What is an employer of record?

An employer of record (EOR) is a company that legally employs workers on behalf of another business. It takes on the legal role of employer in a country where the other business has no entity. The EOR handles payroll, tax, and compliance. You still direct the day-to-day work.

EOR stands for "employer of record." The term describes both the service and the company that provides it. You will also see the model called "global employment" or "international employment outsourcing." They all point to the same idea: a third party becomes the on-paper employer so you can hire someone in a country where you are not set up to employ people yourself.

This page explains what an EOR is, how the model works, what it does and does not cover, how it compares to similar arrangements, and roughly what it costs. It is a plain-language reference. Where a number or a comparison needs more depth, we link to a page that goes deeper.

Last updated July 17, 2026. Jump to: How an EOR works · EOR vs. PEO vs. staffing agency vs. contractor of record · What an EOR costs · FAQ

How does an employer of record work?

An EOR sits in a three-party relationship. There is the worker, the EOR, and your business — often called the client company.

Here is the split. The worker does the job. The EOR is the legal employer on paper. Your business directs the work and pays the EOR for the service.

The employment contract is the key. It is signed between the worker and the EOR, not between the worker and you. That contract is written to follow the local labor law of the country where the worker lives. So the EOR, not your business, carries the legal duties of an employer there.

A simple flow looks like this:

1. You choose the person you want to hire. You agree on the role, the salary, and the start date.
2. The EOR issues a locally compliant employment contract to that person.
3. The EOR runs payroll, withholds tax, and administers required benefits every month.
4. You manage the person's actual work, priorities, and performance.

Because the EOR holds the employment contract, it also holds most of the legal liability that comes with employing someone. If a payroll tax is filed wrong, or a statutory benefit is missed, that sits with the EOR. This is the core reason the model exists. It moves the compliance burden to a party that is set up to carry it.

The worker is a real, full employee — of the EOR. They get a proper local contract, statutory benefits, and payslips. To them, the arrangement should feel like a normal job, with day-to-day direction coming from your team.

What does an employer of record do?

An EOR handles the legal and administrative side of employment. The exact list varies by provider and country, but the core responsibilities are consistent:

• Employment contracts. Drafts and issues a locally compliant contract in the correct language and format.
• Payroll. Pays the employee on time, in local currency, on a local schedule.
• Tax withholding and filing. Deducts income tax and social contributions from pay and files them with the right authorities.
• Statutory benefits. Administers the benefits local law requires, such as pension contributions, paid leave, and health cover where mandated.
• Compliance. Keeps the employment relationship in line with local labor law as those rules change.
• Onboarding and offboarding. Handles the paperwork to start someone and, when needed, to end the relationship in a legally correct way.
• Terminations. Manages notice periods, severance, and the legal steps a country requires to end employment.

The short version: an EOR owns everything that has to be legally correct about employing a person. That is what you are paying for.

What does an employer of record not do?

Just as important is the list an EOR does not cover. This is where buyers get surprised, and where most vendor pages stay quiet. An EOR does not:

• Direct the day-to-day work. You set the tasks, priorities, and goals. The EOR does not manage the person's work.
• Recruit or source candidates. An EOR employs the person you have already chosen. Finding and vetting talent is your job, or a recruiter's.
• Own the work product. Intellectual property the employee creates should flow to your business through the contract terms. The EOR does not keep it.
• Handle performance and development. Reviews, feedback, promotions, and coaching stay with you.
• Replace an entity forever. For a small or growing team, an EOR is often the right long-term tool. But at large headcount in one country, running your own entity can become cheaper. More on that below.

Put simply: the EOR is the legal employer, but you are still the manager. The person works for your team in every practical sense. The EOR just makes the employment lawful in a place where you could not do it alone.

EOR vs. PEO vs. staffing agency vs. contractor of record

Four models often get confused. They solve different problems. The table below draws the lines cleanly. (A PEO is a professional employer organization. A contractor of record engages independent contractors compliantly, rather than employees.)

The crucial contrast is EOR vs. PEO. An EOR is the sole legal employer, and it works in countries where you have no entity. A PEO is a co-employer, sharing employment duties with you, and it usually requires that you already have your own legal entity in that country. So a PEO helps you run HR where you are established; an EOR lets you employ where you are not.

The other line worth drawing is EOR vs. contractor of record. An EOR is for people you are hiring as employees. A contractor of record is for people you are engaging as independent contractors. The difference is not a preference — it depends on the nature of the work and the local law. If the work is full-time, directed, and ongoing, it usually points to employment, and an EOR. If the work is genuinely independent, project-based, and self-managed, a contractor arrangement may fit, and a contractor of record keeps it compliant. Getting this wrong creates misclassification risk. Remote& handles both employees and contractors, plus contractor of record, on one global workforce platform, so the choice is not locked to a single tool.

When should you use an employer of record?

An EOR fits a specific set of situations. It is a strong choice when:

• You are testing a new market. You want one or two hires in a country before committing to an entity. Germany and Japan are common first steps for this reason.
• You have a single hire abroad. One great candidate lives in a country where you are not set up. An entity would be overkill for one person.
• You are relocating an employee. Someone on your team is moving to Canada or Brazil, and you want to keep employing them lawfully.
• You have no local entity and no plan to build one soon. Setting up an entity takes months. An EOR can employ someone in days to weeks.
• You are worried about classification. The person's work looks like employment, not contracting, and you want it done as employment without the entity overhead.

The common thread is speed and reach without the fixed cost of a legal entity. An EOR turns "we cannot hire there" into "we can, this month."

When is an EOR the wrong choice?

