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For Employee, what are the risks associated with an Employer of Record arrangement vs. a direct employment contract?

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iceinjan
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For Employee, what are the risks associated with an Employer of Record arrangement vs. a direct employment contract?

Post by iceinjan » Fri, 12 Apr 2019 10:12 am

The company that I work for used to be a division within a multi-national company, but was recently spun off and sold to a private equity fund. To save costs, the new owner decides to convert all employees located in countries outside of the HQ to an Employer of Record arrangement, instead of setting up legal entities worldwide to have direct employment contracts with us.

I haven’t signed the new contract as I’m nervous about the risks and the rights that I will lose. Can anyone please help me understand what the risks are? Would I still be able to sue the company in case of mistreatment or wrongful dismissal in the future? Would I be considered as a contractor now? What can I do to protect my rights? Appreciate your help!!

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Strong Eagle
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Re: For Employee, what are the risks associated with an Employer of Record arrangement vs. a direct employment contract?

Post by Strong Eagle » Sun, 14 Apr 2019 12:35 am

I am not a lawyer, and as food for thought for you: If you are being employed in Singapore and your permanent residence is in Singapore then one of two employment conditions must be true.

a) You are self-employed, a condition which can occur only if you are a citizen, PR, or one of the fortunate few who have obtained EP's for their sole proprietorships.

b) You must be working for a recognized legal business entity, ie, a private limited, a partnership, a public limited, a sole proprietorship (not yours), or a handful of other business entities that are available.

Put another way, you cannot work in Singapore on a permanent basis without being employed by a Singapore legal entity.

From what you have stated, your new company, located in BFE, thinks they are going to leave you in Singapore, as is, and just pay and administer you from BFE. They will quickly find out they cannot do that, just as they will quickly find out that is the case in most countries. Sounds like they saved some more costs by hiring dumb ass lawyers.

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PNGMK
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Re: For Employee, what are the risks associated with an Employer of Record arrangement vs. a direct employment contract?

Post by PNGMK » Sun, 14 Apr 2019 3:47 am

Assuming you have the residency in Singapore sorted out .... to add to this if you have a new contract what are the arbitration terms? How will you enforce the conditions of your employment if something goes wrong. However I have personally worked several times on these types of arrangements with small and large companies and not had a problem.

One significant advantage of this if you are in Singapore is that you may become eligible for a large income tax cut... https://www.iras.gov.sg/irashome/Scheme ... e-Schemes/
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Re: For Employee, what are the risks associated with an Employer of Record arrangement vs. a direct employment contract?

Post by sundaymorningstaple » Sun, 14 Apr 2019 6:59 pm

Unless OP was lucky on his 3rd PR attempt his options may well be limited.

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