Employer of Record (EOR)

An employer of record (EOR) is a third-party organisation that legally hires workers on your behalf in a country where you don’t have a registered entity. The EOR carries the compliance risk — payroll, tax, benefits, and local labour law — while you direct the day-to-day work. It’s the fastest lawful route to a global team.

You keep the employee, the culture, and the outputs. The EOR keeps the paperwork, the local filings, and the audit trail. That split makes the model attractive to companies testing a new market or hiring one specialist in a country where opening a subsidiary would cost six figures and eight months.

An EOR is not the same as a staffing agency or a contractor platform. The worker sits on the EOR’s payroll but reports to you, follows your OKRs, and uses your tools. Deel, Remote, and Papaya Global made this model mainstream after 2020, when remote hiring forced Western employers to solve cross-border employment quickly.

Key takeaways

• An EOR lets you hire in a country in 1–2 weeks instead of the 6–9 months a legal entity takes.
• The EOR is the legal employer on paper; you remain the functional manager.
• Global EOR market value passed $6.5 billion in 2024 and is forecast to double by 2030.
• EORs typically charge $500–$2,000 per employee per month, or 10–15% of gross salary.
• The model suits teams of 1–20 in a new country; above 20, a legal entity often becomes cheaper.

How it works

An EOR signs the local employment contract, runs payroll in the correct currency, withholds taxes to the local authority, and enrols the worker in statutory benefits. You pay the EOR one monthly invoice; the EOR pays everyone else.

The onboarding sequence is short and repeatable:

1. You select the candidate and agree salary, start date, and role.
2. The EOR issues a locally compliant employment contract in the worker’s language.
3. The worker signs, submits ID, and is registered with tax and social security.
4. Payroll runs monthly; the EOR remits taxes, files reports, and pays statutory contributions.
5. You receive one consolidated invoice and time-off / benefits data through a dashboard.

Behind the invoice sits a live compliance engine. The International Labour Organization counts more than 180 distinct national employment codes, and each carries its own rules on probation, notice periods, 13th-month pay, and termination cause. The EOR’s local counsel updates contracts when laws change, so the worker’s terms never drift out of compliance.

Examples

EOR is now a mature category with named providers operating across 150+ countries and specialising by region or industry.

• Deel — founded 2019, now hires in 150+ countries. In 2024 it reported crossing $500 million in annualised revenue, mostly from EOR and contractor payroll.
• Remote.com, Dutch-registered, owns local entities in 80+ countries and is popular with US tech companies hiring across Europe and LatAm.
• Velocity Global, enterprise-focused and active since 2014, is favoured by Fortune 500 firms placing senior hires across Asia-Pacific.
• Multiplier and Papaya Global are mid-market EORs that combine human resources tooling with EOR compliance, popular with Series B startups.

In the Philippines, EOR is the standard entry mode for foreign firms hiring one to five staff before committing to a full business process outsourcing build-out. Providers register the worker with the Bureau of Internal Revenue, SSS, PhilHealth, and Pag-IBIG, and issue the mandatory 13th-month pay every December.

Related terms

EOR sits inside a family of workforce models that overlap on payroll and diverge on legal risk. Knowing the neighbours helps you pick the right structure for each hire.

• Payroll: the transaction layer the EOR runs; an EOR is payroll plus legal employer status.
• Human resources: the internal function an EOR partially externalises for one country.
• Business process outsourcing: full-function outsourcing where the vendor also owns the work; an EOR only owns employment.
• Staff leasing: a Philippines-specific arrangement close to EOR but with the vendor also managing daily operations.
• Knowledge process outsourcing: niche cousin where the vendor owns the intellectual work, which an EOR never does.

FAQ

What’s the difference between an EOR and a PEO?

An EOR is the sole legal employer in a country where you have no entity. A professional employer organization (PEO) is a co-employer that shares HR duties with your existing US entity. If you have no local entity, you need an EOR — a PEO can’t take that role.

How much does an EOR cost?

Most EORs charge a monthly per-employee fee of $500–$2,000, or a percentage (usually 10–15%) of gross salary. On top of that you pay the worker’s salary and the local employer’s social contributions, which typically add 15–30% depending on the country.

Is using an EOR legal everywhere?

EOR arrangements are legal in most OECD markets but restricted in some. Germany caps continuous EOR employment at 18 months, and countries like China and the UAE require the EOR to hold a specific labour dispatch or PEO licence. Always confirm the local rule before you hire.

When should you switch from an EOR to your own entity?

The rule of thumb is 15–25 employees in one country. Below that, EOR fees are cheaper than incorporation, accounting, and payroll setup. Above it, direct employment usually wins on total cost and gives you the option to hold local IP and contracts.

Can an EOR hire senior executives?

Yes, but tread carefully. Some jurisdictions require directors and officers to sit on the parent entity’s payroll, and equity grants often need a direct employment relationship for tax efficiency. Most EORs will flag these limits before you sign.

Ready to compare EOR and offshoring options side by side? Explore vetted providers and cost benchmarks on the Outsource Accelerator hub.