The Peruvian economy is thriving, and the key to its growth lies in the exports of its exceptional national products. The country’s exportable offerings have captured the attention of international businessmen from diverse sectors, including mining, agro-industry, fishing, light industries, and tourism.
With a rich array of opportunities, Peru stands as an alluring destination for global businesses seeking to enter a market on the rise.
Companies looking to hire workers can benefit greatly by using an EOR in Peru. It handles complex legal and administrative tasks, such as registering as the employer, managing payroll, and ensuring compliance with local regulations.
By entrusting these responsibilities to an EOR, companies can focus on their core business while avoiding the challenges and risks associated with hiring and managing employees in a foreign country like Peru.
To ensure that your business partners with the right EOR in Peru, we have compiled the 12 most crucial questions to ask before agreeing to a partnership.
SEE ALSO: company formation agent in Peru
What is an Employer of Record?
An Employer of Record (EOR) enables businesses to hire foreign workers without setting up a legal entity. EOR handles immigration procedures and tax payments using its Taxpayer ID. The original employer manages the global team while benefiting from a diverse talent pool, remote work options, and cultural knowledge in new markets.
Without an EOR, businesses must become experts in foreign labor laws and set up legal entities, which is time-consuming and resource-intensive.
Key questions to answer when hiring through an EOR in Peru
Not all Employer of Record (EOR) services are the same. Before you commit to partnering with an EOR, you must understand exactly what services it offers.
Here are 12 questions to ask when hiring through an EOR in Peru:
- Does the EOR legally employ your employees?
- Is the EOR the direct employer, or do they use partners?
- Does the EOR provide payroll compliance and guidance for Peru?
- How does the employment contract work?
- Does the EOR possess in-depth payroll and HR expertise?
- What is the employment model they use in Peru?
- How does the EOR store and keep data safe?
- What are the terms of their commercial agreement, and is it easy to terminate?
- What are the costs associated with employing someone through their services in Peru?
- Does the EOR offer a customer service agreement (CSR)?
- How will the EoR assist you when terminating an employment agreement?
- Can the EOR share a project plan example for a client of our size, with timelines, and budgets?
- Does the EOR legally employ your employees?
It’s important to know if the provider manages local employment in Peru. Having a local employer is crucial, as they handle tasks like maintaining a local entity, registering with tax authorities, payroll processing, tax filing, benefits, and HR compliance. Additionally, the provider must maintain proper corporate governance for all their companies.
- Is the EOR the direct employer, or do they use partners?
Understanding the legal employer’s role is crucial as they hold the most responsibility for the employee. Offering legal employment in a country doesn’t guarantee the provider is the direct legal employer; they might work with partners. Working with partners increases the chance of issues and blurs responsibility lines. Employer of Record services may choose partners due to the complexity of setting up entities, but owning companies ensures better quality control and customer experience. Direct contact with partners should be clarified if applicable.
- Does the EOR provide payroll compliance and guidance for Peru?
It seems obvious but you do need to ensure that the EOR can provide it services in Peru. It is also worth checking which other countries they operate in. Not all providers have global advisory services. Hiring one with such services eliminates the need for multiple consultants to manage compliance in all your countries of operation.
- How does the employment contract work?
When working with an Employer of Record (EoR), the contractual handling of the employment relationship is crucial. The EoR serves as the legal employer and needs a contract with the worker, which may or may not include you. The agreement must be compliant with the law and aligned with your company’s practices across all locations the EoR supports. Contracts vary across territories. Some have detailed tripartite agreements, clearly defining responsibilities, with the EoR handling payments, taxes, and local matters, while you retain policy control. Benefits and statutory requirements should be discussed. When choosing an EoR, examine their template agreements for consistency and consider how they ensure uniformity while complying with local practices.
- Does the EOR possess in-depth payroll and HR expertise?
For effective multi-country HR and Payroll support, the Employer of Record needs extensive international payroll and HR expertise, as well as a good understanding of local employment and tax laws. Look for evidence of robust processes and comprehensive guides to simplify information. During the sales or onboarding process, speak to those responsible for employment compliance and assess their depth of knowledge and understanding of your challenges. Inquire about written guides for your convenience, as this shows their investment in supporting customers with local regulations.
- What is the employment model they use in Peru?
Employers of Record often keep their local employment practices in different countries undisclosed. However, understanding these practices is essential due to significant legal differences. Some countries allow unlimited EoR models, while others have time or job function limitations. Compliance with these limitations is mandatory, as violating local laws can lead to serious consequences.
- How does the EOR store and keep data safe?
Safeguarding your worker’s data is another responsibility of the Employer of Record (EoR). Due to the sensitive nature of this data and its accessibility to multiple parties, the EoR must employ the highest security measures. To evaluate their compliance with data protection regulations like GDPR and Schrems II, review their security and privacy policies. Inquire about the specific security measures in place, including the physical location of data servers, disaster management and data recovery plans, threat detection systems, and whether they are ISO27001 certified.
- What are the terms of their commercial agreement, and is it easy to terminate?
If you are dissatisfied with your Employer of Record, you should have the option to end the relationship with relative ease. Inquire about the terms and whether you are obligated to work with them for a specific duration. No Employer of Record should make it difficult for you to switch to another provider or employ people through your own entities, as it’s essential to have the flexibility to make such decisions.
- What are the costs associated with employing someone through their services in Peru?
Employers of Record usually charge either a flat fee for their service, irrespective of the salary, or a set percentage of the compensation. The fees may be standardized for all countries or vary slightly. Request a detailed explanation of their fee structure and ask for assistance with gross-to-net calculations, employer taxes, and their charges to understand the total employment cost both monthly and annually. Determine if their fee covers all Employer of Record services or if additional charges might arise, like termination fees.
- Does the EOR offer a customer service agreement (CSR) in Peru?
An Employer of Record’s initial tasks are established at the beginning of the relationship, but other issues may arise later on, making support crucial. Assess their payroll and HR expertise, reliability, and track record of assisting customers to set support expectations. Look into how they handle emergency situations in both the short and long term. Agreeing to an CSR is an ideal way to give you peace of mind before partnering with an EOR.
- How will the EOR assist you when terminating an employment agreement?
The EOR should provide tailored advice and support for ending employment agreements, complying with strict regulations in most countries. Their availability, willingness to help, and local knowledge are essential for handling such situations positively and legally. Ensure that the commercial agreement with the Employer of Record addresses how to address the termination of employment. Ask if they have an established procedure for compliantly handling employment terminations in Peru and whether they require early notification to avoid legal complications.
- Can the EOR share a project plan example for a client of our size, with timelines, and budgets?
Reviewing an implementation project plan helps determine if a provider follows best practices and if any adjustments are needed to align with your business practices. The plan should cover transitioning from the current provider, integrating with your human capital management (HCM) system, and addressing the risk of losing key personnel during the transition.
Biz Latin Hub can help you find an EOR in Peru
Biz Latin Hub is a valuable partner for companies aiming to enter the Peruvian market. With our extensive presence in Peru, we take pride in our team of skilled bilingual professionals who specialize in corporate support. They are fully equipped to provide tailored solutions catering to your requirements.
The range of services we offer includes company formation, accounting and taxation, legal support, hiring, and PEO services. If you are considering doing business in Peru, Biz Latin Hub is an ideal partner for you.
Our experts have the expertise and resources to support your business throughout Latin America. To discover more about our comprehensive services and how we can contribute to your success, reach out to our team of specialists today.
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