It is totally legal, Reg. I used to be HR director for large multinationals, and although that was before the EOR solution became a thing, we did outsource pay-rolling (and employer ship) to third parties when necessary. I highlighted the liabilities in the article because a clear understanding of where the responsibilities lay is crucial! What are your doubts?
I have given some thought to the legal issues. Yes, the EU’s Agency Workers Directive (2008/104/EC) and current UK equivalent (soon to change) allows such an arrangement, albeit I see it as a potential minefield for the client organisation and question its value other than for some specialist roles and skill shortages.
I say this because the client still retains obligations and areas around control of the workers, health & safety, worker classification, etc. Co-employment risks seem to be a major concern here as the countries, particularly France, Netherlands, Austria, and Germany (maybe the UK soon) monitor this tightly. A tribunal can find the client organisation is the real employer if it controls key employment aspects, e.g. promotion.
The situation regarding works councils muddies things even more. The works council of the client company plays the most significant role in ensuring that employment decisions, including dismissals or changes in working conditions, comply with local labour laws. This means the client company needs good HR people to manage these situations, just as they have to without an EOR. In France, Germany, and Netherlands, it is a real challenge without causing problems by having to bring in a third-party employer, I suggest. When I work with managers in those countries, they spend so much time on these issues that their main role suffers and EOR will not resolve this.
Insofar as H & S is concerned, we have yet another logistical and legal problem as the EOR company that is responsible is not on site, etc. To what extent is the client company liable, given they do not train the workers and so forth?
Collective labour agreements are also a concern to be resolved as collective bargaining may impact the EOR’s other employees with another client!
At the end of the day, it is technically doable in the EU and UK and yet I wonder how much real benefit is obtained for the client company?
As with many “good” ideas, I wonder if EORs are a solution for the wrong problem that HR faces.
Would this be a legal process that is allowed in Europe, I doubt it.
It is totally legal, Reg. I used to be HR director for large multinationals, and although that was before the EOR solution became a thing, we did outsource pay-rolling (and employer ship) to third parties when necessary. I highlighted the liabilities in the article because a clear understanding of where the responsibilities lay is crucial! What are your doubts?
I have given some thought to the legal issues. Yes, the EU’s Agency Workers Directive (2008/104/EC) and current UK equivalent (soon to change) allows such an arrangement, albeit I see it as a potential minefield for the client organisation and question its value other than for some specialist roles and skill shortages.
I say this because the client still retains obligations and areas around control of the workers, health & safety, worker classification, etc. Co-employment risks seem to be a major concern here as the countries, particularly France, Netherlands, Austria, and Germany (maybe the UK soon) monitor this tightly. A tribunal can find the client organisation is the real employer if it controls key employment aspects, e.g. promotion.
The situation regarding works councils muddies things even more. The works council of the client company plays the most significant role in ensuring that employment decisions, including dismissals or changes in working conditions, comply with local labour laws. This means the client company needs good HR people to manage these situations, just as they have to without an EOR. In France, Germany, and Netherlands, it is a real challenge without causing problems by having to bring in a third-party employer, I suggest. When I work with managers in those countries, they spend so much time on these issues that their main role suffers and EOR will not resolve this.
Insofar as H & S is concerned, we have yet another logistical and legal problem as the EOR company that is responsible is not on site, etc. To what extent is the client company liable, given they do not train the workers and so forth?
Collective labour agreements are also a concern to be resolved as collective bargaining may impact the EOR’s other employees with another client!
At the end of the day, it is technically doable in the EU and UK and yet I wonder how much real benefit is obtained for the client company?
As with many “good” ideas, I wonder if EORs are a solution for the wrong problem that HR faces.