An employer of record (EOR) is a third party organisation that legally employs people on behalf of a company, usually in another country, and manages local HR, payroll and compliance responsibilities.
What is EOR?
An employer of record (EOR) allows organisations to hire people in countries where they don’t have a legal entity. The EOR becomes the official employer for legal and administrative purposes, handling payroll, contracts, benefits and compliance with local employment laws. The company still manages the person’s day‑to‑day work.
Using an EOR helps businesses expand into new markets quickly and reduces the complexity and risk of managing international employment on their own.
Things to know
- An EOR is the legal employer, but the company directs the person’s work
- It helps organisations hire internationally without setting up a local entity
- EORs manage payroll, tax, benefits and compliance in the worker’s country
- It can reduce risk around misclassification and local employment rules
- Some EORs own their local entities; others rely on partners
FAQs
Why do organisations use an EOR?
To hire in new countries quickly, stay compliant with local laws and avoid the cost and complexity of setting up a legal entity.
Does an EOR replace HR?
No. The EOR handles legal and administrative employment tasks, while the company manages performance, goals and day to day work.
What are the benefits of using an EOR?
Faster hiring, reduced compliance risk, simpler payroll and a consistent experience for employees in different countries.
Are there drawbacks to using an EOR?
Some organisations feel they have less direct control, and there may be limits on contract length or number of hires depending on the provider.
What’s the difference between an EOR and a Professional Employer Organisation (PEO)?
A PEO uses a co-employment model and usually operates within one country. An EOR is the sole legal employer and enables hiring in countries where the company has no entity.
