Planning your business expansion in Africa is a challenging task, to say the least. From setting up your own entity to hiring qualified professionals, managing payroll and ensuring compliance: the tasks and processes you need to complete and manage are as crucial as they are time-consuming. So you may wish to turn to an Employer of Records (EOR) instead. But there is so much contradictory information about them that it is hard to separate facts from myths regarding EOR services.
Do EOR service providers really take over control of your employees? Are there hidden costs? Read on to find out the truth behind common myths and misconceptions about EOR services.
False. An Employer of Record (EOR) and a Professional Employer Organisation (PEO) are two different organizations that, at their core, offer similar services, namely HR management and compliance. But there are key differences as well between the two. For instance, you must possess an in-country entity in order to partner up with a PEO. Provided you do own a local entity, your partnership with a PEO is characterized as one of co-employment.
In contrast, Employer of Record companies are well-known for their capacity to allow businesses to legally operate in an African country without a local entity. The EOR then becomes a legal entity responsible for payroll, tax, and statutory compliance of your employees.
While EOR companies and PEO companies offer similar services, they operate differently.
It is easy to understand how such an assumption came to be. After all, legally speaking, an Employer of Record is recognized as the employer to your employees and the EOR is legally liable and responsible for any actions taken in the name of your company. So does that recognition ultimately strip you of control over your employees and operations? No, that is not the case at all.
The contract made between your company and the EOR partner guards against any such abuses, giving you ultimate free reign over your employees and the way operations are carried out.
For some, the line between outsourcing services and using EOR services is quite thin – understandably so. After all, both options involve delegating certain tasks to third parties. But outsourcing often means that the people who do the work are in the dark about whom they are working for, whereas this information is made clear to those employed via an EOR partner. Besides, if your company outsources a task, you must ensure that the task is completed up to standard. On the other hand, an Employer of Record is a worry-free solution that requires less input from you in order to operate.
Employer of Record companies cost significantly less than managing all HR services in-house. EOR service providers spare your company the high initial cost of setting up your entity in the African country of choice, buying specialized payroll software, and training your staff. Not to mention, they also spare you penalty fees for any failure to comply with local regulatory frameworks.
Typically, any EOR company of repute will clearly outline the cost of their services before the beginning of your partnership. Costs are usually broken down into: initial costs, which include software and management tools, setup, and a monthly service fee.
EOR companies are legally allowed to hire full-time, part-time, and even contract workers. They can also facilitate the entry of foreign workers in the African country you choose to expand into by processing visa applications.
There are no such hiring limits in Africa. An Employer of Record can hire people from any background, for any position, and with any desired skill level for your company.
While an Employer of Record’s range of activities is considerable, they cannot fully replace in-country entities. For instance, if your business grows past a certain point – the definition of which depends on the African country you are expanding in – you are obligated to set up your own local entity to continue operating. There are also some official procedures that your company can simply not carry out without a local entity.
Should your activities be found to be non-compliant with local law in any way – whether it be labour-related, tax-related, or other – who bears the penalties? Your company, or your EOR partner? Since the EOR is entirely liable in the eyes of the law, your company mitigates any legal or financial risks.
An EOR is a good solution for companies looking to test out new markets. They allow you to operate legally in the country of your choice without setting up a local entity, helping you to explore the possibilities for business without any of the cost and time setbacks.
With over a decade of experience working with companies seeking to expand in the African continent, Africa HR Solutions is uniquely qualified to facilitate your expansion. We walk you through the many complex processes and tasks that expansion entails, assisting you so that you can focus on your core business while we take care of internal operations including HR, payroll, and more.
Get in touch with us now to find out how we can work together for a smooth and hassle-free expansion of your business in Africa.
Grant Geraghty is the longest-serving member of the Africa HR team. This resident subject matter expert and client champion is responsible for gaining a deep understanding of our clients’ unique HR needs in Africa and providing tailored solutions that align with their business objectives. Grant collaborates closely with our clients to ensure that their requirements are properly implemented, providing ongoing support and guidance throughout the process.