An EOR is not always the right tool. Being honest about this matters more than a sales pitch. Think twice when:

• You are hiring a genuine independent contractor. If the work is truly self-managed and project-based, a contractor arrangement — with a contractor of record for compliance — may fit better and cost less than employment. Our contractor management guide covers how to tell the difference.
• You are at scale in one country. Once you employ many people in a single country, running your own entity can cost less per head than paying an EOR fee for each one. The crossover point depends on the country and headcount, but at large scale, entities usually win on cost.
• You need deep in-country presence. If you need a physical office, local directors, or heavy on-the-ground operations, an EOR does not replace an established local company.
• The model is restricted where you are hiring. In some countries, the EOR model faces legal limits or extra scrutiny. A good provider will tell you where the model is straightforward and where it is not.

An EOR is a precise tool for a common problem: employing people, compliantly, in places you are not set up. Outside that job, other options often fit better.

What an employer of record costs

EOR pricing is more consistent than you might expect. Across providers that publish rates, the market range is $199 to $699 or more per employee per month (checked July 17, 2026). Remote& publishes a flat $400 per employee per month.

That fee is charged one of two ways. Some providers use a flat monthly rate per employee, the same regardless of salary. Others charge a percentage of the employee's gross payroll, which rises with pay. Flat pricing is more predictable; percentage pricing can cost less for junior roles and more for senior ones.

One point matters more than the fee itself: the EOR fee is a service charge, not the full cost of the employee. On top of it sit the employer's own statutory costs — social security, pension contributions, mandatory bonuses — set by local law and owed no matter which EOR you use. These vary widely by country, and they often dwarf the EOR fee.

This page keeps cost at a summary level on purpose. For a dated, sourced breakdown of what named providers charge, and how the statutory burden looks country by country, see our employer of record cost guide. To model a full landed cost for a specific country, use the cost calculator, and see per-country statutory data in our country guides.

How to choose an employer of record

Providers differ in ways that matter once you are past the sticker price. A short checklist:

• Country coverage. Does the provider actually support the countries you are hiring in, and how? Ask which are covered directly and which run through a local partner.
• Owned entity or partner model. Some providers own their local entities. Others rely on partners. Owned entities can mean tighter control; partner models can mean broader reach. Neither is automatically better — ask which applies to your country.
• Pricing transparency. Is the price published, or gated behind a sales call? Is it flat or a percentage? Are onboarding and offboarding fees disclosed up front?
• Platform and support. How is payroll approved, how are documents handled, and who does the employee contact with a problem?
• Compliance track record. Ask how the provider keeps contracts current as local laws change, and who carries liability if something is filed wrong.

The goal is a provider whose coverage, model, and pricing match your actual hiring plan — not the one with the lowest headline number.

Frequently asked questions

What is an employer of record?

An employer of record (EOR) is a company that legally employs workers on behalf of another business, in countries where that business has no legal entity. The EOR holds the local employment contract and handles payroll, tax withholding, statutory benefits, and compliance. The client company chooses the hire and directs the day-to-day work. The worker is a full, legally employed member of the client's team in every practical sense.

What does EOR stand for and what does it mean?

EOR stands for "employer of record." It means a company that legally employs workers on behalf of another business, usually in a country where that business has no legal entity. The EOR handles payroll, tax, benefits, and compliance as the on-paper employer, while the client company directs the day-to-day work. The term describes both the service and the provider.

What is the difference between an EOR and a PEO?

An EOR is the sole legal employer of your workers, and it operates in countries where you have no entity of your own. A PEO is a co-employer that shares HR and employment duties with you, and it usually requires that you already have a legal entity in that country. In short: a PEO supports hiring where you are established; an EOR enables hiring where you are not.

Is an EOR the same as a staffing agency?

No. A staffing agency finds and supplies its own workers to fill temporary or short-term roles, and those workers are the agency's. An EOR employs a person you have already chosen and want long-term, acting as the legal employer on your behalf. The agency sources talent; the EOR does not. With an EOR, the hire is yours to manage — the EOR just makes the employment lawful.

What is the difference between an EOR and a contractor of record?

An EOR is for people you hire as employees. A contractor of record is for people you engage as independent contractors. The right choice depends on the work, not preference: full-time, directed, ongoing work usually means employment and an EOR, while genuinely independent, project-based work may suit a contractor and a contractor of record. Choosing wrong creates misclassification risk, so match the model to the actual working relationship.

How much does an employer of record cost?

Published EOR pricing runs from about $199 to $699 or more per employee per month, based on providers' own rates checked July 17, 2026. Remote& publishes a flat $400 per employee per month. That fee is the service charge only. The employer's statutory costs — social security, pensions, mandatory bonuses — sit on top and vary by country. See our cost guide for a dated breakdown.

What are the risks or drawbacks of using an EOR?

An EOR adds a per-employee fee that, at large single-country headcount, can cost more than running your own entity. You also give up some control over employment terms, since the EOR's local contract sets the framework. In a few countries, the model faces legal limits. And an EOR does not suit genuinely independent contractor work. For the right job — compliant employment without an entity — these trade-offs are usually worth it.

Do I need a foreign entity to hire internationally?

No — that is the main reason to use an EOR. Setting up your own legal entity in another country can take months and carries ongoing cost. An EOR already has the legal standing to employ people there, so it can hire on your behalf in days to weeks, with no entity of your own. If you later reach large headcount in that country, building an entity may then make sense.

Can I hire independent contractors through an EOR?

Not exactly. An EOR employs people; it does not engage independent contractors. To engage a genuine contractor compliantly, you use a contractor of record instead. The key is classification: if the work functions as employment, an EOR is the right tool, and a contractor arrangement would carry misclassification risk. A platform that offers employees, contractors, and contractor of record together lets you pick the model each hire actually needs.