Employer of Record (EOR) solutions have become increasingly popular in recent years, providing businesses with a flexible and efficient way to expand their operations in a new country without having to set up a legal entity.
This is particularly relevant for businesses expanding to Belgium, where EOR solutions offer a range of benefits, such as simplified compliance, reduced administrative burden, and quicker access to the market.
If you're considering expanding to Belgium, using an EOR solution can be a smart and effective way to establish your presence in the country while minimizing risk and maximizing efficiency.
What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization, usually a local HR services company, that serves as the legal employer of your employee(s) in a specific country.
The Employer of Record is a company with a legal entity in which country you plan to hire a new employee in. This local legal entity is authorized to, and will, hire your future employee on your behalf. The Employer of Record will then charge you the employee's salary, fees, and social charges in addition to the EOR service fee (usually a fixed monthly fee or a percentage of the total amount). Additionally, depending on the EOR selected, other payments or fees could be required (salary deposit, bank charges, payslip issuance fee, etc.).
Contractually, the Employer of Record hires the Belgian employee, but you have managerial duties over him. This employee will be 100% dedicated to your assigned mission, even if not on your legal payroll. It's a three-party agreement. You manage the employee, the Employer of Record will take care of all the legal and HR duties in the country, and the employee works for you.
The tasks and responsibilities of an Employer of Record usually are:
- Contractually hiring (employment contracts) and HR onboarding of employees
- Payroll management
- Professional expenses management
- Employee HR management (sick leave, holidays)
- Paying HR-linked and social taxes
- Benefits management (bonuses, health insurance, retirement plans, car allowance, meal vouchers)
- Compliance with local laws, administrative declarations
- Possibly, support in visa & immigration requests
The traditional ways of hiring someone in Belgium would be through a legal representative office or a fully operational subsidiary. In both conventional cases, you must register an entity with the Belgian authorities. Using this third solution of Employer of Record, you do not have to register an entity in Belgium but can still hire someone on a temporary or long-term basis.
How does an Employer of Record in Belgium work?
To explain how an employer of record in Belgium functions, we'll cover three main aspects of its role: the relationship it has with its client (your company), the hiring and onboarding phase of your future Belgian employee, and its duties to the Belgian authorities.
EOR's relationship with his client (You!)
After your company finds the right profile for the job in Belgium, the Belgian Employer of Record (EOR) contractually hires your future employee in Belgium. The EOR will simultaneously sign a contract with you that will define the following:
- The nature of its work as an employer on your behalf
- How much it'll charge you for its mission and other related additional fees
- The nature of its relationship with the employee
- The communication duties and legal obligations from you and the EOR
- The legal obligations and requirements toward Belgian authorities
Hiring your Belgian employee
The Employer of Record will hire the employee. It means the employee has an employment contract with the Belgian EOR. The contract will stipulate the main points:
- Type of Contract
- Job Title
- Mission of the employee (the mission assigned by you, the client of the EOR)
- Salary and Benefits
- Working hours and place of work
- Holidays, sick leaves, and accidents
- Intellectual Property
- Non-competing clause
- Communication means
- Terminations clauses
- Jurisdiction
In addition, the Belgian Employer of Record is in charge of onboarding the employee for all the tasks required by you: giving the IT tools to the employee, giving the meal vouchers, explaining the public transportation systems, and giving him his public transportation card, etc. You must negotiate benefits and onboarding with the employee and the EOR.
EOR's duties toward Belgian authorities
The Belgian Employer of Record is in charge of all the legal duties. It is the legal employer of the employee in Belgium. It will be in charge of the following points:
- Calculate and declare the salaries, the mandatory holiday allowance, the mandatory 13th month, the optional pension plan, bonuses and commissions, and car allowance.
- Pay the Employee social charges such as the Belgian Social Security (ONSS - Office National de Sécurité Sociale) and other legal taxes.
- Pay other mandatory costs (i.e., employee medical check-up, work accident insurance, eco cheque).
- Pay for optional benefits.
- Pay local fees for payroll management and employee payment (secrétariat social, bank charges, etc.).
Why Consider EOR Solutions in Belgium?
The Employer of Record solution brings foreign employers many benefits in entering the Belgian market:
- No need for a subsidiary
- Reduced administrative burden and complexities.
- Faster time-to-hire and market entry.
- Compliance with Belgian labor laws and regulations.
- Cost-effectiveness and reduced financial risks.
- Access to top Belgian talent
In conclusion, expanding your business to Belgium can be an excellent opportunity for sales growth and success. However, setting up a legal entity in a new country can be a complex and time-consuming process. That's where Employer of Record (EOR) solutions come in handy. By using an EOR, you can establish your presence in Belgium while minimizing risk and maximizing efficiency. EORs take care of all legal and HR duties in the country, including contracts, payroll, taxes, and compliance with local laws. This allows you to focus on managing your employees and growing your business. If you're considering expanding to Belgium, an EOR solution may be the smart and effective way to go.