Updated: Mar 11
A South Africa employer of record, or EOR, is an intermediatory organisation that deals with the management and administration required for the employment of an overseas company’s workers. It acts in some ways as the official legal employer of the company’s staff, dealing with onboarding and other HR duties – like handling contracts, retention, payment, and employee taxes. The organisation will still manage the staff’s work, reimbursement, tasks, and so on.
Companies may choose to outsource these tasks to an employer of record when they have staff based overseas and need an EOR based in the same country as the employees.
International companies that want to expand into South Africa will find many pros to hiring a South Africa employer of record. Advantages include:
It ensures the employment of South Africa-based staff is compliant with South African employment legislation – understanding the laws of other countries can be difficult for international organisations to do, and an EOR removes the difficulty with having expertise in these areas
An employer of record, being bound by contract to deliver the highest quality service, may be more reliable than a salaried employee due to the extra accountability
It may make it easier for international organisations to retain South African employees due to in-country management
Companies save time that would otherwise be used to handle their South Africa staff, giving managers more time to focus on essential business processes
Using an EOR means that an international company does not need to set up an entity in South Africa to employ South Africa-based workers. This saves them a lot in costs
A South Africa employer of record has insight into the South African market and expertise in employment in the country
All in all, it makes it a lot easier for companies to expand into South Africa.
There are also a few disadvantages to using a South Africa employer of record to consider. These include:
It may be more difficult for companies to develop the way they want to in South Africa in terms of following their business strategy when they are using an EOR
Using an EOR can affect and change the company culture of an organisation, and how an EOR handles staff reflects on the company
There are still costs to hiring an employer of record that an organisation may decide they would rather put towards setting up an entity in South Africa, even though would initially be far more costly
Some companies may feel they don’t really have control once they hand over the onboarding and HR management of South African employees to a third party, even one that has expertise in the process.
Many international companies are shifting to hiring employers of records to handle their overseas staff, and in general the pros outweigh the cons. However, it is still worth weighing up both and deciding whether using an EOR would help you develop your business strategy in South Africa.
CA Global HR has years of experience as an employer of record in South Africa in the Oil & Gas, Mining, and Civil Construction sectors. One of the most appealing things about us is the fact that our team has HR specialists with prior experience working in industries in senior management-level positions, and so have expertise in these areas and know the difficulties of managing organisations on an international level. Our Human Resources and Contractor Payroll services are of the highest quality, to ensure our clients run a successful and happy workforce in South Africa.
What do you think about the pros and cons of hiring an employer of record? Let us know in the comments below.