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The Employer Of Record (EOR): A Step-By-Step Guide

The Most Important Information You Should Know About Employer of Record (EOR)

An Employer of Record (EOR) is a third party corporation that recruits and pays employees on behalf of another company. As well as handling all formal employment task.

What is the definition?

An employer of record (EOR) is a corporation that is legally responsible for hiring and paying full time employees on behalf of another company. Accordingly Global EORs allow you to hire remote workers from anywhere in the globe. Such as without having to set up a foreign company, sponsor visas, or relocate staff, or worry about local tax and employment restriction.

Companies can legally and efficiently engage with overseas workers in a new country or state by using an Employer of Records. Having without to set up a local organization or risk breaching local employment rules.

73 %of employees want the option of remote work after the pandemic, and nine out of ten CEOs say the hybrid work model will be a part of their future strategy.

Important Points To Remember:

  1. An Employer of Record (EOR) solution entails a third party company acting as the legal employer for a client’s employees.
  2. Global Professional Employer Organizations (‘Global PEOs’) frequently offer Employer of Record solutions as a means of worldwide expansion.
  3. An Employer of Record is in charge of payroll, as well as ensuring that the applicable withholding and deductions are made, as well as meeting other employer compliance duties.

Impacts Of EOR:

  1. The world is rapidly evolving toward remote and hybrid work models, as well as the formation of international teams. 
  2. Hiring from diverse regions has nearly tripled, with Latin America seeing a 286% increase in hiring in 2021.
  3. In Europe, the Middle East, and Africa, international hiring increased by roughly 250%.

The Role

An Employer of Record, in its most basic form, is a third-party local entity that serves as a middleman in an existing employee employer relationship. While the EOR is responsible for ensuring that immigration, employment, and payroll legal and regulatory obligations are met, he or she is not involved in the day to day operations.

What Are The Purpose Of Using An Employer Of Record?
When employing workers in a remote workspace, the primary rationale for establishing an Employer of Record is to avoid regulatory and economic barriers. Each country (and some states and regions) has its own regulations for non-resident businesses Work permit, payroll, and employment regulations. Companies may have difficulty adhering to those standards when expanding across borders.

Professional Employer Organization(PEO) vs. Employer Of Record (EOR)

While both Employers of Record Organizations and Professional Employer Organizations serve as extensions of your business. There are four important differences between the two.

1. You merely outsource a portion of your HR work with an EOR, making your HR department’s life easier.1. The majority of your HR-related duties are handled by a PEO, which effectively replaces your HR staff.
2. EORs, on the other hand, almost never do.2. While most PEOs have a minimum staff requirement.
3. EORs give both general liability and workers’ compensation coverage.3. You may be required to provide your own insurance by PEOs.
4. The ability to avoid establishing a local branch in a foreign country may be the most significant benefit of an EOR.4. A PEO will not be able to help you with that.

The Advantages Of Using A Record Employer

Reduce The Likelihood Of Noncompliance

You may rely on EOR instead of learning a new set of rules each time you hire someone from a different country.

Protect The Personal Information Of Your Employees

Because an EOR processes employee data, each client must sign a Data Processing Agreement (DPA). Employers are required by DPAs to handle employee data in a secure and confidential manner at all times.

Enhance The Employee Experience

Employers of record can assist you in preparing new hires for the job, in addition to following employment rules and administering local payroll.

Payrolling Locals In The Host Country

The majority of nations will require a company with on-site employees to manage payroll through a registered corporation in accordance with local regulations. The EOR ensures after that each employee’s payroll is accurate and compliant.


  1. It’s possible that each new site will require a separate EOR, thus it’s best to make numerous hires in the same place.
  2. Because the EOR will act as a “middleman,” it may take extra work to establish a solid employer-employee relationship.
  3. You may encounter linguistic or cultural barriers, so make sure you employ the right EOR for the job.
  4. If you are only interested in recruiting in one place, the entire cost may be higher (it might make more sense to set up your own entity in that case).

To Sum Up

Expansion of your company is a time-consuming process that involves a lot of paperwork, regulatory compliance, and sophisticated payroll procedures. We also handle all these processes. You can obtain our services from any location.

EOR services assist businesses to avoid the bureaucratic stumbling blocks of global hiring, complying with local labor laws, and relieving pressure on HR and legal departments.