Global recruitment has become a common strategy for the growth of modern businesses. Remote work, virtual teams, and the globalization of business have made it easier for companies to recruit talent worldwide. While operational limitations are less relevant in global operations, data security and GDPR compliance remain of prime importance.
As organizations operate across multiple countries, they handle large volumes of sensitive employee data. It makes data security and GDPR compliance critical. It is not an option to handle such information; it is an obligation. It underscores the importance of ensuring EOR GDPR compliance.
This blog describes how the GDPR applies to the work of an Employer of Record and the retained obligations of the engaging company. It addresses employee data processing and how platforms such as WorkMotion enable secure and compliant global recruitment.
What Does GDPR Compliance Mean in Global Hiring?
GDPR compliance meaning: The General Data Protection Regulation (GDPR) is the primary data protection regulation in the European Union. The GDPR is a regulation that governs the collection, processing, storage, and sharing of personal data of individuals within the EU. The GDPR applies not only within the EU but also to non-EU corporations that process the personal data of EU residents.
In terms of employment, being GDPR-compliant means processing employee and job applicant information in a lawful, transparent, and secure manner across the entire employee life cycle, including hiring, onboarding, payroll, benefits, performance, and offboarding.
Under this ruling, personal data includes names, contact information, government-issued identification numbers, bank-related financial information, compensation information, and health or benefit information. Given the extremely sensitive nature of employee data, organizations must ensure strict compliance with GDPR requirements for global recruitment.
In simple terms, GDPR compliance means collecting employee data responsibly, using it transparently, and protecting it throughout the employment lifecycle.
Why Data Protection Matters When Using an Employer of Record
Global hiring adds complexity to data collection, processing, storage, and sharing. The recruiting organization shares personal data with multiple systems and stakeholders, including the Employer of Record, payroll service providers, benefits administrators, and local government authorities. Without clearly defined governance and security frameworks, these data transfers become vulnerable.
Strong data protection practices can help ensure compliance with legal requirements, thereby avoiding legal exposure for the organization. By implementing robust data protection practices, organizations can prevent data breaches, legal inquiries, and costly recovery efforts when employees worldwide mishandle sensitive data.
The Employer of Record is a crucial part of this puzzle, acting as the legal employer of the foreign employee and processing a large volume of sensitive employee data, including identity documents, compensation, tax, and benefits information. Data security should be a key consideration when selecting a global employment solutions provider.
Data Protection concerns in an Employer of Record model:
- Organizations share employee information across multiple countries and systems.
- Job market data contains highly personal information.
- Accountability for regulatory matters remains with the hiring firm.
- Violations may impact compliance and the employer brand.
- Trust plays a critical role in working with remote/distributed teams.
- Multiple data handoffs increase the risk of breaches.
- Cross-border transfers require legal safeguards.
- Employment data includes highly sensitive information.
- Liability can extend beyond the EOR to the hiring company.
GDPR Non-Compliance Penalty: Understanding the Risk
Enforcement actions for GDPR breaches are rigorous and actively pursued by regulatory bodies across Europe. Also, fines can range from €20 million to 4% of total worldwide annual turnover, whichever is higher. That fine may vary based on factors such as severity, the type of data affected, negligence, and evidence of preventive measures taken.
Notably, GDPR treats startups, scale-ups, and global companies equally. In other words, being resource-constrained or a start-up does not exempt an organization from accountability. Therefore, being GDPR-compliant in an EOR agreement is not only a legal requirement but also a business necessity.
The essential elements that are taken into consideration by regulators while imposing a penalty include:
- Volume and sensitivity of the data affected
- Duration of the violation
- Preventive and corrective actions taken
- Transparency
- Response time
- Prior compliance record
Governments charge penalties per infringement, so repeated violations significantly increase financial and legal risk.
How GDPR Applies in an Employer of Record Model
In an EOR, responsibilities for employment and data protection are shared. It means the hiring business is responsible for the employee’s day-to-day work. It also includes the duties of the employee in their position. However, the EOR becomes the employer of record: these funds include tax payments and employee benefits.
Such an arrangement has very significant consequences for accountability under the GDPR. It is essential to ask: who is the data controller within the context of an EOR arrangement? Typically, the hiring firm is the data controller, having determined the purposes for which it processes employee data, among other business purposes. At the same time, the EOR acts as a data processor.
It is essential to understand the distinction between a data controller and a data processor. Data controllers define the purpose of data processing. In contrast, data processors act on documented instructions and implement appropriate organizational and technical measures. Data processing agreements between the two parties must be in place to ensure regulatory compliance. That distinction must be clearly documented in data processing agreements to ensure EOR GDPR compliance.
