Employer of Record (EOR)

Hiring an employee in a country where you have no legal entity usually means setting one up, which is slow and expensive. An employer of record is the way around that. It becomes the legal employer so you can hire abroad without opening an entity everywhere.

Key facts

• An employer of record legally employs workers on a company's behalf and runs payroll, taxes, benefits, and local compliance.
• It lets companies hire employees in countries where they have no legal entity.
• An EOR employs; an agent of record (AOR) engages independent contractors. Worksome does both, in 150+ countries.

Contents

1. What is an employer of record?
2. How an EOR works
3. EOR vs AOR vs PEO
4. What to look for in an EOR
5. Frequently asked questions
6. Choosing between EOR and AOR

What is an employer of record?

An employer of record (EOR) is a third party that legally employs workers on a company's behalf, running payroll, taxes, benefits, and local compliance so the company can hire in countries where it has no legal entity. The worker does the day-to-day job for the client; the EOR is the legal employer on paper.

How an EOR works

• Legal employment. The EOR holds the local employment relationship and contract.
• Payroll and contributions. It runs payroll, tax withholding, and statutory contributions.
• Compliance. It keeps the arrangement aligned with local labor law.
• You direct the work. The client manages the day-to-day; the EOR carries the employer obligations.

This is how companies hire full employees in new markets in weeks rather than the months an entity setup can take.

EOR vs AOR vs PEO

• EOR employs W-2-style employees in markets where you have no entity.
• AOR engages and pays independent contractors, taking on their classification and compliance.
• PEO co-employs staff where you already have your own legal entity.

Key takeaway: An EOR provides employment where you do not operate. A PEO shares employment where you already do. An AOR covers contractors, not employees.

What to look for in an EOR

1. Country coverage. The markets you hire in now and next.
2. Compliance depth. Local contracts, benefits, and statutory handling done properly.
3. Payroll accuracy. Correct withholding and on-time pay in local currency.
4. Contractors too. AOR alongside EOR, so you can engage any worker type through one vendor.
5. One system of record. Employees and contractors visible in the same place.

Best practice: Choose a provider that runs EOR and AOR together, so switching a worker between employee and contractor status does not mean switching vendors.

Frequently asked questions about employers of record

When do you need an EOR? When you want to hire an employee in a country where you have no legal entity, and you do not want to set one up. An EOR lets you employ compliantly without that overhead.

Is an EOR the same as a staffing agency? No. A staffing agency finds and supplies talent. An EOR is the legal employer for workers you have already chosen, handling employment, payroll, and compliance.

Which countries can an EOR cover? Coverage depends on the provider. Worksome acts as EOR in 150+ countries.

Choosing between EOR and AOR

The choice follows the worker. If the person should be an employee in the local market, use an EOR. If they are a genuine independent contractor, use an AOR. Worksome runs both under one system, so you can engage employees and contractors across 150+ countries without switching vendors.

This page is general information, not legal advice. Employment and classification rules vary by country and change over time.

Related: Agent of Record (AOR), Contractor payments, Co-employment, Worker classification.