Employer of Record

How an EOR Works

An Employer of Record operates as the legal employer for your remote workers in countries where you do not have a legal entity. The EOR signs the employment contract, handles payroll, withholds and remits taxes, provides statutory benefits, and ensures compliance with all local labor laws. You retain full control over the employee's day-to-day work, goals, and performance management.

Think of an EOR as outsourcing the legal and administrative shell of employment while keeping the actual work relationship. Your remote employee reports to your managers, uses your tools, attends your meetings, and works on your projects. The EOR handles everything on the back end that normally requires a local legal entity.

When You Need an EOR

The primary trigger for using an EOR is wanting to hire employees in a country where you do not have — and do not want to establish — a legal entity. Setting up a foreign subsidiary typically costs $20,000-$100,000 and takes 2-6 months depending on the country. An EOR lets you hire in days, not months, at a fraction of the cost.

Beyond the entity question, EORs are valuable when you want to convert long-term contractors to employees for compliance reasons, when you need to provide benefits and employment protections to improve retention, or when you are entering a new market and want to test it with a few hires before committing to a subsidiary.

What an EOR Handles

• Employment contracts compliant with local law, including required clauses and protections
• Payroll processing — salary calculation, tax withholding, social contributions, and net pay disbursement
• Statutory benefits — health insurance, pension, paid leave, parental leave, and any other mandated benefits
• Tax filing and reporting — employer tax obligations and required government filings
• Onboarding and offboarding — compliant hiring documentation and, when needed, legally compliant termination processes
• HR support — handling employee questions about benefits, leave policies, and local employment rights

EOR Pricing Models

EOR providers use two primary pricing models. Fixed-fee pricing charges a flat monthly rate per employee, typically $300-$700 depending on the country and service level. This model is transparent and predictable but does not vary with salary level. Percentage-based pricing charges 10-20% on top of the gross salary. This model scales with compensation but can become expensive for senior hires.

When comparing EOR costs, look beyond the headline fee. Some providers bundle comprehensive benefits into their pricing while others charge extras for health insurance, equipment procurement, or offboarding. Request a fully loaded cost comparison showing total employer cost (salary + benefits + EOR fee + any additional charges) to make meaningful comparisons.

Choosing an EOR Provider

The EOR market has expanded rapidly, with providers ranging from global platforms covering 150+ countries to specialized firms focusing on specific regions. Key evaluation criteria include country coverage (do they have their own entities or use subcontractors), benefit quality (are they offering competitive local benefits or just the statutory minimum), platform quality (self-service dashboard for managing employees), and responsiveness (how quickly they handle requests and resolve issues).

1. Verify the provider has a direct legal entity in your target country — some EOR providers subcontract to local firms, adding another layer of risk and cost
2. Test their onboarding speed — a good EOR can have an employee set up in 5-10 business days
3. Assess their HR expertise — they should be able to advise you on compliant compensation packages, not just process payroll
4. Check their termination process — employment law is most complex when things go wrong, so understand their capabilities before you need them