Employer of Record (EOR)

An Employer of Record is the legal employer in the eyes of the local authorities. It issues a compliant employment contract in the local language and format, runs payroll and withholds income tax and social contributions, administers statutory benefits such as pension, health insurance, leave and severance accrual, files the local returns, and handles onboarding, terminations and notice periods under local law. You retain full operational control: what the person works on, who they report to, and how their performance is managed.

The commercial structure is simple. You sign one service agreement with the EOR, the EOR signs the employment contract with the worker, and you receive one invoice covering salary, employer statutory costs and the EOR's fee. Timelines are typically two to seven business days to onboard, depending on country registrations and document checks — against three to nine months to incorporate, register for payroll tax, open banking and build local filing capability yourself.

A PEO is a co-employment model: you must already have a legal entity in the country, and the PEO shares employer responsibilities with you. An EOR needs no entity from you because it is the employer outright. A staffing agency supplies its own workers for temporary assignments and typically owns the sourcing relationship; an EOR employs the person you selected. The distinction matters because only the EOR route lets you hire a specific person in a country where you have no presence.

Neither structure fixes classification. If the work is genuinely independent and project-scoped, a contractor agreement remains appropriate. An EOR is the answer when the role is a full-time job with fixed hours, direction and exclusivity — exactly the pattern that makes a contractor arrangement unsafe.

EOR pricing is usually a flat monthly fee per employee or a percentage of payroll, on top of gross salary and employer statutory costs, which themselves range from roughly 10–15% in the United States to well over 30% in France and Italy. The fully loaded number — not the salary — is the figure to budget and to compare between markets. Most companies move to their own entity somewhere between 15 and 30 employees in a single country, at which point the fixed cost of incorporation and local compliance staff becomes cheaper than the per-head fee.