Grant brings a wealth of experience to his role, having served as Africa HR’s longest-serving employee. He holds a Bachelor of Commerce degree, with a major in Economics and Business Finance, from the University of Natal in South Africa. Additionally, he has completed a certification program in Payroll and Tax Administration from the University of Cape Town, further enhancing his expertise in HR operations and compliance.
His commitment to delivering exceptional service and his extensive knowledge of HR in Africa make him an invaluable member of the Africa HR team.
Kevina Takoordyal has a BA Hons Business Management from the University of Glamorgan, UK, with MBA in leadership and Innovation, MBA General, PMP Certified, and Agile Scrum Master. She currently works as the Head of Operations at Africa HR Solutions Ltd with more than 20 years of proven leadership capabilities in Operations, Business Development, People Management, Process Optimization, and Project Management in the Financial Services, BPO, Banking Industry, and Heath Care Industry. In Senior leadership roles with an international footprint across Europe working and extensive Pan- African experience from a compliance, finance, and operations angle, Kevina comes across with a panoply of cross-functional skills. Kevina also serves on a few Boards, Non-Independent Executive at MioD and for NGOs on a voluntary basis, a coach and mentor to aspiring female leaders across Africa and Mauritius.
Kevina is a firm believer in Servant Leadership with a strong focus and commitment to uplifting others, with the ability to deliver through a highly engaged – diverse team, and works towards consistently synergistic value creation. While being a focused and adaptive thinker and Kevina is actively participating in panel discussions on Innovation, CX, Digital transformation.
Kevina serves as Project Assessor for the National Youth upskilling program. She has been recognized as Global Talent in a few companies, Ceridian, and International SOS Ltd whereby she has been awarded a few scholarships and had the opportunity to be mentored by Senior Vice President in the US. Award Winner in various fields and at a national level and recognized including Super Achiever Leader Award in Africa in 2016, Awarded Africa Women Leader 2018.
Viloshna is an experienced finance professional with 18 years of expertise in strategic financial planning, financial analysis, cash flow management, systems and controls implementation, financial reporting, and continuous process improvements. She currently serves as Head of Finance & Business Support, where she has successfully automated and leveraged the financial reporting system capabilities to ensure efficient company operations.
Viloshna’s background includes senior roles in a multinational pharmaceutical company and a large listed Mauritian conglomerate. Her meticulous attention to detail and strategic thinking have streamlined financial processes, making her a valuable addition to any finance team. Viloshna is a qualified finance professional with an FCCA qualification and an MBA, bringing valuable expertise to any organization.
In her current role, Viloshna leads the company’s Treasury and Payments function, including the fulfillment of the company’s cross-border payments into Africa. With her strong educational background and extensive experience, Viloshna consistently demonstrates her ability to optimize financial operations, minimize risks, and improve profitability. Her expertise in financial reporting and process improvements make her a valuable asset to any organization.
A qualified lawyer who joined Africa HR Solutions in July 2020, Mark Du Preez has experience working in private practice for a reputable law firm in South Africa. He also played commercially focused roles at a leading private bank, wealth management company, and outsourcing firm in South Africa and Mauritius.
Mark has played a pivotal role in Africa HR Solution’s risk mitigation strategy, which positively impacted P&L performance over the years.
He currently leads the Partnerships function of the company including relationships and oversight with in-country partners (ICPs) across Africa.
Alex has more than 15 years of experience in the global, strategic development of both enterprise and consumer brands in categories including technology, transport, enterprise software, entertainment, and travel.
With experience in roles on both agency and corporate side, he has worked across international brands and has led the development and execution of multi-discipline campaigns across EMEA, NORAM and Asia Pacific.
His focus is on driving meaningful business impact through brand differentiation and building high-functioning, digitally oriented, and analytically driven capabilities. He is motivated by working with, and developing dynamic people, teams, and organizations.
He leads, manages, develops and mentors the Key Account Management department, including line management responsibility for the team of Key Account Managers and Key Account Administrator who represent the Company as the primary communication link between all relevant stakeholders, including clients, third party in-country partners and internal functions.
Originally from Mauritius, he holds bachelor’s degrees in International Business, Finance and Management from the University of Nevada, Reno.