Employer of Record FAQs
The questions companies actually ask before picking an EOR — how the arrangement works, what it costs per employee, who carries the legal risk, and how to compare providers without taking their word for it.
EOR basics
What an Employer of Record does, and when you need one.
What is an Employer of Record (EOR)?
An Employer of Record is a company that legally employs workers on your behalf in countries where you don't have a business entity. They take care of payroll, taxes, statutory benefits and local compliance. You still manage the employee's work directly, but the EOR carries the legal and administrative side of employment. Our complete guide to EOR services walks through how the arrangement works end to end.
What's the difference between an EOR and a PEO?
The main difference is that an EOR can hire employees for you in countries where you have no legal entity. A PEO requires you to already have a local business set up, because it co-employs alongside you. If you're expanding internationally without opening offices, you need an EOR. PEOs work better for outsourcing HR where you already operate. We cover the distinction in detail in EOR vs PEO.
When should I use an EOR instead of setting up an entity?
An EOR usually makes sense below roughly five to ten employees in a country, or when you want to start hiring before committing to a market. Setting up a legal entity typically takes three to six months and carries ongoing accounting, filing and compliance costs. Once headcount grows past that point, running your own entity often becomes cheaper per employee, and several providers will help you transition. EOR vs setting up a foreign subsidiary compares the two routes directly.
Can an EOR hire contractors as well as employees?
Most can, though the two are different products. Contractor management handles onboarding, compliant contracts and cross-border payments, but the contractor is not employed by anyone. EOR means the provider becomes the legal employer, with all the obligations that carries. Providers usually price these separately, and misclassifying an employee as a contractor is one of the most common compliance failures in global hiring.
Cost and pricing
What EOR services cost and how providers structure their fees.
How much does an EOR cost?
Most providers charge between $299 and $699 per employee per month, though regional specialists can be considerably cheaper and some price as a percentage of salary instead, typically 10-20%. The country matters as much as the provider. See employer of record cost for what makes up the total, or run your own numbers in the cost calculator.
What costs are on top of the EOR fee?
The provider's fee is only part of the total. You also pay the employee's gross salary plus statutory employer contributions, which vary enormously by country: roughly 7.65% in the United States, but over 30% in France and Italy. Watch for extras too, including deposits held against severance, one-off onboarding fees, currency conversion spreads and offboarding charges.
Which pricing model is better, flat fee or percentage?
A flat monthly fee is predictable and works out cheaper for senior, well-paid roles. Percentage pricing is usually cheaper for junior or lower-salary roles, but the cost scales with every raise you give. Percentage models often carry a monthly minimum and maximum, so check where those thresholds sit relative to the salaries you plan to pay.
Choosing a provider
How to evaluate providers and compare them fairly.
How do I choose the right EOR provider?
Start with whether they operate in the countries you need, then look at the pricing model, whether they own their local entities, and how quickly support responds. Read reviews from other companies and test the platform if you can. Our comparison tool puts providers side by side, and you can browse the full list of EOR providers by country.
Does the provider own its entities, or use partners?
This matters more than most buyers realise. A provider with its own legal entity in a country controls the employment relationship, the compliance work and the support quality directly. A partner-based model routes through a third party, which can mean slower responses, less consistent contracts and an extra margin in the price. Ask which countries are owned entities and which are partner-served — good providers answer this openly.
How long does onboarding take?
For a country where the provider holds its own entity, one to five business days is typical once the employee has submitted their documents. Partner-served countries and those with heavier registration requirements can take two to three weeks. Ask for the specific country you are hiring in rather than the headline number on the website.
Risk, control and compliance
Who is responsible for what, and where the real exposure sits.
Is using an Employer of Record legal?
Yes. Employing staff through a third party that holds the local entity is an established and lawful arrangement in the countries where reputable providers operate. What varies is the detail: a few jurisdictions regulate labour leasing or require the employing entity to hold a licence, and some restrict how long an arrangement can run before the worker must be employed directly. A provider operating in a country should be able to explain the basis on which it employs there, and whether it owns that entity or works through a partner.
Do I still manage the employee day to day?
Yes. You decide what they work on, set their objectives, run their reviews and manage their performance exactly as you would with any direct hire. The EOR is the legal employer for contractual and statutory purposes, not the manager. That said, formal steps such as disciplinary process, changes to contractual terms and termination have to go through the provider, because those are acts of the legal employer.
What happens if I need to end someone's employment?
The provider handles it, and local rules apply rather than the norms of your home country. Notice periods, grounds for dismissal, consultation requirements and severance are all set by local law, and in many countries at-will termination simply does not exist. Give the provider as much notice as you can: a termination that is straightforward in one country can take weeks and carry statutory payments in another.
What are the risks of using an EOR?
The main ones are concentration and visibility. You depend on the provider staying compliant, solvent and responsive, and you see the employment relationship through their platform rather than directly. Partner-served countries add a party between you and the employee. Check who holds accrued liabilities such as severance and gratuity, what happens to your employees if you leave the provider, and how quickly you could move. Top compliance mistakes when hiring internationally covers the failures that come up most often.
Can I move employees from an EOR to my own entity later?
Yes, and it is a common path once headcount in a country justifies incorporating. Plan it properly though. In the UK, the EU and several other jurisdictions the move can amount to a transfer of undertaking, meaning employees carry their existing terms and accrued service across and cannot simply be re-hired on new contracts. See TUPE for what that involves, and ask a prospective provider how they handle the transition before you sign.
How is an EOR different from a staffing agency?
A staffing agency finds and supplies workers, usually for a temporary assignment, and the relationship generally ends when the assignment does. An EOR does not source anyone: you find the person yourself, and the provider employs them long term on your behalf. Both are the legal employer of the worker, which is why they get confused, but the purpose differs. EOR vs staffing agency sets out where each fits.
About this site
How EOR Network works and where our data comes from.
Is EOR Network free to use?
Yes, completely free. You can browse all providers, read reviews, use our comparison tools, and access the cost calculator without paying anything. We make money through partnerships with some providers, but that doesn't affect how we rank or recommend them.
How often is the provider information updated?
We update provider information regularly. Providers can update their own profiles anytime, and our team verifies details quarterly. Reviews are added in real-time after moderation, so you're always seeing current feedback from actual users.
How are providers ranked?
Rankings combine verified user reviews with our own assessment of pricing transparency, country coverage, platform quality and support responsiveness. Commercial relationships never change a ranking position. Our methodology page sets out the criteria and weightings in full.
Go deeper
Longer guides on the decisions these questions usually lead to.
Complete guide to EOR services
How the arrangement works end to end
EOR vs PEO
Which model fits your situation
EOR vs your own subsidiary
When incorporating starts to pay off
EOR for small businesses
Whether it is worth the cost at your size
Five compliance mistakes
The failures that come up most often
Global payroll compliance
What the provider is actually doing
Hiring somewhere specific?
Still deciding?
Put providers side by side on price, coverage and features, or estimate what your specific hire would cost.