What Is an Employer of Record (EOR)?
Definition, how EOR works, how it compares to staffing, PEO, and managed staffing, and when to use it.
An Employer of Record is a third-party company that legally employs workers on behalf of another business, handling payroll, benefits, taxes, and compliance in jurisdictions where the client does not have a legal entity. The client directs day-to-day work; the EOR is the official employer for legal and tax purposes.
In more detail
Employer of Record (EOR) services exist because it is legally and operationally difficult for one company to hire employees in a country where it has no registered business. To employ a single worker in India, for example, a US company would normally need to register an Indian subsidiary, obtain PAN and TAN numbers, set up Provident Fund and ESI accounts, and file ongoing Indian corporate and payroll tax returns. For one worker, that's prohibitively expensive. An EOR solves this by employing that worker itself, under its own locally-registered entity, and simply invoicing the US company for the total cost plus a service fee.
The EOR model has exploded alongside remote work. Providers like Deel, Remote, Oyster, Papaya Global, and Velocity Global serve 100+ countries each. For the client, it's simple: pick a worker, tell the EOR, and start paying one invoice. The EOR handles the local employment contract, tax withholding, social-insurance contributions, statutory benefits, and termination compliance.
What an EOR handles
- Local employment contract drafted to the worker's country law.
- Monthly payroll in local currency.
- Income tax withholding and remittance to local authorities.
- Statutory benefits (Provident Fund, Employee State Insurance in India; superannuation in Australia; social security in most EU countries).
- Private benefits where appropriate (health insurance top-ups).
- Leave tracking and compliance (paid leave, parental leave, sick leave).
- Termination compliance (notice periods, severance, documentation).
- Expense reimbursement and tax-compliant allowances.
What an EOR does NOT do
- Recruit or source candidates (you bring your own).
- Interview or vet candidates.
- Manage performance or provide coaching.
- Direct day-to-day work (that's the client).
- Handle IT, laptops, or security setup (usually).
EOR vs staffing agency vs PEO vs managed staffing
| Model | Legal employer | Recruits? | Manages people? | Best for |
|---|---|---|---|---|
| Staffing agency | Client | Yes | No | One-time placements in your country |
| PEO | Co-employer with client | No | Partial | US teams with existing entity |
| EOR | EOR | No | No | Workers you found, in countries you don't operate |
| Direct hire | Client | You | You | Your home country core roles |
| Managed remote staffing | Provider | Yes | Yes | Ongoing offshore roles end-to-end |
EOR pricing
EORs typically charge $599-$1,200 per employee per month as a service fee on top of salary and benefits. Some charge a percentage of payroll (8-15%). For a typical India-based worker earning $1,800/month gross, total EOR cost lands around $2,200-$2,800/month. For the same worker, a managed remote staffing provider like Teckas will often land lower because scale, recruiting fees, and people-ops are bundled rather than sold separately.
What this means for your business
If you already have a specific person you want to hire abroad and just need them legally employed, an EOR is the right tool. If you're still figuring out who to hire and want someone to handle sourcing, vetting, management, and replacements too, a managed remote staffing provider is a better fit. Both are legally sound; they solve different problems.
Related questions
Not sure whether you need an EOR or a managed staffing provider? Let us map it out with you.
Book a Free Call →Common follow-up questions
A staffing agency recruits a candidate and places them with your company, who then becomes the employer. An EOR is the legal employer itself. You typically bring your own candidate to an EOR; the EOR then puts that person on their payroll in the worker's country.
A PEO (Professional Employer Organization) is a co-employer, used by companies with their own US legal entity. A PEO shares employment responsibilities with the client. An EOR is the sole legal employer, used when the client has no legal entity in the worker's country.
EORs typically charge $599 to $1,200 per employee per month as a service fee on top of the worker's salary and benefits. Total monthly cost depends on the country and salary: for an India-based worker paid $1,800/month gross, total EOR cost is usually $2,200 to $2,800/month.
Use an EOR when you already have a candidate and simply need them legally employed. Use managed staffing when you also need help sourcing, vetting, and managing the worker. Managed staffing is EOR plus recruiting and people ops, typically for a comparable or lower total cost.
No. An EOR employs W-2-style employees in the worker's country. For independent contractors, you can work directly with the contractor, use a contractor-payment platform, or use an Agent of Record (AOR) service for compliance.