In most EOR schemes:
- Employer/Company = Data controller
- EOR provider = Data processor
- Define responsibilities in the contract.
- Share security and compliance obligations.
How an EOR Handles Employee Data
An Employer of Record must process employee data throughout the employment life cycle, including onboarding, payroll and benefits, statutory compliance, general HR, and offboarding. All these activities involve different types of personnel data.
A GDPR-compliant EOR uses secure, centralized platforms to handle this information. These platforms include features such as encrypted data storage, access controls, and retention policies that comply with applicable regional laws. Access to this information about employees is limited to authorized users, with audit trails in place.
These help ensure effective data privacy compliance for EOR and minimize the risks of unauthorized access and data loss.
The type of employee data for frequent processing:
- Onboarding documentation and identity verification.
- Payroll and tax data processing.
- Benefits enrollment and statutory reporting.
- Secure document storage and retention.
GDPR Requirements for EORs
An Employer of Record that wants to comply with GDPR standards will do so by meeting the legal, technical, and organizational requirements. It will depend on the Employer of Record having a legitimate basis to process employee data. Additionally, the Employer of Record should collect only the data necessary for the job.
EOR service providers also need to ensure that the information shared or stored is processed solely for specific purposes. It is also essential to process the data in a safe environment.
Essential requirements for providers of EOR services under GDPR are as follows:
- Legal and transparent data processing
- Data Minimisation & Purpose Limitation
- Securing cross-border data transfer mechanisms
- Procedures for breach detection/notification
- Support for employee data rights
- Clear Data Processing Agreements
Organizations must assess such capabilities when choosing an EOR. In practice, a GDPR-compliant EOR should demonstrate compliance across legal, technical, and operational layers.
How to Ensure GDPR Compliance in Global Hiring
Here’s the answer to the frequently asked question: how to ensure GDPR compliance in global hiring?
To attain GDPR compliance for the global recruitment process, one must employ a structured approach. To start, it is paramount to choose an EOR capable of operating within the EU regulatory environment. It encompasses being transparent about data handling, security measures, and obligations.
Straightforward documentation is essential. The organization and the EOR must establish an explicit agreement on roles and responsibilities. They should limit data sharing strictly to what is necessary for employment purposes.
Ensuring the secure transfer of data across borders is also essential. In international employment, it is common to transfer data across borders, and standardized contractual clauses are required to ensure GDPR compliance in global roles. It is also essential for the organization to respond efficiently to employee data rights requests, such as access, modification, and deletion. A compliant EOR will enable this in its workflow.
To operationalize GDPR compliance in global hiring, companies should focus on the following steps.
- Select a GDPR-compliant EOR.
- Specify the roles of controller and processor.
- Limit data shared to the necessary information.
- Use approved transfer mechanisms.
- Record documentation and audit trails.
GDPR Compliance for Remote Employees
Remote work also brings an extra layer of complexity to the data protection regime. Workers may be based in different EU Member States or outside the EU altogether.
Ensuring the remote worker’s GDPR compliance requires using secure systems that enable remote access from multiple locations without compromising data integrity. These systems must incorporate robust authentication procedures, secure connections, and consistent internal policies, regardless of location. Having an HR central platform can reduce compliance fragmentation to some extent by providing standard compliance guidelines for workers across different areas. Remote access increases the risk of unauthorized access if you don’t enforce identity and authentication controls.
GDPR Risks When Using an EOR
Although an Employer of Record reduces administrative complexity, it does not eliminate the risks associated with GDPR compliance. These associated risks include a lack of clarity regarding contract obligations, security measures, cross-border information transfers, and incident response preparedness.
Understanding GDPR risks in the context of EOR will help organizations mitigate them. Due diligence processes help organizations stay on track with regulatory requirements.
These include: Common GDPR risk areas:
- Ambiguities about data ownership responsibilities.
- Insufficient vendor security standards.
- A breached bank’s notification of clients.
- Inadequate documentation and record-keeping.
Companies can mitigate most of these risks through due diligence, contractual clarity, and regular compliance reviews.
How an EOR Supports GDPR Compliance
An effective EOR serves as a compliance ally, not just a transactional services partner. With its platform infused with legal acumen, secure infrastructure, and automated compliance processes, an Employer of Record can help businesses stay compliant with evolving data protection regulations.
These include, but are not limited to, the following:
The provision of complaint contract solutions, secure payroll solutions, employment best practices for local jurisdictions, and centralized documentation.
This allows companies to focus on growth while maintaining consistent GDPR compliance for global hiring.
