Employer of Record (EOR)

An Employer of Record lets you hire full-time employees in countries where you do not have a legal entity. The EOR owns the employment contract, runs payroll, files taxes, and handles local compliance. You manage the person. They handle the paperwork. If you are here, you probably know the basics. This page is organised by buying decision rather than by concept, so you can find what you need without reading content you have already moved past.

How does an Employer of Record work?

You sign a service agreement with the EOR provider. The provider's local entity employs the worker on your behalf under a compliant employment contract. You pay a monthly platform fee ($199 to $750 per employee per month, depending on provider) plus the employee's salary and statutory employer contributions (15-45% of salary depending on country). The EOR runs payroll, withholds and files taxes, enrols the employee in statutory benefits, and manages onboarding and offboarding under local labour law. You retain day-to-day management of the employee's work.

What the EOR is legally responsible for

The EOR is the legal employer of record. That means it signs the employment contract, holds the tax registration number that appears on the employee's payslip, and carries the statutory liability for accurate withholding, social charges, and termination notice. If the tax authority in Germany audits the payroll filings or a French labour inspector queries a contract clause, the provider answers. You stay out of the conversation as long as you have paid them on time. Read that liability transfer carefully on the master services agreement. A handful of providers cap their indemnification at 12 months of fees, which can leave you exposed if a misclassification claim surfaces years later. Ask for unlimited indemnification on compliance failures before you sign.

What stays with you as the client

You direct the work. You set the salary, approve time off, run performance conversations, and decide when to promote or part ways. The provider executes the mechanics, but the relationship with the employee is yours. That split causes the most friction during disciplinary action. The EOR will not fire someone you are unhappy with unless the documentation supports a lawful termination under local law, and "lawful" looks very different in Brazil than in Texas. Build your performance trail early. A clean paper record is the difference between a 30-day exit and a six-month severance negotiation.

How the money actually moves

You fund the EOR once per pay cycle. The provider pays the employee in local currency, remits employer and employee taxes to the relevant authority, transfers any statutory benefits contributions, and sends you a reconciliation showing the breakdown. Some providers invoice the platform fee separately. Most bundle it into the same monthly draw. FX is where the headline price quietly slips. A 1.5% spread on a $120,000 salary in euros is $1,800 a year, hidden in the exchange rate line. Ask for the spread in writing before you compare quotes. For a deeper explanation, see our guide: What is an Employer of Record?

When does EOR make sense for your business?

On the EOR-versus-entity decision, the 15-employee threshold is a useful rule of thumb, but the timeline pressure is often the deciding factor: EOR can start in days where an entity takes months. EOR is the right model when you need to employ people in a country where you have no entity and either the headcount is too small to justify setting one up (under roughly 15 employees) or you need to move faster than the 3-6 months an entity setup requires.

The headcount and speed thresholds we use

Under 15 employees in a single country, the EOR fee is almost always cheaper than running an entity once you fold in accountancy, registered-agent fees, and the internal time spent on filings. Above 15, the maths flips. Standalone payroll through your own entity runs about $29 per employee per month. EOR runs $400 to $700. Finance will notice that gap in the next quarterly review. Speed cuts the other way. Even at 30 employees, EOR wins if you need to start hiring next month. A German GmbH takes 8 to 12 weeks to register a tax number. An Indian private limited company can take six months once foreign-direct-investment approvals land. Plan the transition early, not after you are already overpaying.

Cases where EOR is the wrong call

EOR is a poor fit when you need to issue stock options under a tax-advantaged scheme, when you have regulated work (financial services, legal practice, certain healthcare roles) that requires the entity itself to be licensed, or when you are buying an existing team via an acquisition and need to transfer them under TUPE-style protections. In each case the legal architecture assumes the employer is you, not a third-party provider, and an EOR cannot bridge that gap. It is also the wrong call when one country is becoming your operational anchor. If your second director is moving to Lisbon and the next five hires will follow them, set up the entity now. You will pay for both models during the overlap, but you will not have to restructure in 18 months.

How to frame EOR for finance and procurement

If you are presenting EOR to your CFO or procurement team for the first time, lead with speed-to-hire and compliance risk avoided, not the platform fee in isolation. The real comparison is EOR cost versus the cost of delaying a hire by 3-6 months while you set up an entity, plus the risk-weighted cost of misclassifying that hire as a contractor in the meantime. A two-tab spreadsheet usually settles the conversation. Tab one: entity setup cost, monthly payroll cost, accountancy retainer, internal hours. Tab two: EOR fee, statutory contributions, deposit interest forgone. Show finance the breakeven date in months, not in headcount. They are used to thinking in time.

What are the alternatives to EOR?

We find contractor engagement is the most tempting alternative to EOR but also the highest-risk one: misclassification penalties in Germany, Netherlands, and France routinely exceed the cumulative EOR fee that the business was trying to avoid.

