What is an Employer of Record (EOR)?

EOR stands for Employer of Record. It refers to a third-party company that legally employs workers on behalf of another organization. This term is commonly used in the context of global employment, where companies may engage an EOR to handle the legal and administrative aspects of hiring and managing employees in foreign countries.

An Employer of Record, or EOR, is a third-party company that takes on the legal and administrative responsibilities of employing workers on behalf of another organization. In essence, the EOR becomes the official employer, taking care of payroll, benefits, compliance, and other HR-related tasks for the workers.

EORs are commonly used in the context of global employment, where companies often need to hire and manage a workforce in foreign countries. By partnering with an EOR, companies can navigate the complexities of international employment and ensure compliance with local labor laws and regulations.

How Does an EOR Work?

When a company engages an EOR, the EOR signs an employment contract with the worker, making them the legal employer. However, the worker still performs their duties for the client company, under the client's supervision and direction. The client company maintains the day-to-day management of the workers, while the EOR handles the administrative and legal aspects of employment.

The EOR takes care of tasks such as:

• Payroll processing

• Employee benefits

• Tax withholding and filing

• Work permit and visa sponsorship

• Compliance with local labor laws

By outsourcing these responsibilities to an EOR, companies can focus on their core business operations and expand their global footprint without the need to set up legal entities in each country.

When is an EOR Suitable for Your Business?

Employing workers in foreign countries can be complex due to differences in labor regulations, employment practices, and tax systems. Here are some scenarios where partnering with an EOR may be suitable for your business:

• Expanding into new markets: When entering a new country, an EOR can help you set up quickly without the need for legal entity establishment.

• Short-term or project-based assignments: If you have short-term or project-based work in foreign countries, using an EOR can be more cost-effective and efficient than incorporating a local entity.

• Compliance management: An EOR specializes in local labor laws and regulations, ensuring that you remain compliant with employment requirements in each country.

• Employee benefits and payroll: EORs can handle employee benefits, payroll processing, and tax withholding, simplifying the administrative burden for your HR team.

• Minimizing risk: Working with an EOR mitigates legal and compliance risks associated with international employment, as the EOR assumes responsibility for legal and tax compliance.

It is important to evaluate your specific needs and consult with legal and HR professionals to determine if partnering with an EOR is the right approach for your global employment strategy.

An Employer of Record can be a valuable partner in managing global employment, providing expertise and support in navigating the complexities of international labor laws and regulations. By leveraging the services of an EOR, companies can optimize their global workforce management and ensure compliance while focusing on their core business objectives.

Take the Payroll Burden Off Your Shoulders.
Manage your global team's Payroll with a cost and time-efficient solution.
Learn More

Stay up to date with our latest content

We are the experts in global hiring, let us help you scale.
View all posts
independent contractors maternity leave

Can independent contractors take maternity leave?

Discover the challenges and explore potential solutions for self-employed individuals seeking time off during maternity.
us companies that are hiring foreign workers

How to Find US Companies That Are Hiring Foreign Workers

Gain access to specialized job boards and essential legal tips for a smoother job search experience.
minimum wage in Peru

What is the minimum wage in Peru in 2024?

Uncover the intricacies of Peru's minimum wage system and how it shapes livelihoods and economic landscapes within the country.
minimum wage in mexico 2024

What is the minimum wage in Mexico in 2024?

Understanding the minimum wage in Mexico: its variations, implications, and effects on livelihoods and the economy.
minimum wage in costa rica

What is the minimum wage in Costa Rica in 2024?

Discover the complexities behind Costa Rica's minimum wage system and how it extends beyond simple numbers.
men working on his desk while writing on a paper

Answers you should have about Payroll and Payments

We believe in transparency in all aspects and processes, so this is a text for us to be crystal clear about all of our payroll and payment methods.

How to Run a Remote Business

Our helpful Guide to Hire International Workers will give you insights on the best way to conquer new Global Talent.
Get the Ebook
X Logo