Minimize Risk When Hiring Offshore Employees: The Role of an EOR

The idea of doing business across the globe is very exciting but when you start expanding your company internationally, then things get a little tough especially when you are planning to hire offshore employees. One of the greatest challenges is ensuring adequate legal and tax advice together with compliance with the legislation of foreign states. That being said, if you are thinking about expansion and hiring in a country like Malaysia it is beneficial to use an Employer of Record (EOR). Let’s explore why an EOR service could be a big plus for your firm planning to expand in Malaysia.

What Does an Employer of Record (EOR) Do?

EOR stands for Employer of Record and is a service provider that acts as and takes legal liability for your offshore employees. This means the EOR becomes the ‘official’ employer of your employees in Malaysia including managing the payment of wages, taxes, entitlements, and more. The best part? Under the EOR model, you only control the day-to-day working of your employees and can set their tasks and responsibilities at will, while the EOR is legally responsible for all other obligations to the employee.

This essentially means that companies that are interested in conducting business in Malaysia, can hire workers without the need to open a Malaysian legal entity. Instead of having to think about how you and your company will be able to deal with Malaysian labor laws while expanding your business, you have the EOR handle this.

Why Do You Need an EOR to Minimize Risk?

Having employees offshore especially where legal systems differ from your country exposes your business to compliance risks. As with any system or process, there are quite a number of risks associated with the implementation of the classification process such as misclassifications of an employee, failure to observe tax regulations, and dismissal of mandatory benefits among others. Regulatory networks of legal jurisprudence in nations such as Malaysia are quite convoluted, and the subject matter may easily present some critical compliance nuances.

The drawbacks will be transferred to a reliable EOR Malaysia, which possesses professional expertise in Malaysian employment legislation. The EOR guarantees legal compliance to assist your business in meeting all legal requirements such as tax registrations, employment contracts, and social security payments, which will save you from legal ramifications.

Faster Market Entry with Compliance Assurance

One of the most significant advantages of using an EOR is the ability to enter the Malaysian market quickly and compliantly. Without the need to set up a local entity, you can hire employees and begin operations almost immediately. Whether you’re testing the waters in Malaysia or expanding your existing business, the EOR allows you to scale faster without the delays that come with company formation and legal registrations.

An EOR also ensures that all the necessary paperwork, from employment contracts to salary payments, is in order. For example, in Malaysia, employees typically sign open-ended contracts or fixed-term contracts, depending on the nature of the job. The EOR will handle these contracts, ensuring they comply with Malaysian labor laws.

HR, Payroll, and Tax Management Made Easy

Managing payroll and taxes for offshore employees can be one of the most daunting tasks when hiring internationally. In Malaysia, the minimum wage is MYR 1,500 per month, and salaries must be paid within seven days after the end of the wage period. Additionally, there are mandatory employer contributions to Malaysia’s Central Provident Fund (CPF), and employee benefits like annual leave and medical insurance must be provided.

Handling all these administrative details on your own can be overwhelming, but an EOR in Malaysia takes care of it for you. The EOR ensures that your employees are paid on time, with all necessary deductions for taxes and social security contributions. The best part? You don’t need to worry about managing the complexities of payroll systems or figuring out how to make payments in Malaysian currency (MYR). The EOR handles it all.

Reducing Costs and Increasing Efficiency

While the cost of using an EOR may seem like an additional expense, it can actually save you money in the long run. Setting up a legal entity in Malaysia requires significant time and money. You’ll need to hire local staff, invest in office space, and pay for legal fees to ensure compliance with local labor laws.

By using an Employer of Record Malaysia, you can skip these upfront costs and access a solution that starts as low as US $300 per employee/month. This is an affordable and efficient way to hire offshore employees, allowing you to test the market, scale your team, and adjust your business strategy without being bogged down by bureaucracy.

Scalability with EOR Solutions

If your business sees rapid growth or needs to scale quickly in Malaysia, the EOR makes it easy to add new employees without additional administrative burdens. The EOR takes care of the hiring, onboarding, and HR management, freeing you up to focus on scaling your operations. Whether you’re hiring one employee or an entire team, an EOR ensures that your expansion is smooth and hassle-free.

Conclusion: Make Offshore Hiring Risk-Free with EOR

Hiring offshore employees in Malaysia can be a strategic move for expanding your business, but it’s not without its challenges. By partnering with an Employer of Record (EOR) like BGC Group, you can minimize risk, ensure compliance, and scale your operations with ease. With more than 19 years of experience as an EOR in Malaysia, it can handle all tasks from handling payroll and taxes to managing legal contracts and employee benefits.

So, if you’re ready to hire talent in Malaysia but don’t want to deal with the complexities of setting up a local entity, an EOR is the way to go. It’s an affordable, efficient, and risk-free way to grow your team while focusing on your core business objectives.