When and why is a deposit required?

Why is a deposit required?

Charging a deposit is a common practice in the Employer of Record (EOR) industry, and at Horizons, we follow this standard approach to ensure financial security for all parties involved. As an EOR, Horizons assumes legal and financial responsibilities for the employees, and the deposit serves as a safeguard to fulfill those obligations. 


The deposit is not used to fund our day-to-day operations. Instead, it acts as a protective measure, held securely until the end of the employment term. As Horizons is the official employer, Horizons is responsible for ensuring compliance with local laws and employee rights, regardless of any financial issues a client may face. In the unfortunate event that a client becomes insolvent or cannot meet their financial commitments, Horizons remains liable for the employee’s welfare. The deposit ensures that, should this situation arise, Horizons can cover any necessary settlements or termination fees as required by law to finalize the employment relationship.


Think of it in terms of a rental agreement: much like a landlord holds a deposit to cover potential damages at the end of a lease, Horizons holds this deposit to ensure that, in the event of an unexpected financial situation, employee obligations can still be met. It’s important to note that this deposit is not a replacement for ongoing monthly payments. Clients are still expected to fulfill regular payment obligations during the employment period. The employees salary is directly impacted by the timely payments of the payroll invoices - payroll depends on it. 


When is a deposit required and when refunded?

As part of the onboarding process when a new employee is being hired, the deposit must be paid before the employment agreement is sent to the employee for signature. This step ensures that all necessary financial safeguards are in place before the employment relationship officially begins.


At the conclusion of the employment relationship, provided no claims or unresolved issues remain, the deposit will be fully refunded to the client.


This practice ensures that both Horizons and the employees are protected, and it aligns with industry standards. We take these measures to provide a secure and compliant service, while maintaining our commitment to transparency and trust with our clients.


Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select at least one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article