The employer of record market reached $5.59 billion in 2025 and is projected to grow to $10.46 billion by 2033, according to Business Research Insights. With remote work now standard for 75% of knowledge workers, EOR services have become essential infrastructure for companies hiring across borders. Here is everything you need to know about what an employer of record is and how one works. Learn how multi-state payroll processing impacts your remote team operations. Learn how visa runs for digital nomads impacts your remote team operations. Learn more about the business case in 5 core benefits of hiring remote employees. Learn more about choosing an EOR.
What is an employer of record (EOR)?
An employer of record (EOR) is a company that acts as the legal employer for employees who are hired by a client company. The EOR assumes responsibility for the administrative and legal tasks an employer of record handles, such as payroll, benefits, tax compliance, and compliance with employment laws — including permanent establishment tax obligations that arise when hiring internationally. However, companies using an EOR should be aware of PE risks that come with EOR arrangements in certain jurisdictions. The EOR typically charges a fee for these services, and the client company maintains control over the workers’ day-to-day tasks and responsibilities. EORs are commonly used by companies that want to hire workers in countries where they don’t have a legal entity, or that want to outsource certain HR functions. Learn more in our guide on benefits of an Employer of Record. Learn more in our guide on how much EOR services cost.
One common question is whether an EOR can sponsor work visas for international employees.
How does an employer of record work?
An employer of record (EOR) works by providing a range of HR services to a client company that hires workers through the EOR. The EOR acts as the legal employer for the workers and assumes responsibility for the administrative and legal aspects of employing the workers, such as payroll, benefits, tax compliance, and compliance with employment laws. The client company maintains control over the workers’ day-to-day tasks and responsibilities, and the EOR typically charges a recurring fee per employee for the services it provides.
Here is an overview of how an EOR works:
- The client company contacts the EOR and provides information about the workers they want to hire, such as their job titles, locations, and salary details.
- The EOR reviews the information and determines if they can provide the services and support the client company needs.
- If the EOR agrees to provide the services, they enter into a contract with the client company and become the legal employer for the workers.
- The EOR assumes responsibility for the administrative and legal aspects of employing the workers, such as payroll, benefits, tax compliance, and compliance with employment laws.
- The client company maintains control over the workers’ day-to-day tasks and responsibilities and provides direction and supervision as needed.
What exactly does an EOR do?
The EOR acts as the legal employer for the workers, and assumes responsibility for the administrative and legal aspects of employing the workers, such as payroll, benefits, tax compliance, and compliance with employment laws.
Here are some examples of the services and responsibilities that an EOR might provide:
Onboarding: The EOR may be responsible for providing onboarding support to new employees, such as orientation and training in regard to the relationship between the EOR and your business. As well as helping them get set up with the necessary tools and resources, and completing new employee paperwork.
Payroll: The EOR is responsible for processing the workers’ payroll, including calculating and paying wages, withholding and remitting taxes, and issuing pay stubs and tax documents.
Benefits: The EOR is responsible for providing and administering employee benefits, such as health insurance, 401(k) plans, and vacation time.
Compliance: The EOR is responsible for ensuring that the workers are compliant with all applicable employment laws and regulations, such as minimum wage, overtime, and anti-discrimination laws.
Visa and relocation support: If the workers are located in a different country from the client company, the EOR may be responsible for providing support with visa applications and relocation services.
Employee support: The EOR may also provide support to employees on issues such as tax compliance, benefits, and employment-related questions.
How does an employer of record compare to a PEO?
An employer of record and a professional employer organization both handle payroll and compliance for distributed teams, but the legal structure differs significantly. A PEO operates under a co-employment model — both the PEO and your company share employer responsibilities, and your business must have a legal entity in the worker’s country. An employer of record, by contrast, becomes the sole legal employer on paper, which means you can hire in countries where you have no local entity at all. The EOR assumes full liability for employment compliance, while a PEO shares that liability with your company.
| Feature | Employer of Record | PEO |
|---|---|---|
| Legal employer status | Sole legal employer | Co-employer |
| Requires local entity | No | Yes |
| International hiring | Supported in 150+ countries | U.S.-focused |
| Payroll responsibility | Full payroll ownership | Shared payroll |
| Compliance liability | EOR holds liability | Shared liability |
| Best for | Hiring without a local entity | Domestic HR outsourcing |
For a deeper comparison, see our full guide on PEO vs EOR key differences and how to choose.
Is an employer of record the same as a staffing agency?
An employer of record is not a staffing agency. The two serve fundamentally different purposes. A staffing agency recruits candidates and places them in temporary roles — the agency controls the hiring process and assigns workers to client projects. An employer of record does not recruit or source talent; your company selects the worker, and the EOR handles only the legal employment side — payroll, taxes, benefits, and compliance. The worker reports to your team day-to-day, not to EOR managers.
Staffing agencies charge markup fees on hourly rates and control the worker assignment. Employers of record charge a flat monthly fee per employee (typically $400–$800) and stay out of workforce management entirely. If you already have a candidate and need a legal employment wrapper, an employer of record is the right structure. If you need someone to find and place workers, that is a staffing function.
What does an employer of record cost?
