Business Talk with Baruch Swinkin Part 3: Using Employer of Record services

This is the third part in a series with Baruch Swinkin, the Co-Founder of Route 38 Professional Services LTD.  In the first part, we discussed how he established Route 38.  In the second part, we discussed an overview of the employer of record service. In this part, we discuss the types of companies that use the service and its growth worldwide.

What kind of companies use an Employer of Record Service?

Baruch Swinkin (Courtesy)

All kinds of companies use employers of record.  It spans the whole gamut of size and sector. 

There are major international firms, smaller mid-sized companies, and start-ups included in our client roster.  There are even mom-and-pop shops and individual entrepreneurs that benefit from it. 

The sectors include sales, marketing, accounting, translations, editing, legal, consulting, medical consulting, and finance. 

There is no end to people that we can serve.  We work with the public, private, nonprofits, and for-profits.  

Why do global companies use an Employer of Record in Israel?

That’s a terrific question.  The need can arise in any foreign country.  Israel is no different in that regard.  The service is becoming a worldwide trend.  Obviously, this is a little more on our radar in our Jewish, Anglo, Israel-centric community.  Still, in reality, Israel is no different in this regard, and the same model can be applied anywhere. 

Why are these services on the rise around the world?

As the world shrinks and becomes a much smaller place and becomes a global community, companies are increasingly looking to hire beyond their communities, regions, and countries.  Companies are looking to tap into resources worldwide, which can be more robust and cheaper. 

Individuals are also looking for opportunities outside of their local work environments.  This allows companies to hire them without taking many of the risks associated with employment, especially when dealing with foreign companies and foreign tax authorities. In addition, these employer of record services will allow a company to access foreign talent bases and engage resources in those bases without creating any nexus in those foreign countries.

Consider the following situation.  A company gives its budget for the year to its managers, with a strict headcount cap or new hire freeze.  This can be especially common when dealing with subsidiaries of larger global conglomerates. They may not be able to hire anybody because they have a hiring freeze.  But they may have a budget and need more work and more contractors.  This will also allow someone within your own country to hire an individual without taking employment risk or raising your employment roster and busting an employment freeze. 

In the last year, the events of COVID on the planet have made working from home much more accepted and acceptable.  And in some companies, it has become the norm. When people realize that they can live their lifelong dream and move to an exotic location, it gives people the opportunity to ask new questions about their future. For example, they might ask why I should sit at my desk freezing in Manhattan when I can sit on the beach in Hawaii while doing the same job?

That location can be Israel, Mauritius, or Switzerland, etc. So another reason that the employer of record is on the rise is that people realize that they can move and do the same job and don’t want to deal with the challenges and bureaucracy of foreign governments.

From the company’s perspective, they don’t want to create a nexus in the foreign country.  From the individual’s perspective, they are moving to a foreign country with different and challenging taxes, and this allows them to work without having to deal with those requirements. The employer of record service deals with it for them.

Is there anything else that companies must know about when working with an Employer of Record?

You have to do your research.  It’s essential not just to jump online and hit the first Google search that you get to.  It would help if you made sure that the service you are looking to hire knows their stuff.  That they are dependable, reliable and that they are going to take care of you.

If you are speaking to a robot or working on a platform, that may be easier, but you need to be sure they are doing everything correctly.  You need to make sure you establish a connection at that company so that when you have questions, you know whom to reach out to who understands your account and what your needs are.  Again, you are dealing with employment and people’s livelihoods, and the company is making a significant hire, and you want to know that they are doing the right thing. 

And the individual also is making a serious leap.  There is much trust involved.  It’s a good idea to do as much due diligence as possible when making that decision.  And to get references and put your faith in the service that you are contracting with.

In the next part, we will discuss Route 38’s unique role in Israel.