The Pros And Cons Of Hiring Through An Employer Of Record (EOR) In Colombia

• Published date: 01 August 2023
• Subject Matter: orporate/Commercial Law, Law Practice Management, Compliance, Corporate and Company Law, Human Resource Management
• Law Firm: Biz Latin Hub Group
• Author: Mr Craig Dempsey

Employing staff in a foreign country can be a complex and time-consuming process. One option that many companies are turning to is Employer of Record (EOR) services, which allow businesses to hire and manage staff through a third-party provider for company incorporation in Colombia. In this article, we will explore the pros and cons of using EOR services for hiring staff in Colombia, including the legal framework governing EORs, the benefits and risks of working with an EOR, and the future of EORs in Colombia.

What is an Employer of Record?

An Employer of Record (EOR) is a third-party organization that acts as the legal employer for a company's employees. In Colombia, an EOR is responsible for payroll, benefits, taxes, and other HR-related matters on behalf of the client company. Essentially, an EOR allows a company to outsource its HR functions and focus on its core business operations.

Knowing when to work with an Employer of Record (EOR in Colombia) is essential in running your business

Legal Framework governing Employer of Records (EOR) in Colombia?

The legal framework governing EORs in Colombia is governed by the Labor Code, which outlines the employer-employee relationship and the obligations of employers. Additionally, the Colombian government has established regulations that EORs must comply with, including tax and social security requirements.

Advantages of hiring through an EOR in Colombia?

1. No requirement to incorporate a local entity Hiring through an EOR in Colombia allows foreign companies to operate without the need to establish a local entity. This is particularly beneficial for companies looking to test the market before committing to a full-scale expansion.
   
   
2. Flexibility: EORs in Colombia offer a high level of flexibility in terms of employment arrangements. They can handle short-term or project-based contracts, part-time, and provide support for employees across multiple jurisdictions.
   
   
3. Ability to hire in multiple jurisdictions: Hiring through an EOR in Colombia allows companies to access a wider pool of talent across the country. The EOR can handle the complexities of employment law across different regions, making it easier for companies to expand their operations.
   
   
4. Faster Time-to-Market: Hiring through an EOR in Colombia can help companies accelerate their time-to-market. With an EOR companies can quickly hire employees and begin operations without the delays associated with establishing a local entity.
   
   
5. Reduced Administrative...