Glossary
Employer of Record (EOR)
An Employer of Record (EOR) is a third-party organization that serves as the legal employer of a worker on behalf of a client company. The EOR handles payroll, tax withholding, mandatory benefits, and local compliance; the client directs the day-to-day work. EOR arrangements are the standard way to hire internationally without setting up a local legal entity.
How EOR works in practice
- You identify a candidate in the country where you want to hire.
- The EOR drafts an employment contract under local law and signs it with the worker.
- The EOR runs monthly payroll, withholds local taxes, pays mandatory benefits (health, pension, statutory leave).
- You pay the EOR monthly for wages plus their markup or SaaS fee.
- You direct the worker's day-to-day output just like an employee.
When to use EOR vs alternatives
- Use EOR when you want to hire someone in a country where you have no legal entity and setting one up is disproportionate.
- Use a direct contractor when the engagement is short-term and the worker is genuinely independent.
- Register a local entity when you have 5+ workers in one country and plan to stay long-term.