An Employer of Record legally employs your staff in a country where you have no entity, handling contracts, payroll, tax, benefits and compliance, while you direct the work. Someone can start in days rather than the months an incorporation takes, and you can leave with a notice period rather than a liquidation.
What it does not do is trade for you. No local invoicing, no local licences, no signing contracts that require a legal entity. If you need any of those, you incorporate regardless. Last updated September 2026.
| Employer of Record | Your own entity | |
|---|---|---|
| Time to first hire | Days to weeks | Months, and 2+ years in some countries |
| Setup cost | None | $60,000 to $120,000 |
| Ongoing cost | Per-employee fee | Legal, accounting, filings, premises |
| Compliance liability | Sits with the EOR | Sits with you |
| Can you invoice locally? | No | Yes |
| Cost of leaving | A notice period | Months and legal fees |
A third party that becomes the legal employer of your people in a country where you have no presence. On paper they work for the EOR. In practice they work for you, on your projects, managed by your managers.
The EOR holds the employment contract, runs payroll under its own tax registration, enrols people in statutory benefits, and carries responsibility for local employment compliance.
You keep everything that matters day to day: what the person works on, how they are managed, whether they are performing.
Drafted to local standards rather than adapted from your home-country template. This is also the primary defence against misclassification, since the contract has to reflect a genuine employment relationship under local law.
People paid in local currency from local accounts, with correct deductions and filings in each jurisdiction. This matters more than it sounds: paying from a head office account means the amount varies month to month with the exchange rate, and several countries require payment into a domestic account.
Enrolment in mandatory schemes, which differ enormously by country, plus any additional cover you choose to offer. See the benefits worth offering.
Employment law changes constantly. The EOR applies those changes rather than leaving you to notice them. See the five compliance risks of hiring abroad.
Right-to-work checks where required, and exits handled to local notice and severance rules.
The clearest case. Put two people in a country, find out whether the market responds, then scale or leave. Incorporating first commits you before you have the information.
The candidate is in a country where you have no entity. Without an EOR that is a hire you simply cannot make.
An existing employee moving to a country where you have no presence would otherwise have to resign.
A visa refused, or a role that no longer meets sponsorship thresholds. Rather than losing the person, employ them where they already live. See global immigration for employers.
Where a long contractor engagement has drifted into something that looks like employment. See how contractor conversion works.
Transferring staff during a transaction where the receiving entity does not yet exist.
Either a flat fee per employee per month or a percentage of salary. Ask which, because the two behave very differently as salaries rise.
The comparison that matters is against your own entity. Incorporating typically runs $60,000 to $120,000 before you hire anyone, with legal, accounting and filing costs every year after.
Somewhere above roughly 15 employees in one country, fixed entity overheads usually become cheaper than per-employee fees. Below that the EOR is almost always cheaper, and it is always faster. Full numbers are in EOR vs owned entity.
Worth being direct, because this is routinely oversold.
It cannot trade for you. No local invoicing, licences, or contracts requiring a legal entity.
It does not remove permanent establishment risk entirely. If your people conclude contracts on your behalf in a country, you may create a taxable presence there regardless of who employs them.
It does not recruit, manage or develop your people. Culture, performance and progression stay with you.
It does not cover corporate tax, commercial contracts or product compliance. It covers employment.
The question most buyers miss. Providers either own a legal entity in a country or subcontract to a local partner. Both work, but they differ on accountability and speed when something goes wrong. Ask country by country, and get the answer in writing. See EOR operating models.
A headline country count tells you little. Ask about the difficult market on your list, not the four straightforward ones.
Fixed fee or percentage of salary, what termination costs, and what sits outside the fee.
Employer social contributions and mandatory benefits vary widely and are additional to salary. A provider who cannot give you accurate total cost per country is not one to plan headcount with. Our employment cost calculator covers it.
An EOR holds salaries, bank details, addresses and identity documents. Review the security posture rather than accepting a certification badge.
Response times, escalation, and who carries liability for a compliance failure. Establish this in the contract rather than during an incident.
One question decides it: do you need to trade locally?
If you need to invoice customers in-country, hold local licences or sign contracts requiring a local entity, incorporate. If you only need people there, you do not.
Many companies sequence both: an EOR to enter and prove the market, an entity once the commitment is justified. Ask any provider how they handle that transfer before you sign.
We employ people on your behalf across 214 countries and territories, with contracts, payroll, benefits and compliance handled in each one.
Country requirements are in CountryPedia.
Tell us which countries are on your list and we will tell you how we operate in each, what the timeline looks like, and whether an EOR is actually the right structure for what you are doing.
A third party that becomes the legal employer of your staff in a country where you have no entity. It holds the contract, runs payroll, files taxes and carries employment compliance liability, while you direct the work.
A staffing agency finds and supplies workers, usually temporarily. An EOR employs people you have already chosen, on a permanent basis, in a country where you cannot employ them yourself. An EOR does not recruit for you.
Typically days to a few weeks, depending on the country and how fast right-to-work checks clear. Compare that with months for an incorporation, and over two years in some markets.
Below roughly 15 employees in a country, usually yes, because there is no setup cost and no fixed overhead. Above that the entity often becomes cheaper, though it depends on the market and salary levels.
The EOR. It holds the contract, runs payroll, files taxes and carries compliance liability. You retain responsibility for how you manage the person day to day.
Yes, and many companies plan for exactly that. Use an EOR to enter and prove a market, then incorporate and transfer the team. Raise it with your provider early so the transfer is clean.
Trade on your behalf. No local invoicing, no local licences, no contracts requiring a legal entity. It also does not recruit, manage or develop your people, and it does not cover your corporate tax position.