In short: If you’re a small business without in-house legal and tax experience, hiring someone in another country usually means using an Employer of Record (EOR) – a company that legally employs the person on your behalf, so you don’t need to set up a foreign entity yourself. You can compare EOR providers on sites like Anywherer. But you’ll want to be sure your new hire is adhering to your company policies just as your existing team is – and that’s where policy management software, like Dayspring Software, comes in. Policy management software ensures that everyone on your team is properly informed of your company policies, no matter where they’re located.
For a lot of small and growing businesses, hiring your first international employee is the first time that policy management becomes a real, practical problem. Up to now, policies may have been printed out and signed during onboarding then filed in the office, or they live in a folder on SharePoint. That doesn’t hold up once your first international hire starts. There’s no-one sitting at the desk beside them to ask and, depending on the country, you may even need policies you didn’t have before.
This article covers:
- What is an EOR, and what does it do?
- How do you choose an EOR?
- Why small and growing teams use EORs to hire internationally.
- What is policy management software, and what does it do?
- Why small and growing businesses need policy management software before hiring internationally.
- How EOR and policy management software work together when you hire internationally.
What is an "EOR"?
An Employer of Record (EOR) is a company that legally employs someone on your behalf, in a country where your business doesn’t have a registered legal entity.
Normally, to employ someone directly in another country, your company needs to be legally registered there – which usually involves setting up a local entity, registering for local tax and payroll, and complying with that country’s employment law. This process can take months, cost tens of thousands, and often requires local legal advice. An EOR removes that step. The EOR is already legally established in that country, so they become the employee’s legal employer on paper, while the person works for you day-to-day, same as any other member of your team. As the legal employer, the EOR is responsible for making sure the employment relationship itself complies with local law – things like minimum wage, working hours, statutory leave, and any legally required notices about the job itself. Note: your company’s own internal policies – code of conduct, data handling policy, expenses policy, etc. – are a separate matter entirely, and stay your responsibility – more on this in the next section.
What does an EOR do?
EORs handle:
- The employment contract: drafted to comply with that country’s labour law.
- Payroll: paying the employee correctly, in the right currency, on the right schedule.
- Tax and social security: withholding and filing what’s legally required in that country.
- Statutory benefits: things like pension contributions, health insurance, or paid leave, where required by local law.
- Compliant termination: if the working relationship ends, making sure it’s handled according to that country’s rules.
How do you choose an EOR?
EORs providers differ by which countries they cover, how they price, and how much local support they offer. Anywherer reviews and compares EOR providers side by side, which is a faster starting point that researching each provider individually.
Why do small and growing teams use EORs to hire internationally?
Small businesses use an EOR to hire international talent because it lets them hire someone in another country without needing to do all the work to set up – and then manage – a legal entity in another country.
The main reasons small businesses choose an EOR:
- Speed: Setting up a foreign entity can take months. Whereas hiring through an EOR can typically be done in days or weeks.
- Cost: Registering and maintaining a legal entity in another country involves ongoing accounting, legal, and administrative costs – regardless of whether you employ just one person or many in that country. An EOR spreads that cost across many client companies, so you pay a smaller fee per employee instead.
- Compliance without a legal team: Employment law varies significantly by country – notice periods, statutory leave, termination rules, and mandatory benefits are all different. An EOR is already set up to handle this correctly, so you don’t need to research or manage it yourself.
- Testing a new market: If you’re a growing team, unsure yet whether you’ll build a long-term presence in a country, an EOR lets you hire there without committing to the cost and complexity of a permanent legal entity.
What is policy management software?
Policy management software is a system that centralises a company's policies, and allows companies to distribute, update, and track staff acknowledgement of those policies.
What does policy management software do?
Policy management software varies in features between providers, largely because different providers are built for different organisation sizes and industries – a platform designed for a global enterprise looks very different from one designed for a 20-person business. Since this article speaks to small and growing businesses hiring their first international hires, we’ll speak to what Dayspring Software does: the policy management software built for small businesses.
- Centralises your policies: one secure place where you know that the current version of a policy lives, instead of scattered across email, SharePoint sites, or paper files.
- Version control: captures which version of a policy a file is, without someone needing to remember to append the filename with “V2” or “V3_FINAL” and automatically archives old versions of a policy and ensures only the latest version is in circulation.
- Distribution: Sends policies to specific people or teams, rather than a team member needing to send emails and chasers.
- Acknowledgement tracking: Records – with a timestamp – who has actually read and accepted each version of a policy.
- Audit-ready reporting: Produces exportable evidence that demonstrates that policies are version controlled, reviewed on a schedule, and who has seen and accepted them.
Why do businesses need policy management software before hiring internationally?
