TL;DR:
Using an Employer of Record (EOR) does not take away your control over employees. You maintain authority over daily operations, hiring, performance, and management decisions. The EOR handles legal employment, payroll, and compliance, ensuring your business meets local regulations while you focus on managing your team. Hire Manila provides Employer of Record services in Metro Manila, allowing companies to hire globally without losing operational control.
Summarized Answer
Many businesses considering an Employer of Record (EOR) wonder if using one will limit their authority over staff. The short answer: it doesn’t. You retain control over how employees perform their work, supervise their tasks, and make key management decisions. The EOR’s role is to ensure all employment-related legal obligations—contracts, taxes, payroll, and compliance—are handled correctly in accordance with Philippine labor laws.
This division of responsibilities allows companies to expand quickly and hire talent globally without worrying about local employment regulations.
What Is an Employer of Record?
Before diving into control issues, it’s important to understand what an EOR does:
- An Employer of Record is a third-party service that legally employs your workers in a specific country.
- They handle payroll, taxes, benefits, and statutory compliance.
- Your business continues to direct day-to-day tasks, performance, and operations.
Essentially, the EOR is the legal employer on paper, but you remain the operational manager.
Does an Employer of Record Affect Your Control Over Employees?
A common concern among companies is whether using an EOR limits their authority. The answer is no, but understanding the boundaries is key:
Areas You Maintain Full Control Over:
- Daily work assignments and projects
- Employee performance monitoring
- Hiring and termination decisions
- Team culture and workplace policies
- Operational management and reporting
Areas the EOR Controls:
- Legal employment status (onboarding and contracts)
- Payroll processing and benefits administration
- Compliance with labor laws, taxes, and social contributions
- Documenting employment history and contracts
By keeping roles clearly defined, your business enjoys full managerial control while remaining fully compliant with Philippine labor laws.
Employer of Record vs Direct Employment
Understanding the difference between direct employment and using an EOR helps clarify control issues:
| Aspect | Direct Employment | Employer of Record |
| Payroll | Managed internally | Managed by EOR |
| Taxes & Compliance | Handled internally | EOR ensures legal compliance |
| Hiring/Termination | Business handles | Business still decides, EOR processes |
| Daily Supervision | Business manages | Business manages |
| Contracts & Benefits | Business prepares | EOR provides legal employment contracts |
| Legal Employer | Company | EOR (on paper) |
As you can see, the management authority over employees remains with the business, while the EOR handles administrative and legal obligations.
Who Manages Employees When Using an EOR?
Even with an Employer of Record, your business remains the primary manager of the team:
- Assign tasks and projects
- Set performance goals and review progress
- Conduct performance evaluations
- Decide promotions or terminations
The EOR ensures that every management action aligns with Philippine labor law, so your decisions are legally protected.
Employer of Record Control vs Compliance Responsibilities
A key distinction to understand is operational control vs compliance responsibility:
- Operational control: You manage employee work, schedules, and performance.
- Compliance responsibility: The EOR ensures employees receive legally required benefits, taxes are filed correctly, and labor regulations are followed.
This dual approach allows businesses to focus on growing operations while mitigating the risk of non-compliance.
Can You Hire, Fire, and Discipline Employees With an EOR?
Yes. You make all core employment decisions:
- Hiring: Identify and select candidates. The EOR signs the employment contract.
- Termination: Decide on layoffs or dismissals. The EOR processes legal documentation.
- Discipline: Issue warnings or corrective actions. The EOR ensures compliance with labor regulations.
The EOR acts as a legal partner, but not a decision-maker in day-to-day operations.
Does an Employer of Record Supervise Employees?
No. The EOR does not manage your team’s work performance or supervision. Your business remains responsible for:
- Daily task supervision
- Workflow management
- Team motivation and culture
- Performance appraisals
This setup prevents conflicts and ensures employees receive consistent direction from the company they report to operationally.
Is Using an Employer of Record the Same as Outsourcing HR Control?
Not at all. While EOR services include administrative and compliance support, your business retains full authority over staff management.
Key Differences:
- HR outsourcing often shifts management responsibilities to a third party.
- Employer of Record keeps operational control with the company while handling legal employment and compliance.
This model allows companies to scale globally without giving up control.
Risks If Control Boundaries Are Unclear
Even though an EOR does not assume operational control, unclear boundaries can create issues:
- Co-employment confusion: Employees may not know whom to report to.
- Compliance gaps: Miscommunication between your company and the EOR may lead to legal violations.
- Operational inefficiencies: Overlapping responsibilities can slow decision-making.
Solution: Clearly define roles in your EOR agreement. Hire Manila provides guidance and ensures operational and legal roles are separated.
How to Stay in Control While Using an Employer of Record
- Define responsibilities clearly
- Operational vs legal duties
- Communication channels
- Operational vs legal duties
- Maintain managerial authority
- Continue supervising daily tasks
- Conduct performance reviews
- Continue supervising daily tasks
- Coordinate with the EOR
- Align payroll, taxes, and compliance activities
- Clarify processes for hiring and termination
- Align payroll, taxes, and compliance activities
- Document roles and policies
- Employee handbook
- Written guidelines for interactions with the EOR
- Employee handbook
- Leverage Hire Manila
- We provide expert support for Employer of Record compliance and operations
- Ensure your business retains full control while meeting Philippine labor law
- We provide expert support for Employer of Record compliance and operations
FAQs
1. Does an Employer of Record affect your control over employees?
No. You retain full control over daily operations, management, and performance while the EOR handles legal employment and compliance.
2. Who manages employees when using an Employer of Record?
Your company manages daily tasks, schedules, and performance. The EOR manages payroll, benefits, and statutory compliance.
3. What control does an Employer of Record have over employees?
Only administrative and legal control, such as employment contracts, taxes, and statutory benefits. They do not supervise daily work.
4. Can you hire, fire, and discipline employees with an Employer of Record?
Yes. All hiring, termination, and disciplinary decisions remain with your company; the EOR ensures legal compliance.
5. What is the difference between management control and legal employment?
Management control refers to supervising work and performance. Legal employment refers to payroll, benefits, and contracts—handled by the EOR.
6. Does an Employer of Record supervise employees?
No. Your company continues to supervise and manage employee performance.
7. Is using an Employer of Record the same as outsourcing HR control?
No. An EOR handles legal compliance and administration but does not replace management or operational control.
8. What risks exist if control boundaries are unclear with an EOR?
Unclear roles can cause co-employment issues, compliance gaps, and operational inefficiencies. Clear agreements prevent this.
Conclusion
Using an Employer of Record allows your business to hire, manage, and scale globally without the burden of legal and compliance headaches. With Hire Manila, companies in Metro Manila can confidently hire staff while maintaining full operational control. By clearly defining management vs legal responsibilities, businesses enjoy both flexibility and compliance, ensuring a smooth workflow and legal peace of mind.
Hire Manila ensures your Employer of Record experience keeps you in control of employees while taking care of payroll, taxes, and compliance.📩 Contact Hire Manila today to learn how our EOR services help you manage employees efficiently in Metro Manila without losing control.
