Ready To Switch EOR Providers? Here Is What You Need To Know First

Switching an Employer of Record (EOR) provider is a process that involves legal, financial, and operational changes. It affects both the company and its employees, especially those working in international markets.

An EOR is a third-party organization that legally employs workers on behalf of another company. The EOR handles payroll, taxes, benefits, and compliance in the country where the employee is based.

Companies often start with one EOR and later decide to move to another. This decision can be based on changes in business goals, team size, or the need for better support in new countries.

Why Companies Switch EOR Providers

An Employer of Record takes care of the legal employment of workers in different countries. They handle everything from payroll and benefits to tax filings and local compliance. As businesses grow, they sometimes find their current EOR no longer meets their needs.

The most common reasons companies make the switch include:

  • Service quality problems: Slow responses, payroll delays, or poor local support disrupt business operations
  • Limited global coverage: Many EORs only operate in certain regions, forcing companies to use multiple providers
  • High or hidden costs: Unexpected fees, unclear pricing, or rising service charges strain budgets
  • Outdated technology: Manual processes and limited integrations create extra work for HR teams
  • Compliance concerns: Mistakes in tax filings or employment contracts create legal risks

For growing companies, switching EOR providers often becomes necessary when expanding into new markets or scaling teams internationally. The right provider can make global hiring simpler and more efficient.

Key Challenges During EOR Transitions

Changing from one EOR provider to another involves several moving parts. Understanding these challenges helps companies plan effectively and avoid disruptions.

Employee Data Transfer

Moving employee information between systems requires careful handling. This includes personal details, salary history, tax documents, and benefits information. Errors in this process can lead to payroll mistakes or compliance issues.

Critical information that must transfer correctly includes:

  • Employment start dates and service history
  • Current salary and payment details
  • Tax identification numbers and withholding rates
  • Accrued leave balances and benefits entitlements

Without proper verification, data can be lost or entered incorrectly, causing problems that affect employees directly.

Compliance Continuity

Each country has specific employment laws that must be followed consistently. During a transition, there's a risk of gaps in legal coverage if registrations, work permits, or mandatory benefits aren't maintained properly.

In Canada, for example, employers must ensure continuous coverage for Canada Pension Plan (CPP) contributions and Employment Insurance (EI) deductions. Any interruption can result in penalties for the employer.

Timeline Management

EOR transitions involve multiple steps that must happen in a specific order. If these steps aren't coordinated between the old and new providers, it can cause payment delays or benefits gaps for employees.

The typical transition involves:

  • Contract review and termination notice
  • Data preparation and transfer
  • System setup with the new provider
  • Parallel processing period for verification
  • Final cutover to the new system

Proper planning helps avoid overlaps or gaps in critical services like payroll processing.

What To Look For In A New EOR Provider

Selecting the right replacement EOR requires evaluating several important factors. This evaluation helps ensure the new provider will be a better fit for your company's needs.

Global Coverage

Check if the EOR has legal entities in all countries where you currently have employees or plan to hire. Some providers use their own entities, while others work through partners.

Direct entities often provide more consistent service and faster response times. Borderless AI offers coverage in 170+ countries through its own network, supporting companies with diverse international teams.

Local Expertise

Each country has unique employment laws, tax rules, and cultural practices. An effective EOR needs deep knowledge of these local requirements to keep your company compliant.

Look for providers that demonstrate expertise in:

  • Local employment contracts and labour laws
  • Tax filing requirements and deadlines
  • Mandatory and customary benefits
  • Work permit and visa processes

This expertise helps prevent compliance issues that could result in fines or legal problems.

Technology Platform

Modern EORs use technology to automate many employment processes. This reduces manual work and helps ensure accuracy and consistency.

Features to look for include:

  • Automated payroll processing
  • Real-time compliance updates
  • Self-service employee portals
  • Integration capabilities with your HR systems

Advanced platforms like Borderless AI use artificial intelligence to streamline processes that traditionally require significant manual effort.

Cost Structure

EOR pricing models vary significantly. Some charge a percentage of employee salaries, while others use flat monthly fees. Many also require security deposits or pre-funding of payroll.

Understanding the full cost structure helps avoid surprises later. Look for transparent pricing with no hidden fees or large upfront payments that affect your cash flow.

Planning Your EOR Transition Timeline

A successful EOR switch follows a structured timeline. Each phase has specific tasks that build on previous steps. The entire process typically takes 4-8 weeks, depending on complexity.

The key phases include:

  • Planning (1-2 weeks)
  • Review current contract terms and termination requirements
  • Select new provider and finalize agreement

  • Create communication plan for employees and stakeholders

  • Preparation (2-3 weeks)

  • Collect and organize employee data
  • Gather compliance documentation

  • Notify employees about the upcoming change

  • Active transition (2-3 weeks)

  • Set up accounts with new provider
  • Transfer and verify employee data
  • Configure payroll and benefits

  • Run parallel processing if possible

  • Completion (1 week)

  • Verify all employees are correctly onboarded
  • Confirm first payroll is processed correctly
  • Address any outstanding issues

Allowing overlap between the old and new providers helps ensure continuous service and reduces risks during the transition.

Communicating With Employees

Clear communication helps maintain employee trust during an EOR transition. Many employees worry about how changes will affect their pay, benefits, or employment status.

Communication Timeline

Start by announcing the change once the decision is confirmed. Explain why the company is switching providers and what employees can expect during the process. Follow up with regular updates at key milestones.

