that may be new to your HR department, and an efficient solution has to be found that meets your business needs but also ensures compliance with unfamiliar laws.
The initial challenge is:
How can you assess the overall task of setting up foreign employment, especially if you don’t have a legal entity in the new location? Where do you even begin with a DIY approach to overseas employment?
This is where the GEO employer of record solution comes in, which can work well for companies that want to hire local employees to run operations, send expats on assignment or to build a remote team in multiple foreign countries. With a GEO, all of this can be accomplished in a few simple steps that allow your employees to begin work as quickly as possible.
What is a GEO (Global Employment Organization)?
If you are not familiar with the GEO service, then you may be surprised how efficient it is to employ workers overseas using this model. In essence, the GEO becomes the employing entity in the new country, so that your company does not have to set up a local branch just for the purpose of employment.
After HR completes recruitment and makes a job offer, the GEO hires your employees directly in the country and provides end-to-end employment support and compliance.
How does a GEO arrangement work?
The GEO arrangement really has three separate parties: 1) your company, 2) the employee and 3) the GEO employer of record (EOR). The EOR steps into the role as the formal employer in the foreign country, but only for purposes of compliance and administration. You continue to manage the employee’s time, work product and methods while the GEO tends to payroll, withholding and ongoing employment support.
Because the EOR is already set up, this means they can onboard your employees without the delay and expense of incorporating your own legal entity.
The GEO employer of record takes care of all of these items for you:
- Helps you draft an employment contract that meets local requirements
- Registers your employee on their local payroll
- Completes social security registration with required ID numbers
- Ensures compliance with host country laws including tax withholding, making statutory contributions and sponsoring work permits (if needed)
- Runs the monthly payroll and issues payslips
- Handles any issues or questions that come up for the employee about benefits, leave and expense reimbursement
- Adheres to notice and severance rules in the event of termination
Who uses a GEO?
The GEO model is used by any company that is expanding internationally, or wants to access a broader talent pool of remote workers. Only companies with a firm commitment to a foreign market will consider going to the time and expense of setting up their own local entity, and the GEO alternative works for any size business and number of employees being hired.
Why would you use a GEO?
The question may come up of why a GEO service might be right for your company. When you consider the other options for international employment, the GEO is by far the most cost-effective and compliant method for hiring overseas employees.
The GEO service is a perfect fit for you if:
- You don’t have a local entity set up already in the country
- Your company is just testing out a new foreign market
- Compliance and cost are major factors for your HR strategy
- You want to have global access to recruit top talent
- Managing the risk of international employment is a priority
Pros and Cons of Using a GEO to Hire and Employee Overseas
Like any business strategy, using a GEO has pros and cons that have to be weighed against the other options available...read more
Shield GEO makes international employment simple. Our customers use Shield GEO to employ and payroll hundreds of workers in over fifty countries. Find out more.