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How Much Does an Employer of Record Cost?

How Much Does an Employer of Record Cost? The cost of employer of record services remains unclear to many. To help with this, our EOR experts have prepared a guide on the pricing of employer of record services.

EOR services cater to businesses looking to tap into global or remote talent. But need to figure out how to proceed while staying compliant with regulations.

Employer of record services cost about $250 per month per employee.

The cost of hiring an employer of a record company boils down to a firm’s needs and requirements.

Different employer of record service providers charge based on the region and services provided.

How is the employer of record service cost calculated?

Employer of record pricing models

Custom Pricing

In this model, a personalized quote determines the cost of an employer of record. The quote considers factors such as:

  • the number of employees,
  • a percentage of their salaries,
  • extra services like health benefits set up.

In other words, the client’s specific needs determine the cost of the EOR services.

This quote is often given as a fixed monthly rate and per employee.

The model suits firms with specific HR needs or custom HR administration requirements.

Employer of Record cost in Africa

Percentage of Employee Payroll model

In this model, you pay more to the employer of record to promote employees or raise their pay.

The percentage-based employer of record firms was the order of the industry at first.

Due to the changing dynamics of the corporate market, the model has become less appealing.

This suits a business that prefers variable payroll costs tied to employee income.

Fixed Fee Pricing Model

With flat or fixed fee rates, the parent firm can hire the best global candidates for open vacancies.

They can also pay their employees the amount they deserve without questions.

Furthermore, the flat-rate payment system can increase employee productivity and benefit the company.

A flat fee usually ranges between $900 and $1,500 per employee every year.

This cost also depends on the employer of record service provider.

What are you paying an employer of record company for?

Employer of record firms offer a broad range of services to business owners.

If you choose to partner with an employer of record company, the cost includes these services:

Payroll administration in compliance with local laws:

EOR providers handle payroll administration while ensuring compliance with local regulations.

They calculate wages, deduct and manage payroll taxes in line with government requirements.

Federal regulation compliance:

EOR providers assist businesses in adhering to federal regulations.

They help businesses to navigate these regulations, ensuring their practices align with requirements.

Employee administration:

EOR providers handle employee onboarding, record-keeping, and terminations.

They manage paperwork and documentation throughout the employee lifecycle, reducing business administrative burdens.

Recruitment of new hires:

EOR partners assist in candidate sourcing, screening, and hiring processes. They streamline recruitment, saving businesses time and effort in finding qualified talent.

Employee benefits and compensation claims:

EOR providers manage benefits enrollment, eligibility verification, and claims processing. They handle employee reimbursements and expense claims, ensuring timely and accurate compensation.

HR elements like working hours and leave:

EOR partners manage HR tasks such as monitoring work hours, sick leave, and vacation days.

They enforce policies, track attendance, and ensure compliance with labor laws.

EOR Set up:

EOR partners help to establish the Employer of Record relationship.

They help set contractual agreements and define service scopes, ensuring a smooth transition.

Extra Fees:

Empoyer of records providers charge extra costs for services outside their standard offering.

Businesses need to discuss and understand any potential extra costs upfront.

EOR services provider with employer of record cost

Factors Affecting Employer of Record Pricing

It is crucial to know the factors influencing employer of record costs.

Here are a few common factors to consider:

The location of a business and its employees

The business and employee locations impact the cost of Employer of Record services.

EOR providers factor in local laws and regulations while determining prices.

Businesses with employees in many locations may encounter extra expenses.

Employee Headcount

The number of employees and the industry also impact EOR pricing.

EOR providers charge based on the number of employees managed. Hence the larger the workforce, the higher the fees.

Specific industries with complex HR needs may face higher charges.

The Service Scope

The range of services offered by EOR providers influences the costs.

EOR providers offer various services to support businesses, such as payroll management.

The more services a business requires, the higher the costs incurred.

Compliance Fees

Taxation, compliance, insurance, and benefits also impact EOR pricing.

Complex compliance needs and requirements can lead to higher fees.

These compliance fees influence the cost of employer of record services.

Example of EOR service firm with favorable  employer of record cost

Conclusion

Remember that working with employer of record companies is a logical investment.

When evaluating their cost, remember they help you stay compliant with laws.

You’ll encounter challenges if you decide to handle the entire hiring process alone.

They will leave your business in a less favourable position.

These firms provide more than face value.

So, to recap…

An employer of record usually costs $250 per month per employee. However, the final outlay will depend on a company’s personal set of requirements.

Choose Flexi Personnel as your trusted EOR partner. You will get competitive pricing and unparalleled services as you expand in Africa.

If you found this article helpful, check out our post on how to become an employer of record too.

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