Own entity plus local payroll

Full control, no per-employee platform fee. Takes 3-6 months and $50,000 to $150,000 to set up, plus ongoing accountancy, registered-agent, and director-service fees. Best when you have 15 or more employees in one country, plan to stay long-term, or need to issue local stock options, hold real estate, or contract with local government clients. The hidden cost is internal. Someone on your team will spend 5 to 10 hours a month managing filings, board minutes, and statutory deadlines per country. By country five, that is a full-time hire. Plan for it.

Contractor engagement

Faster and cheaper, but misclassification risk is real. Penalties are severe in Germany, Netherlands, Spain, and France. In Germany, a successful misclassification claim can trigger six years of back-dated social contributions plus penalties, easily six figures per worker. The IRS in the US, HMRC in the UK, and URSSAF in France apply similar logic. Use contractors only when the relationship genuinely looks like a contract: defined deliverables, multiple clients, the worker controls their own hours and tools. The moment someone has a manager, a 9 to 5 schedule, and a company laptop, they are an employee everywhere that matters.

PEO and staffing agency models

A PEO (Professional Employer Organisation) is a co-employment model that requires your own entity in the country. Common in the US, where it covers benefits and payroll administration. Rare internationally and not a substitute for EOR when you have no entity. A staffing agency provides temporary or project-based workers under the agency's payroll. Compliance depth is shallower than EOR, the agency typically controls the employee relationship, and bill rates run higher per hour. Useful for genuine short-term coverage, not for building a permanent team.

Which EOR providers should you shortlist?

We assessed 8 providers across pricing, entity model, product scope, support, and financial stability. Rather than ranking them here, we built a full decision framework on our best EOR providers comparison. Start there if you are ready to evaluate.

How to match a provider to your priority

If you already know your priority, these links will get you to the right review faster. Broadest product scope (EOR, payroll, contractors, HR, IT on one platform): Deel review. Owned-entity compliance model with no deposit required: Remote review. Lower per-employee cost for mid-size teams: Multiplier review. Widest country coverage (185+) with in-house immigration: Pebl review. US-first HR/IT/finance stack with EOR bolt-on (pricing is quote-based): Rippling review. Strong employee self-service UX: Oyster review. Finance-grade reporting and payments infrastructure: Papaya Global review. US domestic payroll plus light international EOR (12 countries, from $599 per month): Gusto review.

Owned-entity versus partner-network providers

The single biggest compliance variable is whether the provider owns its local entity in your target country or rents one from a third-party in-country partner. Owned entities give the provider direct control over the contract, the payroll engine, and the employee relationship. Partner networks add a hop. They can still be compliant, but every change request, contract amendment, and termination has to travel through an intermediary, which adds days to every cycle and obscures who is actually liable when something goes wrong. Ask each provider for a country-by-country list of owned versus partner status. Most will share it under NDA. The ones that refuse are usually heavier on partners than they want to admit.

Country coverage and depth, not just count

Provider marketing pages love the country count. The number that matters is depth in the countries you actually need. A provider with 150 countries and a thin partner in Vietnam is worse than one with 60 countries and an owned entity there. For your top three target markets, ask for the contract template, the typical onboarding timeline, the local benefits package, and whether the provider has handled a termination in that country in the last 12 months. The answers will sort the shortlist faster than any feature matrix.

What does EOR typically cost?

Platform fees range from $199 per month (Remofirst) to $750 or more per month (Papaya Global for complex markets). The three largest providers, Deel, Remote, and Oyster, all charge $599 per month as the standard rate.

What the platform fee actually covers

The platform fee is roughly 6% of your total monthly cost per employee. Employer statutory contributions (15-45% of salary), FX spreads (0.5-3%), and deposits (0 to 2 months of salary depending on provider) make up the rest. The fee buys the contract, the payroll runs, statutory filings, benefits enrolment, and platform access. It does not cover one-off work such as visa sponsorship, equity administration, or country-specific allowances. Those bill separately, often at rates that surprise you on the second invoice. Ask for the full add-on list before signing. Budget for the total, not the headline.

Deposits, FX, and the hidden line items

Several providers hold a deposit equivalent to one or two months of payroll per employee as security against unfunded pay runs. Deel's standard deposit on a 10-person team locks up $80,000 to $120,000, money that does not earn for you while it sits on their balance sheet. Remote and Multiplier do not require deposits, which can be the deciding factor on a tight cash plan. FX spreads sit on every cross-currency transfer. A 1.5% spread on a $1.2 million annual payroll is $18,000 a year. Ask the provider to quote the mid-market reference rate plus their spread, in writing. If they decline, assume the spread is at the higher end.

Pricing pages by provider

For current rates, see the per-provider pricing pages. Each one shows the standard plan, the add-ons, the deposit terms, and how the FX spread is disclosed. Deel pricing · Remote pricing · Multiplier pricing · Papaya Global pricing

Frequently asked questions