Employer of record service: what you get and what it costs

On this page

1. What the service includes
2. How the service works
3. What the service costs
4. What compliance the service carries
5. When the service fits
6. Scaling past the service
7. FAQ

An employer of record service is a company that legally employs your workers in their own country and runs their payroll, benefits and local compliance for you. The service currently costs from $599 per employee a month at both Deel and Remote, on top of salary and employer contributions. Through the employer of record (EOR) service, the provider holds the local employment contract, registers the employment and answers to the tax and labor authorities in your worker’s country. You keep the working relationship: the role, the direction of work and the decisions.

One agreement covers every country the provider operates an entity in, so an engineer in Poland, a designer in Brazil and an analyst in the Philippines can all start without you registering three companies. The employer of record is the legal employer on paper; the worker works for you in practice. What moves to the provider is the employment paperwork; what you gain is the ability to hire where you have no presence.

What the service includes

Area	The service includes	Stays with you
Employment contract	The employer of record issues and holds the local contract	The role, salary and reporting line
Payroll and tax withholding	The employer of record calculates, withholds and remits each cycle	Approving salary and title changes
Social and statutory contributions	Registers with the authorities and pays them	Funding the contributions
Benefits	The employer of record enrolls the worker in statutory and optional plans	Choosing the tier you pay for
Onboarding registrations	Local tax IDs and social insurance numbers	Supplying the worker’s documents
Work permits	Applies where the provider offers them	Covering the government fees
Day-to-day direction	Not included: the provider never manages your worker	You assign and review all work
Equipment and stipends	Not included: bought outside the fee	You buy, ship and reimburse
Termination	Runs the local notice and severance process	The decision to end the employment
Salary funding	Not included: wages sit outside the fee	You fund salary, fees and expenses

The split that matters is legal employment against the working relationship. The provider holds the local contract, the registrations and the filings; you keep the person, the work and the decisions that shape them. Most service agreements spell this division out, including your right to direct the work day to day while the provider stays the employer on paper.

The exact tasks an EOR takes on shift by country, because each country sets its own registration, contribution and benefits rules; the table above holds only at the level every engagement shares. Where local law adds a step, a registration or a benefit, the provider’s local entity carries it, not your company.

How the service works

An employer of record service runs as a cycle: you define the employment, the provider draws up and holds the local contract, and you fund each payroll cycle while the provider pays your worker and files with the local authorities. The six steps below walk the whole engagement, from the first role spec to the worker’s last day.

1. Define the role, country and salary

You set the title, the responsibilities, the salary in the worker’s currency and the country your worker lives and pays tax in. The provider checks the role against the local market and the salary against local payroll rules, and quotes its monthly fee before anything is signed. This is also where you confirm the person should be an employee rather than a contractor, because the service exists to employ people, not to pay invoices.

2. Sign the service agreement

You sign a service agreement with the provider, separate from your worker’s employment contract, and it sets the fee, the notice periods and each side’s duties. Most agreements run month to month rather than for a fixed term, so the engagement scales with your headcount. Nothing in this step touches your worker yet; the agreement covers the two companies.

3. The EOR issues the local contract

The EOR drafts an employment contract under the worker’s national law, with the local notice periods, probation rules and required benefits written in. You review the salary, start date and role description before it goes out, and the worker signs with the EOR as the named employer, not your company. From that signature, the EOR is the legal employer in the worker’s country and your company is a client of the EOR.

4. Onboard and register the worker

The EOR registers the employment with the local tax and social insurance authorities, gets the worker’s payroll IDs and collects the documents the country asks for, such as proof of right to work. Your side runs the practical onboarding: equipment, accounts, access and the team’s own welcome. The worker starts reporting to you while the EOR handles the registrations and filings behind the scenes.

