Why Hire Staff Through an Employer of Record in Uruguay?

More and more global commercial actors are seeing the value of hiring international employees through an Employer of Record in Uruguay to establish a footprint in this market. An Employer of Record in Uruguay is one of the best ways to ensure your company meets the legal employment standards to hire staff, enter the market, and operate efficiently.

With a population of 3 million people, and sharing borders with major regional giants Argentina and Brazil, Uruguay is the ultimate place to expand into and have access to some of the world’s most rapidly developing markets.

During an age of globalized information, the focal point of the global economy has changed from an industry-oriented one to a service-oriented one. The emerging markets of Latin America are no exception to this transition process and Uruguay is undoubtedly one of these emerging economies, with the highest growth rate in the last decade. 

What is an Employer of Record in Uruguay?

An Employer of Record (EOR) is an external partner of a business or company that hires staff locally on their behalf. EOR companies take legal responsibility for the formal employment tasks of your company and can manage payroll and other benefits for locally-employe staff.

When expanding, a partnership with an EOR alleviates the administrative burden your company may face when navigating unfamiliar labor markets to hire staff. On behalf of your company, an Employer of Record in Uruguary will comply with all relevant labor requirements for your locally-employed staff (this includes immigration, benefits, social contributions and other payroll services). The hiring company, in turn, can manage staff performance and core tasks, such as developing a sales presence in the new market.

An Employer of Record in Uruguay can ultimately carry out the following tasks for your company:

  • Organize visas and work permits for employees with precision and deep understanding of bureaucratic processes
  • As a formally established entity, EORs may manage local, compliant payroll processes inside the country with the correct currency, without the hiring company needing to go through company incorporation procedures
  • Utilize advanced knowledge of all labor laws concerning local employee contracts and worker protections to maintain full compliance of employment obligations
  • Inform their customer, the hiring company, of required rules on notice periods, termination, and severance pay
  • Be the host country’s link between employees and government authorities.

What are the differences between an EOR and PEO?

A Professional Employer Organization (PEO) also serves a similar purpose. However, there are several differences between these two types of employmer companies, including:

  • Liability
  • Regulatory compliance management
  • Insurance
  • Business registration.

A PEO client is more liable

An EOR essentially hires a portion of your employees and paces them of a payroll. However, a PEO assumes responsibility for all of the client’s employees and is able to provide the human resources needed.

People sitting around a boardroom table
Dealing with EORs allows alleviating the pressure off you and your business when it comes to human resources.

When dealing with a PEO, the client still holds or signs employment contracts. An EOR holds the employment contracts with the company’s employees.

In reality, a PEO becomes the client’s co-employer. The client still assumes all liability and responsibility. But an EOR becomes a legal employer of the company’s employees.  Furthermore, any disputes and issues that arise from employment contracts are covered by the EOR

EORs can better manage compliance

In most cases, PEOs are not necessarily completely legally responsible for your employees. Some Professional Employer Organizations may not be able to provide full hiring and payroll management services. For this reason, confirm which services your PEO or Employer of Record in Uruguay is able to carry out before engaging with them.

An Employer of Record in Uruguay can take care of insurance needs

When hiring a PEO, the company must pay for the PEO’s insurance policy, as well as their own. However, when dealing with an EOR, the client’s employees are covered under the EOR’s regulations and fees. This includes health care.

Save time and money: avoid company incorporation with EOR services

Most EORs are already registered as legal entities in the markets they operate in. When working with an Employer of Record in Uruguay, hiring companies do not need to formally incorporate their company and establish a formal presence in the country.

This offers a clear advantage of a smaller-scale market entry operation for expanding businesses. With an EOR, companies can utilize local labor talent to start developing their brand and sales activities before choosing to make the larger investment of formal company incorporation.

Likewise, should the expansion not work in the company’s favor, exiting the market is easier and quicker, requiring less bureaucratic procedures to do so as opposed to company liquidation.

Uruguay is a growing economy

In July 2013, the World Bank classified Uruguay as a high-income country. By 2017, the gross national income per capita amounted to $21,870 per household.

Since 2003, the Uruguayan economy has demonstrated positive economic growth, remaining positive in 2017 and 2018 despite economic collapses and recessions experienced by Brazil and Argentina.

Both moderate and extreme poverty has seen a monumental decline and in terms of equity, income levels amongst the poorest 40% of Uruguayans has increased much faster than the average growth rate.

Companies expanding to Latin America can find key opportunity in this growing market, with increasingly upskilling talent.

Engage with a trusted Employer of Record in Uruguay for market entry success

Expanding your business into Uruguay is a key stepping stone to access commercial advantages offered by the country, and gaining access to other key markets in Latin America. If you are considering an expansion but want the flexibility of small-scale market entry and ext, then speak with an EOR professional service provider about your options.

Our team of professional experts consisting of local lawyers familiar with the local knowledge and financial experts, up-to-date with financial laws, then Biz Latin Hub can help you.

Contact us today for more information about employer of record in Uruguay.

Learn more about our team of professionals and expert authors.

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