Service agreements establish the relationship between EOR providers and client companies. They define what services the EOR provides, client obligations, fees, liability allocation, and other terms governing the relationship.
Key Terms
Important provisions include scope of services covered, fee structure and payment terms, liability and indemnification, data protection and confidentiality, termination provisions including employee transition, dispute resolution, and service levels or guarantees.
Understanding Responsibilities
Agreements should clearly delineate what the EOR handles versus client responsibilities. Areas requiring clarity include hiring decisions, day-to-day management, performance management, disciplinary actions, and termination decisions.
Risk Allocation
Understanding how agreements allocate employment-related risks is important. Who bears liability for employment claims? What happens if regulations change? How are disputes with employees handled? These provisions significantly impact risk exposure.