An Employer of Record (EOR) is a third-party organisation that takes on the responsibility of legal employer of a company’s employees. The EOR handles all employment-related administrative tasks, such as payroll, taxes, and benefits, while the client company retains control over the employee’s day-to-day work and responsibilities.
On the other hand, a Withholding Payer Number (WPN) is an essential identifier for individuals and certain non-individual entities without an Australian Business Number (ABN) or those not required to have one. WPNs are allocated explicitly to entities ineligible for an ABN but still have responsibilities related to employee taxation, including PAYG withholding and contributing to superannuation for eligible employees.
Employer of Record (EOR) hiring has both advantages and disadvantages. Here are some of them:
Advantages
- Simplified recruitment process: EORs can help you with your basic hiring needs and make the recruitment process in another country much less complicated.
- Ease of expansion: EOR services allow you to tap into other markets in different countries, making it easier for small companies to expand their business to global markets.
- Cost-effective in the short term: The cost of adding new employees is negligible once payroll is established.
- Reduced supervisory risks: EORs take on the responsibility of being the legal employer of a company’s employees, which reduces the supervisory chances for the client company.
Disadvantages:
- Lack of control: EOR handles all administrative tasks related to employment, such as payroll, taxes, and benefits. This method of getting new employees is more of a temporary solution than a medium to long-term strategy.
- Limited autonomy: EORs work in a specific way, so they might not be the perfect solution for your recruiting needs.
- Additional costs: EORs charge a fee for their services, which can add to the overall cost of hiring.
With the WPN, the company controls the employee and is responsible for employee taxes and superannuation.
At Abdera, we can assist with WPN registration and payroll management of your employees without setting up an Australian entity. This may be a cost-effective solution until you can expand into the Australian market.
