An employer of record (EOR) is an entity that legally employs workers on behalf of another business. An EOR takes full responsibility for all aspects of employment, including compliance, payroll, taxes, and benefits.

An employer of record (EOR) directly employs workers on behalf of another company, while a professional employer organization (PEO) co-employs workers with the employer. Professional employer organizations manage specific HR tasks like payroll, taxes, and employee benefits, while the employer retains control over day-to-day operations and employee management. With PEO services, the employer shares liability with its professional employer organization partner. In contrast, an EOR assumes full liability for compliance with labor laws, payroll, taxes, and benefits management.

Using an employer of record (EOR) is legal, and helps businesses manage distributed teams without setting up local entities which can be costly and time-consuming.

Switching from one employer of record partner to another can be seamless with the right planning and support. Oyster offers a dedicated team of specialists who guide you through the process compliantly, while keeping your team members’ experience at the center. Learn more here.

Yes, but it requires establishing a local legal entity in each country where you want to hire. This involves hiring local experts—such as lawyers, payroll specialists, and benefits administrators—to navigate complex labor laws, manage payroll, handle taxes, and ensure compliance with all employment regulations.

Establishing local entities can be time-consuming and costly. With a global employment partner like Oyster, you can skip setting up entities and scale your team through our seamless, automated, and compliant all-in-one employer of record solution.