5. Fund and run the monthly payroll cycle

Each cycle you fund the invoice: salary, employer contributions and the EOR’s fee. The EOR pays your worker after local withholding, remits income tax and social contributions to the authorities on the local deadlines, and issues payslips in the worker’s language and currency. You keep approving changes: raises, bonuses and promotions go through you, and the EOR applies them to the contract and the payroll.

6. Offboard or move to your own entity

When the employment ends, you make the decision and the EOR runs the local process: notice, severance where the worker’s country provides for it, and final pay. If you later open your own entity in the country, the EOR can transfer the employment to it, a move providers call entity transition. The termination rules that apply are the worker’s own, so notice periods and severance depend on where the person is employed.

What the service costs

An employer of record service costs a monthly service fee per employee on top of salary, and the list prices at the three providers below currently run $499 to $599 per employee a month. The service fee covers the legal employment, the payroll runs and the compliance filings; it never covers the wage itself, the employer contributions or your worker’s expenses. What an employer of record service costs per employee each month is the fee, plus the salary, plus the employer contributions your worker’s country sets.

Provider	EOR list price, USD, per employee a month
Deel	$599
Remote	$599
PapayaGlobal	$499

Providers charge in one of two ways: a flat monthly fee per employee, as all three above do at list price, or a percentage of the worker’s salary, which some providers use for senior or highly paid roles. Neither model bundles the wage, the social contributions or optional benefits add-ons; those bill separately. The cost of employer of record services breaks down what each provider includes, because the list fee is only the start of what lands on the invoice.

What compliance the service carries

The compliance responsibilities an employer of record service carries are the employer’s side of local law: registering the employment, withholding income tax, paying social contributions and maintaining a contract that matches the worker’s national law. In the United States, the employer is the one who withholds federal income tax and the employee’s share of social security and Medicare and remits them, as the IRS Publication 15, Employer’s Tax Guide sets out. With an EOR, that employer is the provider.

Misclassification exposure moves to the provider in one specific way: a worker on an EOR’s payroll holds an employment contract, so the arrangement never depends on a contractor classification holding up. In the US, the IRS independent contractor rules turn on behavioral control, financial control and the relationship, and an employed worker never has to satisfy them. The protection holds only while the role you describe to the provider matches the work you actually assign.

What never transfers starts with permanent establishment exposure. An EOR lowers that risk because your company has no employees registered locally, but it does not erase the exposure if the work your person does amounts to a taxable presence under the local rules; the employer of record permanent establishment risks guide works through the triggers. Direction of work never transfers either: you assign, review and manage the person, and no provider takes that over.

The last thing that never transfers is the legality question itself. Some countries license or restrict third-party employment, so whether an EOR arrangement is lawful depends on the worker’s country, and the legality of employer of record arrangements is decided country by country. The provider holds the compliance it takes on; whether the arrangement is permitted in a given market is a question you settle before you sign.

When the service fits

You use an employer of record service when your first hires are in a country where your company has no legal entity: one or two people abroad, a market being tested, or a hire that must start before any incorporation could. The employer of record service also fits teams whose headcount abroad stays small and scattered across several countries, because one agreement covers all of them. The framework for when you need an EOR runs the decision by headcount, timeline and budget.

It fits less when your workers are contractors by nature, short-term project workers or genuinely self-employed, because a full employment relationship costs more than those roles need. It also fits less once one country holds most of your headcount, because at some size the monthly fee exceeds the cost of running your own local payroll.

Scaling past the service

The choice between an employer of record and your own entity turns on headcount in one country: once enough employees sit there, your own entity’s fixed costs spread thinner than the monthly per-employee service fees, and the employer of record service stops paying. Your own entity brings incorporation fees, a local bank account, registered staff and its own compliance filings, so it costs money and setup time before the first payroll, where the EOR needs none of them. The usual pattern is the employer of record service for the first hires in a country and your own entity once headcount there grows and stays put; where the line sits depends on salaries, contribution rates and that country’s incorporation costs, so the answer is a per-country calculation rather than one universal number.

FAQ