WorkMotion’s Approach to Employer of Record Data Protection and GDPR Compliance
WorkMotion is a global platform that simplifies cross-border hiring. It ensures compliance with the privacy and legal requirements of countries. WorkMotion enables companies to employ and manage workers globally without requiring local presence. WorkMotion’s Employer of Record solution has a GDPR-first approach. WorkMotion securely processes employee data, automatically translates contracts to local legal standards, and adopts an updated approach to address changes to the GDPR. It makes the process of being an employer of record compliant with GDPR scalable.
By embedding compliance at every stage of employment, WorkMotion reduces operational friction and strengthens data protection.
Benefits of Strong Employer of Record Data Protection
Using a GDPR-compliant EOR brings about tangible business benefits. Companies can reduce litigation risk, expedite the global hiring process, increase employee trust, and ensure global compliance. Start-ups moving into a new geography would greatly benefit from robust data protection provided by EORs.
Important benefits include:
- Lower compliance & legal risk costs.
- Faster and safer global expansion.
- Increase in employee confidence and trust.
- Coordination and control are centralized.
Conclusion: Compliant Global Hiring with WorkMotion
Data protection has shifted from a side-line issue to an essential cornerstone of the modern global workplace. As companies expand globally and grow their workforces, GDPR compliance in global recruitment has become a key to business success and resilience. Rather than being seen as a restrictive mechanism, the GDPR has become a valuable framework for responsible business growth and scalability.
WorkMotion helps make this vision a reality by enabling businesses to hire and manage international talent with confidence. With its Employer of Record service, companies can hire full-time employees in foreign jurisdictions without opening subsidiaries, in compliance with local labor laws, tax regulations, and GDPR requirements. Organizations address data privacy, reliable salary processing, and legally compliant employment contracts throughout the employment lifecycle.
For European countries, WorkMotion’s Direct Hiring Solution provides streamlined local employment management support in 21 European countries. It optimizes administrative tasks by automating contract processing, onboarding, and overall HR compliance. WorkMotion ensures data protection and GDPR compliance.
It also provides services like Contractor Management for organizations hiring freelance professionals worldwide. It helps reduce misclassification risk, ensures contractors are engaged lawfully, and securely manages contractor information in accordance with evolving regulatory requirements. When combined, these solutions enable organizations to expand globally without sacrificing compliance, security, or employee experience. With WorkMotion, companies can recruit worldwide faster, easier, yet securely, correctly, and genuinely, people-first.
FAQs
Is an Employer of Record GDPR compliant?
An employer of record can be GDPR-compliant when it adheres to EU data protection laws, implements robust security controls, and signs clear data processing agreements. Employer of record GDPR compliance depends on how the provider manages employee data, supports data subject rights, and meets GDPR requirements for EOR services. Companies should continually assess the Employer of Record data protection practices before selecting a provider.
Who is the data controller in the EOR model?
In most cases, the hiring company is the data controller in the EOR model because it determines the purpose and scope of data processing. The Employer of Record typically acts as the data processor, handling employment-related activities such as payroll and benefits. Understanding data controller vs data processor EOR responsibilities is essential for GDPR Employer of Record compliance and risk management.
How does EOR handle employee data?
An Employer of Record handles employee data across onboarding, payroll, benefits administration, statutory reporting, and offboarding. A GDPR-compliant EOR uses secure systems, encryption, access controls, and audit trails to support EOR data privacy compliance. These measures ensure strong data protection Employer of Record standards throughout the employee lifecycle.
What are the GDPR risks when using an EOR?
GDPR risks when using an EOR include unclear roles for controllers and processors, weak security frameworks, improper cross-border data transfers, and insufficient breach response procedures. These risks can impact GDPR compliance for international employment if not managed correctly. Selecting a provider with proven EOR GDPR compliance capabilities helps reduce regulatory exposure.
What is the difference between a data controller and a data processor in EOR?
In an EOR arrangement, the data controller determines why and how employee data is processed, while the data processor executes those activities on the controller’s behalf. This distinction between data controllers and data processors under the EOR is fundamental to GDPR compliance and directly affects accountability for global hiring.
How does an EOR support GDPR compliance?
An Employer of Record supports GDPR compliance by offering secure infrastructure, compliant contracts, localized payroll processing, and structured data protection processes. These capabilities help organizations meet GDPR requirements for EOR, ensure GDPR compliance for remote employees, and maintain consistent data protection and GDPR compliance across regions.
How can companies ensure GDPR compliance for global hiring through an EOR?
Companies can ensure GDPR compliance for global hiring by selecting a GDPR-ready EOR, clearly defining controller and processor responsibilities, limiting data sharing to employment-related needs, and using approved mechanisms for international data transfers. These steps strengthen GDPR compliance for international employment and reduce the risk of a GDPR non compliance penalty.
