What is an Employer of Record (EOR)?

Back to Glossary

Employer of Record (EOR)

An Employer of Record (EOR) is a business that employs an individual on behalf of another company. This can be within the same country or, as is becoming increasingly common, in another country with different employment laws.

Example of an EOR

An EOR based in Spain, for example, can hire employees locally on behalf of a company based in the United States. The employees would work locally in Spain for the company in the United States, with the legal responsibilities of employment lying with the EOR in Spain.

How does an EOR differ from a PEO?

With an EOR employees are not ‘co-employed’ like they are with a Professional Employer Organization (PEO). An EOR is the sole legal employer, hiring an employee to perform services for a different company. Find out more about the difference in our guide to employment models.

Is it easier to open your own entity in another country or use an EOR?

This depends entirely on the circumstances of your company. Companies that open their own legal entity in a different country tend to be planning to hire hundreds or even thousands of employees. This is due to the fact that opening a legal entity means the company is responsible for their entire presence in the country, and will have to hire legal and accounting professionals to comply with employment laws, run payroll, administer benefits, and carry out many other tasks specific to that country’s rules and regulations.

Want to see the Oyster platform in action?
Book a demo and we promise to show you all the features that'll make your People Ops team go "woah."

If your expansion plans in a country are uncertain or projected to be limited in scope, it can be far easier, more cost effective, and less complicated to use the services of an EOR.

How do you choose the right EOR?

Here are a few things you should consider when choosing an EOR:

1. Are they present in the countries you wish to hire in?

If you have prospective team members in one or two countries you should check in each location that there are EORs present that you feel happy to work with. If your prospective team members are located in several countries you would either need to find multiple EORs, which would cause a lot of administrative work, or you can look to the services of a global employment platform like Oyster. 

At Oyster we own or partner with local entities in over 180 countries worldwide to save you the headache of finding multiple individual services. We also handle high value employment functions, like benefits, onboarding, and offboarding, all through our easy to use global employment platform.

2. What Support being offered?

As cross-border employment can be complicated, you’ll want to partner with an EOR that provides adequate support for your needs. It’s a good idea to chat in-depth with a sales representative before you commit and to find out how responsive you can expect the support team to be. 

You should also check out the support materials the EOR has on their website and whether it will be easy to self-serve. Why not kick off your search by speaking to a member of the team at Oyster to explore our solution further?

3. Does the EOR have a platform and what features does it include?

It’s important to try before you buy. Many EORs don’t have a software platform, but Oyster has a comprehensive platform that you can demo before you commit.

What are some advantages of using an EOR?

1. People Operations compliance

An EOR can help you save time and money in the hiring process by handling all of the paperwork and red tape associated with hiring an employee, which can be a major time-saver for businesses. From running payroll in local currencies to onboarding, the services vary from provider to provider, so make sure you check that a prospective EOR offers everything you need before committing.

2. Compliance with local employment laws

An EOR can also help with local regulatory compliance. By using an EOR, businesses mitigate their compliance risks. Oyster partners with local experts in every location we provide services to ensure local compliance.

3. Flexibility in staffing

An EOR can increase your company’s flexibility when it comes to staffing. Businesses can use EOR services to hire international contractors on a temporary or project basis. 

4. Cost savings

The cost of using an EOR is far less than the cost of setting up your own entity in a particular country. A global employment service, like Oyster, saves you even more by enabling you to build teams globally—just imagine the cost of setting up entities in several countries worldwide.

Paying team members in different countries can also prove to be more cost efficient, as what’s considered a decent salary by a worker in a certain country or city could be far lower than the expectation of workers local to your operations.

5. Faster expansion

The ease with which the right EOR can enable you to onboard team members, and the enormous pool of talent global hiring opens, means that you can expand your team faster by finding the right team members more quickly.

6. A more diverse talent pool

It’s no secret that a diverse workforce is a better workforce, and building a global team will naturally make your business more diverse, adding a range of team members with different cultures and perspectives.

In summary, there are many advantages to using an EOR, and you should carefully weigh all the pros and cons before making a decision.

Which countries are EORs present in?

EORs are present in most countries around the world. Find out more in our country-specific guides:

What employment tasks does an EOR take on?

The tasks that an EOR takes on vary from service to service and location to location. Here are a few tasks that a typical EOR handles to give you an idea of what global hiring can look like:

Compliance

An EOR will guide and support you to ensure employees are hired in accordance with local laws in every jurisdiction and providing them with compliant employment contracts. As the EOR is the employer, you can rest easy knowing that the legal ins and outs are taken care of.

Onboarding

Once you’ve found your new hire, the EOR will onboard them, managing all the paperwork and setting up all the necessary processes.

Payroll

Payroll will be managed by the EOR, and your team members will be paid by and receive payslips from the EOR.

Benefits

A variety of benefits can be offered by EORs, but these will vary from service to service. Benefits can include health insurance, time-off policies, parental leave, etc.

Terminations

When an employee’s contract is terminated, the EOR will handle all the necessary details.

How much does an EOR cost?

Costs of EORs vary depending on a number of factors including location, services offered, and number of employees. Many EORs charge on a per-employee basis. Check out our pricing page to learnmore about the cost of hiring globally.

Is Oyster an EOR?

At Oyster, we provide global workforce management consultancy services through our global employment platform worldwide. As part of our Team Member service, Oyster is the legal employer of our customers' Team Members.

In countries where Oyster does not have a direct entity, we typically use trusted Employer of Record Vendors to manage Team Members who are employed there. In these cases, the vendor is the legal employer. 

Can you onboard contractors through an EOR?

Yes, EORs can help companies onboard contractors in many countries around the world. Find out more about working with international contractors using Oyster.

What are the alternatives to an EOR?

Some alternatives to using EORs for international hiring include:

Opening your own entity

If you open your own entity in the country or countries you wish to hire in, you can handle all the aspects of employment that the EOR would handle. As mentioned above, the compliance burden of this approach makes it appeal mainly to larger companies that are looking to take on a large number of staff in a particular location.

Helping an international employee obtain a visa

Many countries have visa programs that enable employers to sponsor employees to work legally for them. However, these visas are often time-limited and following this process for each employee would be burdensome.

How can I learn more about EORs?

If you want to learn more about EORs, or are interested in using an EOR for your business, get in touch with Oyster today. One of our expert advisors would be happy to discuss your specific needs and requirements.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world, with reliable, compliant payroll as well as great local benefits and perks.

Disclaimer: This article and all information in it is provided for general informational purposes only. It does not, and is not intended to, constitute legal or tax advice. You should consult with a qualified legal or tax professional for advice regarding any legal or tax matter and prior to acting (or refraining from acting) on the basis of any information provided on this website.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.