What Is an Employer of Record (EOR)?

How does an employer of record work?

The EOR becomes the legal employer in the worker's country. You choose the person and manage their work. The EOR handles everything that depends on local employment law.

What an EOR typically handles

• Employment contracts that follow local rules
• Payroll and tax withholding
• Statutory benefits and social contributions
• Onboarding and offboarding paperwork
• Compliance with local labor requirements

What are the benefits of using an EOR?

• Hire abroad without setting up a local entity
• Reduce compliance risk with local labor rules
• Start hiring faster than with a new subsidiary
• Offer compliant contracts and benefits to the worker

What are the drawbacks?

• Ongoing fees on top of salary and employer costs
• Less direct control over contract terms
• Not ideal for very large teams in one country, where an entity may cost less

EOR vs contractor vs staffing agency

• EOR: the worker is a full employee, employed legally by the EOR
• Independent contractor: the worker is self-employed, with no employer
• Staffing agency: the agency employs and places the worker, often with a markup

Which model fits depends on the role, duration and legal context. Read our comparison of employer of record vs staffing agency for more detail.

When does an EOR make sense?

• You are hiring one or a few people in a new country
• You want to test a market before opening an entity
• You need compliant employment for long-term remote staff

This page is general information and not legal advice. Employment rules differ by country.