Employer of Record (EOR)

What is an 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 an EOR 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 EORs Matter

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 Use Case

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

Related Glossary Terms

• Global Payroll

• Cross-Border Compliance

• USD Wallet

• Stablecoin Payroll

Explore More

See how SigmaRemote enables global hiring with EOR support →
Compare EORs vs direct contractor models →
Explore our Latin America Hiring Guide →