An Employer of Record (EOR) enables companies to hire talent worldwide without establishing a legal entity in every country where they operate. EORs assume legal employment responsibilities such as payroll, taxation, and compliance. This allows foreign companies to concentrate on their core business and workforce management rather than worrying about legalities.
As the remote work and international expansion trend continues to rise, EORs are becoming essential. PwC’s Global Compliance Study 2025 indicates that 85% of respondents feel compliance requirements have become more complex in the last three years, making EORs a practical solution.
If you’re planning to expand your business beyond borders, we can make it easy for you to hire, pay, and comply with the law around the world.
Key Functions of an Employer of Record
An Employer of Record (EOR) ensures businesses remain legally compliant while managing essential employment functions. By handling payroll, benefits, and tax obligations, an EOR simplifies international hiring and reduces administrative burdens.
The key functions of an EOR are explained below.
1. Legal Employment and Compliance Management
- Ensures compliance with local labor laws: EORs draft legally binding employment contracts that align with national regulations, ensuring businesses avoid legal pitfalls.
- Prevents employee misclassification issues: Many companies risk misclassifying contractors as employees, which can result in heavy fines. EORs ensure proper classification.
Tech startups and IT firms looking to expand into global markets often set up remote teams for easier expansion. However, they struggle with legal compliance. EORs ensure they meet labor laws without setting up costly subsidiaries. They handle complex legal requirements such as worker classification, social security contributions, and termination policies, preventing costly fines and disputes.
By keeping businesses up to date with evolving labor regulations, EORs provide a safeguard against legal pitfalls, allowing companies to operate smoothly in multiple jurisdictions.
2. Payroll and Benefits Administration
Managing payroll across different countries can be complicated, with varying tax structures, banking regulations, and employee benefits expectations.
For example, in the Philippines, social security contributions include SSS, PhilHealth, and Pag-IBIG, while in Vietnam, they are divided into Social Insurance, Health Insurance, and Unemployment Insurance, each with different contribution rates and requirements.
In such a situation reliable EORs in these countries such as RecruitGo, streamline payroll processing, ensuring timely and accurate salary payments while managing statutory benefits like health insurance, pensions, and paid leave.
Startups looking to scale quickly may lack the internal HR team needed to handle international payroll and benefits. EORs provide a turnkey solution, allowing them to expand efficiently while staying compliant with global regulations.
3. Hiring and Onboarding Global Talent
Hiring internationally involves navigating different recruitment processes, documentation requirements, and background checks. EORs handle these complexities, ensuring companies can onboard employees quickly and efficiently.
EORs also provide ongoing HR support, assisting with probation periods, contract renewals, and performance management. This ensures a smooth transition for both employers and employees, allowing businesses to focus on productivity while EORs handle administrative and legal responsibilities.
The Financial and Strategic Benefits of Using an EOR
Cost-Efficient Global Expansion
Expanding into international markets comes with high costs, including legal registration, accounting setup, and ongoing administrative maintenance. The support of an EOR eliminates these expenses by offering a fully compliant employment solution without requiring businesses to establish a legal entity.
Companies can allocate resources more strategically by outsourcing payroll, tax management, and employee benefits, ensuring smooth operations in new regions. The flexibility of an EOR allows businesses to test new markets, scale their workforce efficiently, and avoid long-term financial commitments.
Our EOR services provide a cost-effective pathway for global expansion, reducing complexity and enabling businesses to grow with confidence.
Improved Employee Experience and Retention
Employee satisfaction and retention improve when payroll, benefits, and compliance are handled efficiently. An EOR’s structured approach ensures that salaries are processed on time, benefits align with local regulations, and job protections remain in place.
Consistent and transparent HR support helps employees feel secure in their roles, reducing turnover and fostering a stable workforce. By managing these critical employment functions, EORs create a seamless experience for both businesses and employees, eliminating administrative burdens.
Our EOR solutions provide a smooth employment experience with top-tier benefits and HR support, ensuring compliance and employee well-being.
Enabling Remote Work & Digital Nomadism
The rise of remote work has made hiring across borders more common, but companies still face legal and tax challenges when employing international remote workers. EORs provide a framework for legally employing remote talent without violating tax or labor laws.
By having an Employer of Record (EOR) manage compliance, businesses can maintain productivity while ensuring a safe and organized work environment for remote teams.
If you’re looking to hire remote employees legally, our EOR services make international employment seamless and compliant.
Final Thoughts
EORs have become an important tool for businesses looking to expand internationally, hire remote teams, and ensure compliance with global labor laws.
Companies like RecruitGo, Deel, RemoFirst, and several others are helping businesses scale globally with seamless EOR solutions.
By handling employment contracts, payroll, taxation, and benefits, EORs allow companies to focus on growth without legal complications.
Frequently Asked Questions About EOR
How Much Does an Employer of Record Cost?
EOR costs vary by country, employee count, and service level. Pricing is typically a fixed monthly fee per employee or a percentage of the salary, covering payroll, compliance, and HR management.
Is an Employer of Record Legal in Every Country?
EOR services are legal in most countries, but regulations vary. Some regions have restrictions on third-party employment, so compliance checks are essential before hiring.
Can an EOR Fire an Employee?
EORs manage terminations in line with local laws, but the decision comes from the client company. They ensure proper legal procedures, notice periods, and severance compliance.
Does an EOR Handle Employee Disputes?
Yes, EORs assist with disputes by ensuring labor law compliance and managing legal processes. However, companies handle daily employee relations and performance issues.
What Happens if a Business Ends Its Contract with an EOR?
Companies must transfer employees to a local entity or terminate contracts per labor laws. EORs facilitate the transition to minimize risks and disruptions.
How Long Can a Company Use an EOR Before Setting Up a Local Entity?
There’s no set limit. Businesses can use EORs indefinitely or transition to a local entity when financially or operationally viable. Many continue with EORs long-term.