A simple communication schedule might include:

  • Initial announcement (4-6 weeks before transition)
  • Detailed information about any changes to benefits or processes (2-3 weeks before)
  • Reminder and instructions for any employee actions needed (1 week before)
  • Confirmation when the transition is complete

Providing contact information for questions helps address individual concerns quickly.

Explaining What Changes

Be transparent about what will and won't change for employees. This includes any updates to:

  • Payroll schedule or payment methods
  • Health insurance or retirement plans
  • Time-off request processes
  • HR contact information

Most employees primarily care about getting paid correctly and on time. Reassuring them about these basics helps reduce anxiety about the transition.

Step-By-Step EOR Switching Process

Following a structured process helps ensure a smooth transition between EOR providers. Each step builds on the previous one to maintain compliance and minimize disruption.

1. Review Current Contract

Start by checking your agreement with the current EOR. Look for:

  • Required notice period for termination
  • Early termination fees or penalties
  • Data transfer requirements and support
  • Post-termination obligations

Understanding these terms helps you plan the timing and budget for your transition.

2. Prepare Employee Data

Collect comprehensive information about each employee before beginning the transfer. This includes:

  • Personal and contact information
  • Employment contracts and amendments
  • Salary history and current compensation
  • Tax documents and identification numbers
  • Benefits enrollment and eligibility
  • Time-off balances and history

Verify this information for accuracy before sharing it with the new provider.

3. Set Up With New Provider

Work with your new EOR to establish company accounts and employee profiles. This involves:

  • Completing service agreements
  • Setting up billing and payment methods
  • Configuring payroll schedules and approval processes
  • Establishing reporting requirements

Prioritize critical functions like payroll processing to ensure business continuity.

4. Verify Compliance Requirements

Confirm that all necessary registrations and filings are in place with the new provider. This includes:

  • Tax authority registrations
  • Social security and pension enrollments
  • Workers' compensation coverage
  • Health insurance and benefits enrollment

Double-check that these align with local requirements in each country where you have employees.

5. Coordinate Payroll Transition

Align payroll cycles between the old and new providers to avoid gaps or duplications. This may involve:

  • Running parallel payrolls for one cycle to compare results
  • Adjusting pay dates temporarily to align systems
  • Transferring year-to-date tax and earnings information
  • Verifying that all deductions and contributions are correct

Clear coordination between providers helps ensure employees are paid correctly throughout the transition.

What Changes For Employees

When switching EOR providers, some aspects of employment change while others stay the same. Understanding these differences helps set clear expectations.

Employment Contracts

The legal employer on paper changes from the old EOR to the new one. This typically requires new employment agreements or amendments to existing contracts. However, the employee's role, responsibilities, and relationship with your company generally remain unchanged.

The new contracts maintain important details like:

  • Original start date and service history
  • Current position and duties
  • Salary and compensation structure
  • Vacation entitlement and accrued balances

These new agreements ensure legal compliance while preserving the employee's employment history.

Benefits and Payroll

Benefit plans often change during an EOR transition because each provider works with different insurance carriers and benefit administrators. This can affect:

  • Health insurance networks and coverage
  • Retirement plan administrators
  • Additional benefits like wellness programs

Payroll processes may also change, including:

  • Pay dates or frequency
  • Payment methods
  • Payslip format and access
  • Tax withholding calculations

Mandatory benefits required by local law typically remain consistent, though the specific provider may change.

Hidden Costs To Consider

Beyond the basic service fees, EOR transitions can involve additional expenses that affect the total cost. Being aware of these helps with accurate budgeting.

Termination Fees

Many EOR contracts include penalties for early termination. These can take different forms:

  • Flat cancellation fees
  • Percentage of remaining contract value
  • Minimum service periods with penalties
  • Charges for transition support

Review your current agreement carefully to understand these potential costs before setting your timeline.

Administrative Expenses

The transition process itself can generate additional costs:

  • Legal review of new contracts
  • Document processing fees
  • Re-registration with government authorities
  • Temporary dual payments during transition periods

These expenses vary by country and provider but can add up, especially for larger teams across multiple countries.

Finding The Right EOR Solution

Modern EOR providers offer different advantages depending on your company's specific needs. When evaluating options, consider how they address your current pain points.

Key features that differentiate providers include:

  • Technology integration: How well their systems connect with your existing HR tools
  • Payment reliability: Speed and accuracy of international payroll processing
  • Support model: Availability and expertise of customer service teams
  • Pricing transparency: Clear fee structure without hidden costs
  • Compliance updates: How they stay current with changing regulations

Borderless AI combines AI-powered automation with human expertise to simplify global employment. Their platform processes payments in minutes rather than days and operates without requiring security deposits or pre-funding.

Frequently Asked Questions About Switching EOR Providers

How long does switching EOR providers typically take?

A complete EOR transition usually takes 4-8 weeks from initial planning to final implementation, depending on team size and the number of countries involved.

Do employees need to resign from the old EOR before joining the new one?

Employees typically don't need to resign formally; instead, their employment is transferred from one legal entity to another through new employment agreements that maintain their original start date and service history.

What happens to accrued vacation time and benefits during an EOR switch?

Accrued benefits like vacation days and sick leave should transfer to the new EOR as part of the employee data migration process, preserving these entitlements without interruption.

Can companies expand to new countries while switching EOR providers?

Yes, companies can simultaneously transition existing employees and hire in new countries, though this adds complexity to the process and requires a provider with broad global coverage.

How is compliance maintained during the transition period?

Compliance continuity requires careful coordination between both EORs to ensure all legal registrations, tax filings, and mandatory benefits remain active throughout the transition process.