What Is an Employer of Record (EOR)? How It Works, Costs and Risks (2026)

• The EOR is the legal employer; you choose the person and direct their work.
• Published fees run from US$199 to US$699 per employee per month among the 14 providers we track that publish one, on top of salary and employer costs. See the EOR pricing tracker.
• Whether and how you can use one depends on the country: several regulate EOR arrangements as staff leasing, with licences, time limits or bans, such as Germany's 18-month limit. See EOR labour hire rules by country.
• It's an alternative to setting up your own company, usually for the first hires in a country. See EOR vs local entity.

A provider that legally employs a worker for you in a country where you don't have your own company. The EOR's local entity (or a partner's) signs the employment contract, so the person gets a local employment contract with the statutory rights of that country, without you registering a company, opening a bank account or setting up payroll there.

You choose the person and agree the role and salary. The EOR issues the employment contract, registers the employee with the authorities, runs payroll each month, pays the employer's social contributions and withholds the employee's taxes, then invoices you for salary, employer costs and its fee. You manage the work.

Contracts, payroll, tax withholding and filings, social security and pension contributions, statutory benefits and leave, and compliance with local employment law through to termination. Deel's pricing page, for example, says its EOR fee covers onboarding and local compliance, payroll processing and tax filings, benefits administration and ongoing HR and legal support.

The EOR. Its entity is named on the employment contract and carries the employer's legal obligations under local law. That's the key difference from a PEO, where your own company remains an employer.

Legally, of the EOR. In practice they work for your business, as part of your team. Because you direct their work while the EOR employs them, some countries treat the arrangement as staff leasing and apply their agency-work rules: see EOR labour hire rules by country.

You do: you set their tasks, hours within the contract and local law, and goals. The EOR handles the employer side: contract, pay, contributions, leave and compliance.

Three parts: the employee's salary, the mandatory employer costs in that country, and the EOR's fee. Published fees run from US$199 to US$699 per employee per month among the providers we track; employer costs range from a few percent of salary to more than half. See EOR pricing by country and the Employer Cost Index.

The provider's fee is published as a monthly price per employee: from US$199 (the lowest we track) to US$699. Some providers price by country or within a range, and some quote only. The cheapest EOR providers guide ranks them, with what each includes.

Check each provider's list: Deel's, for example, covers onboarding and local compliance, payroll processing and tax filings, benefits administration and ongoing HR and legal support. Salary, employer contributions and optional benefits are billed on top. See EOR pricing explained.

Ask about deposits, currency conversion margins, benefits, onboarding and offboarding fees, and the cost of moving the employee to your own entity later. Deposit terms differ: Playroll takes a fully refundable deposit of one month's salary, while Remote says it has no standard deposit but may require a refundable reserve in certain circumstances. See EOR pricing explained.

An entity has set-up and running costs (registration, accounting, filings, a local director in some countries) but no per-employee fee, so it becomes cheaper as the team grows. Our EOR vs entity calculator and EOR vs local entity guide work out the break-even point.

A PEO co-employs your staff with your own company, which must already have an entity; it's a US arrangement under US tax law. An EOR is the sole legal employer, so you need no entity. See EOR vs PEO and PEO outside the US.

If you have no company in the country, an EOR. If you have a US company and want to outsource HR administration for US staff, a PEO. Elsewhere, with your own entity, use a payroll provider.

For the first few hires in a country, to test a market, or to hire quickly. Set up an entity when the team grows, you sell locally, or local rules limit EOR arrangements (such as Germany's 18-month limit). See EOR vs local entity and foreign subsidiary vs EOR.

A staffing or temporary work agency employs workers in order to assign them to your business temporarily; an EOR employs someone you've chosen, for as long as you need, subject to local limits. See PEO vs EOR vs staffing agency.

A contractor suits genuinely independent work; someone who works set hours under your direction as part of your team can be treated as an employee under the tests in the countries we cover, whatever the contract says. See EOR vs contractor, contractor vs employee tests by country and Contractor of Record.

It can. Having people work for you in another country can, depending on what they do, give your company a taxable presence there (a permanent establishment); where there's a tax treaty, it sets out when that happens. This applies whether or not you use an EOR, so take advice before staff abroad negotiate or sign contracts for you. See US company hiring abroad.

It depends on the country and on how the provider operates. Several countries regulate it: Germany treats an EOR where you direct the work as employee leasing, with a licence and an 18-month limit; Mexico allows supplying personnel only in narrow cases; France and Belgium restrict lending staff outside licensed agencies. See EOR labour hire rules by country.

The EOR, as the legal employer, carries the employer's obligations. But some laws reach the client too: in Mexico the client can be jointly liable if the provider is non-compliant, and in Spain an illegal transfer of workers brings joint liability. Check the contract's indemnities and the rules in our labour hire guide.

Yes, and only the EOR can, because it is the employer. It gives notice and pays any severance under local law, then bills you. Agree the process and how notice and severance are billed before you hire. See notice periods by country and severance pay by country.

Make sure your company does, in writing. Because the EOR is the employer, the employment contract and your agreement with the EOR should assign the employee's work and IP to your company. Several providers list IP protection as part of the service (RemoFirst, for example, and Borderless AI's pricing page lists "Global Intellectual Property (IP) protection"); ask how the assignment is worded for your country.

Restricted, yes. Among the countries we cover, Germany, Japan and South Korea set licences and time limits; Mexico, France, Belgium, Spain, Norway and the Philippines ban or narrowly limit supplying workers; Switzerland doesn't permit leasing workers from abroad. See EOR labour hire rules by country.

Providers state days to weeks: Safeguard Global says onboarding can start in as little as two days after the candidate accepts, with a week or two from offer to start standard; Atlas HXM says as little as two weeks. Notice the candidate owes their current employer, background checks and visas can add time. Each provider page shows what that provider says.

It depends on the country and the provider. The employer applies for the permit and the EOR is the employer, but some permit systems limit sponsorship for workers placed with a client, and not every provider sponsors in every country. See EOR visa sponsorship by country.

The EOR runs payroll in the local currency, withholds the employee's income tax and social contributions, pays the employer contributions and files the returns, as the employer must under local law. You pay the EOR the gross salary plus employer costs and its fee.

It pays every mandatory contribution and provides statutory benefits such as paid leave and sick pay; extra benefits such as private health insurance can be priced on top: RemoFirst, for example, lists health insurance from US$55 per person per month. See employer social security by country and employer pension contributions by country.

Your company, not the EOR, grants equity, because the options are in your company. The employment is with the EOR, so ask how it will report any taxable benefit through payroll in that country, and get local tax and securities advice before you grant; we don't yet cover equity rules country by country.

The employee's employer is then insolvent, so the local rules for employer insolvency apply. Some countries fund protection for unpaid wages through employer contributions: in Germany, employers pay an insolvency levy of 0.15% that funds insolvency pay for employees of insolvent employers, and Poland's Guaranteed Employee Benefits Fund (FGŚP) protects pay if the employer becomes insolvent. Before you sign, check whether your deposit is refundable and how quickly you could move the employee to another provider or your own entity.

Set up the entity, register it as an employer, then end the EOR employment and re-hire the person on a new contract, ideally recognising their service so they don't lose rights. Ask the EOR upfront what it charges to transfer an employee, and how it handles notice and accrued entitlements. Some providers offer entity setup themselves, such as Pebl's entity advisory and Safeguard Global.

Both models exist. Remote says it employs through entities it owns; Atlas HXM says it owns and operates its entities; Rivermate says it uses its own entities in some countries and local partners in others; RemoFirst works through vetted in-country partners. Each country guide lists what each provider says about its model there; ask for it in writing.