Employer of Record (EOR)
A third-party service that legally employs international workers on your behalf, handling payroll, tax filing, contracts, and legal compliance.
What is Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party service that legally employs international workers on your behalf. You manage the worker's day-to-day tasks, while the EOR handles payroll, tax filing, contracts, and legal compliance in the worker's country.
How it works
- An EOR acts as the legal employer in a foreign country and provides:
- Locally compliant contracts
- Payroll processing and tax contributions
- Social security and employee benefits administration
- Onboarding and offboarding procedures - often faster than opening a local entity
- By using an EOR, companies avoid the complexity and cost of setting up foreign subsidiaries.
Why it matters
- Using an EOR gives companies the ability to:
- Hire full-time global talent in days
- Avoid permanent establishment risk
- Ensure compliance with local labor laws
- Expand into new markets without legal bottlenecks
- This is especially useful for startups and NGOs hiring across LATAM, Africa, or Southeast Asia - where entity setup is costly or slow.
Example
A U.S.-based startup wants to hire a full-time engineer in Argentina. Instead of opening a local entity, they partner with an EOR that: Drafts a compliant employment contract under Argentine law. Handles tax registration and monthly filings. Pays the engineer in USD (via wallet) or Argentine pesos. Ensures full cross-border compliance - no misclassification risk.