Hiring your first employee in another country adds legal variation that most domestic setups haven’t yet to deal with, and it’s often a sign that a business is maturing past its early, informal stage – meaning policies need to move from being passive and ad hoc to properly managed.
Plenty of small businesses already manage a remote or hybrid team domestically, with policies stored in a SharePoint folder or handed out on a printed sheet during onboarding. That’s a normal, reasonable way to operate early on. But international hiring tends to arrive at the same time as other signs of growth – bigger clients with due diligence and compliance requirements, more formal processes, ambitious and strategic projects. It’s usually the point where informal processes start being too time-consuming, and stop being enough to satisfy customers and regulators, not just for policies but across the business generally.
What changes with your first international hire?
- You may need policies you didn’t have before: Some countries have specific legal requirements around workplace policies. For example, several EU countries – including France and Germany – legally require employees to be informed in writing before a company monitors their email, internet use, or computer activity, regardless of headcount. That’s a policy about your company’s own systems, separate from anything covered in the employment contract that an EOR arranges. Other requirements are headcount-triggered rather than immediate. For example, in the UK, a written health and safety policy becomes a legal requirement once you have 5 or more employees.
- What’s “normal” for you might not be normal for them: Policies aren’t just information, or pieces of paper companies have just to tick boxes. They guide behaviours in a company – and they can contradict someone’s default behaviour if they’re different to their own culture’s norms. For example, in some countries, small gifts to clients are a standard part of doing business, which could put an employee at odds with your anti-bribery policy. In countries where sharing work documents over personal messaging apps is common practice, an employee might not register that as a breach of your data handling policy, because it's not treated as unusual where they're from.
- Auditors and clients specifically ask about this: ISO 27001 and SOC 2 audits, along with client vendor security questionnaires, increasingly explicitly ask whether policy acknowledgement covers remote and international staff as a distinct category – not just whether policies exist in general.
- Policy-related questions are less likely to get asked, or answered: Even with a domestic remote team, a quick Slack message can let an employee ask policy-related questions. Add a time zone gap, and possibly a language difference, and that same question might not get answered — or even raised. Dayspring Software's policy management helps ensure all staff have seen the same policy documents, can ask questions about them, and their acknowledgement is recorded for auditing purposes.
How EOR and policy management software work together when you hire internationally.
An EOR makes the hire legally possible without needing to setup an international bank account, legal entity, etc. Policy management software makes sure that the new hire – and everyone else on your team – actually knows about and follows your company’s rules, wherever they’re based.
In practice, this looks like two separate steps:
- Before the hire: you choose an EOR for the country you’re hiring in – checking coverage, pricing, and support for that specific location.
- Onboarding: from day one your new hire needs access to your company’s policies – the same ones your existing team has, plus any country-specific additions. This is what policy management software, like Dayspring Software, is built for.
These two steps happen roughly in parallel, not one after the other. The EOR relationship doesn’t end once the contract’s signed, and policy management isn’t a one-time onboarding task – both are ongoing as long as that employee is with you.
Why skipping either one causes problems:
- Skip the EOR, hire direct: you risk breaching local tax and labour law, and potentially having no valid legal employment relationship.
- Skip policy management software, rely on manual and informal methods: you have no way to confirm a remote or international hire has actually seen your policies, and no evidence to produce if a client, auditor, or insurer asks for it – a real risk for any regulated businesses, or businesses pursuing ISO 27001, SOC 2, or responding to vendor security questionnaires.
Summary:
Hiring your first international employee involves two separate problems: making the hire legally possible and staying compliant – making sure someone working far from you, in a different legal and cultural environment, knows about your policies, agrees to them, and you’ve got a record of it.
An EOR solves the first problem, and policy management software solves the second. Skipping the EOR risks the legal employment relationship itself. Skipping policy management risks your compliance and your company rules not being followed.
If you’re hiring internationally for the first time, both are worth having in place before, not after, that first hire starts.
FAQs:
- Is an EOR the same as a recruiter? No. A recruiter helps you find a candidate. An EOR has nothing to do with sourcing. You find the person, then use an EOR to legally employ them. Some small businesses use both: a recruiter to find the right candidate, an EOR to employ them once they’re hired.
- Do you still need HR if you have an EOR? Yes. An EOR handles the legal and payroll side of employment for international employees. Your business still manages everything about how those employees actually work: their day-to-day role, performance, and – importantly – whether they know and follow your company’s policies. An EOR has no visibility into any of that, and it’s not part of what they’re set up to do.
- What happens if an international employee breaches one of your company policies in another country? It depends on the policy, but the consequences can be serious. Under UK law, for example, a company can be held liable if an employee bribes someone overseas to win business.
- Is policy management software the same as a document management system? No. A document management system stores and organises files. Policy management software supports businesses with ensuring their policies are current, version controlled and properly communicated to staff.
