Employer of Record (EOR) – Outsourced Local Staffing & Human Capital Management

Countries like France are highly unionized with stringent labor laws and costly social regimes that offer a high level of protection to the employee. The French labor codes delineate general laws and decrees that govern employment, and the French Supreme Court’s employment law section interprets the labor codes in accordance with the French Constitution.

However, the governing codes of day-to-day labor are derived from collective bargaining agreements that cover some 90% of employees in France.

Unlike the United States, most aspects of Human capital management in France are governed by collective bargaining agreements and all aspects are well-regulated – onboarding employees, probationary periods, and conditions of redeployment or termination. The real fun starts when your company is faced with managing payroll taxes and “social charges.”

The European Union is grappling with the impact of post-Covid changes in ways of work magnified by the gig economy. Countries already require you to employ locally via an incorporated entity, on which payroll taxes and human capital management charges are imposed by the government, and these requirements are being reinforced to limit “the gig worker on state benefits” economy.

This magnifies the costs and complexities for small businesses that do not have the resources to incorporate and staff in various countries under legacy approaches. For this reason, it’s advisable to use human capital management and payroll solutions vendors specialized in local employment.

An outsourcing solutions partner absorbs your human capital management (HCM) needs along the full transactional value chain – job descriptions, recruitment & employment contracts, payroll taxes & social charges while ensuring compliance with conditions of work and employee termination guidelines and laws.

You engage a local partner to efficiently and effectively manage the outsourcing of your human capital and payroll management to local in-country professionals and subject matter experts while you focus on running and developing your business.

It goes to the effective division of labor in a work environment transformed by globalized SaaS tools, the Gig employee, and virtual and new efficient ways of approaching work and reducing costs.

EOR – Employer of Record

This is widely thrown about by many service providers online, but this is often an expropriation of the American term (and in the American sense) that does not exist in many the labor codes of many countries, including France’s.

In substance, France recognizes the Portage Salarial – a tripartite contractual relationship – which is effectively an EOR solution. It is atop the options for avoiding the onerous and expensive legacy approach to hiring and managing staff.

Caution! PEO – Professional Employment Organization

There are several organizations marketing themselves as PEOs – a co-employment arrangement. The PEO is a buffer organization that administers staffing and payroll and so forth, but you, the client organization are responsible for the day-to-day human capital management of your employees because the employees stay on your books. Your company and the intermediary organization (PEO) that does your employment share legal responsibility for your employees.

This is a convoluting arrangement and guess what? This form of co-employment arrangement is illegal in France and many other European countries.

Beware of online services offering you PEO solutions in Europe or those offering EOR solutions which are really PEO operations