An employer of record (EOR) is a provider that legally employs workers on your behalf in a country, running payroll, taxes, benefits and local employment compliance. It lets you hire people where you have no legal entity, while you still direct their day to day work.
Staffing and agenciestopic
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In one line
A provider that legally employs workers on your behalf in a country, running payroll, taxes and local compliance, so you can hire where you have no entity.
The EOR signs a local employment contract with the worker and becomes the legal employer for payroll and tax purposes. You sign a service agreement with the EOR, pay it the employment costs plus a fee, and manage the person's work, goals and performance yourself.
EORs are popular for hiring a few people in a new country, testing a market before opening an entity, and converting contractors who face misclassification risk. They differ from a professional employer organization, which usually co employs staff in a country where you already have an entity.
Using an EOR does not remove every risk. Local rules on contracts, notice, benefits, permanent establishment and intellectual property still apply, and some countries limit long term use of employment arrangements like this. Get local advice; this is not legal advice.
Why it matters to recruiters
Recruiters increasingly fill roles across borders, and the first question from a hiring manager is often 'can we even employ this person there?'. Knowing how an EOR works lets you widen a search, talk credibly about start dates and costs, and flag when a company should consider its own entity instead.
An example from a recruiting desk
A US software company finds its best candidate for a support lead role in Portugal, where it has no entity. Instead of waiting months to set one up, it uses an EOR. The EOR issues a compliant local contract, handles payroll and benefits, and the candidate starts within weeks. The company reviews the setup again after hiring its fifth person there.
Tips that help
Confirm early whether the company can employ people in the candidate's country.
Ask the EOR for a full cost estimate, including employer taxes and mandatory benefits.
Check how the EOR handles intellectual property and confidentiality clauses.
Review whether to open your own entity once headcount in a country grows.
Mistakes to avoid
Treating a long term overseas employee as a contractor to avoid EOR costs.
Making an offer before checking local notice periods and mandatory benefits.
Frequently asked questions
What is the difference between an EOR and a PEO?
An EOR is the full legal employer, often in countries where you have no entity. A PEO usually co employs staff alongside your company in a country where you already operate.
Is an EOR the same as a staffing agency?
No. A staffing agency finds and supplies workers. An EOR employs a worker you have already chosen and handles the legal employment, payroll and compliance.
Can I use an EOR for contractors?
EORs employ people as employees. Many providers also offer contractor payment services, and some help convert contractors to employees where misclassification is a risk.