An employer of record costs $400 to $800 per employee per month for most providers. The employer of record fee covers payroll processing, tax filing, and statutory compliance. Employers of record that offer tiered pricing charge a base fee for core employment services plus add-ons for benefits administration, visa sponsorship, and equipment. The employer of record market reached $5.59 billion in 2025 and is projected to reach $10.46 billion by 2033 at a 6.8% CAGR, according to Business Research Insights, reflecting growing demand for hiring across borders.
Employer of record costs vary by region. EOR services in Western Europe and North America tend to carry higher per-employee fees due to greater regulatory complexity and mandatory benefits requirements. Markets in Southeast Asia and Latin America often offer lower per-employee pricing. For a detailed breakdown by provider and region, see our guide on how much EOR services cost.
Do Employers of record help with hiring and recruitment?
In general, larger EOR providers typically do not help with job postings or candidate screening. It depends on the employer of record (EOR) and the services they offer. Some EORs may provide hiring and recruitment support to their clients, while others may not offer this service.
Here are some examples of how an EOR might provide hiring and recruitment support:
- Offer letter and contract generation: Some EORs may also provide support with generating offer letters and employment contracts for new hires, and may help the client company ensure that these documents are compliant with applicable employment laws and regulations.
- Job postings and advertising: Some EORs may help their clients with posting and advertising job openings, and may provide access to a database of potential candidates.
- Candidate screening and selection: Some EORs may also assist with screening and selecting candidates for job openings, and may provide tools and resources to help the client company make informed hiring decisions.
What is an employer of record’s role in firing, termination, and probation?
Firing and termination: If a client company decides to terminate an employee, the EOR may be responsible for handling the administrative and legal aspects of the termination, such as issuing a termination letter and final paycheck, and providing assistance with unemployment claims.
Probation: While an employer of record is typically not involved in the day-to-day aspects of probation periods for a new hire, they can be valuable by keeping you informed on local probation laws in the country your employee works. The duration of probation can vary by country, and your employer of record can help ensure you know exactly when your new hire’s probation period ends. An EOR can also schedule benefits packages to start after a probationary period compliant with local labor laws.
Benefits of using an EOR
There are several benefits of using an employer of record (EOR) for your business. Here are some key reasons.
Using an EOR can save your business time and money by outsourcing the administrative and legal aspects of employing workers. This can free up your time and resources to focus on other aspects of your business, and can reduce the costs associated with hiring and employing workers.
An EOR can help ensure that your business is compliant with all applicable employment laws and regulations, and can help manage the risks associated with employing workers. This can provide peace of mind and protect your business from potential legal and financial liabilities.
If your business wants to hire workers in countries where you don’t have a legal entity, an EOR can provide access to global talent and can help you navigate the complexities of employing workers in different countries. This allows you to recruit the best talent opportunities regardless of their location.
An EOR can provide support and assistance to your employees on issues such as visas, benefits, and tax compliance, which can help improve employee morale and satisfaction and can lead to higher employee retention rates.
An EOR can provide your business with the flexibility to hire and employ workers on a temporary or project-based basis and can help you scale up or down quickly and easily as needed.
An EOR can provide access to advanced HR tools and systems, which can help automate and streamline HR processes, improve data accuracy and security, and provide a better user experience for your employees.
An EOR can provide your business with access to a team of HR experts who can provide support and guidance on a range of HR-related issues, and can help you make informed decisions about hiring and employing workers.
Potential disadvantages of using an employer of record
While there are many benefits of using an employer of record (EOR), there are also some potential disadvantages to consider.
When you use an EOR, you are outsourcing the administrative and legal aspects of employing workers to another company. This can mean that you have less control over certain aspects of the employment relationship, such as payroll and benefits.
An EOR may have other clients with conflicting interests and may need to prioritize the interests of those clients over your business. This can create potential conflict and may require careful management and communication to avoid misunderstandings and disputes.
While using an EOR can save your business time and money, it can also add costs in the form of fees for the EOR’s services. These costs may be higher than what it would cost to handle the administrative and legal aspects of employing workers in-house.
An EOR may have standard processes and systems that are not fully customizable to your business’s specific needs and preferences. This can limit your ability to tailor the employment relationship to your business’s specific requirements.
When you use an EOR, you may have less visibility into certain aspects of the employment relationship, such as payroll and benefits, which can make it difficult to track and monitor these areas. This can also reduce transparency and make it harder to identify and address potential issues or problems.
If your business relies heavily on an EOR, you may be at risk of losing key employees if the EOR decides to terminate the employment relationship. This can create uncertainty and instability for your business, and can make it harder to retain and motivate key talent. While this is uncommon because your EOR legally employs your employees, they can terminate them if they need to for whatever reason.
An employer of record has the right to refuse to hire a candidate. This doesn’t happen often and is usually a result of legal compliance or complications with hiring a specific candidate. That being said, it is still a possibility.
When to consider partnering with an EOR
There are several situations when it may be beneficial to use an employer of record (EOR) for your business. The big one is for hiring employees in other countries.
If your business wants to hire workers in countries where you don’t have a legal entity, using an EOR can provide access to global talent and can help you navigate the complexities of employing workers in different countries.
If your business needs to hire and employ workers on a temporary or project-based basis in a different country, or if you need to scale up or down quickly and easily, using an EOR can provide the flexibility and scalability you need.
If your business does not have the time or resources to handle the administrative and legal aspects of employing workers in other countries, using an EOR can save you time and money by outsourcing these tasks. This can free up your time and resources to focus on other aspects of your business.
If you are unsure about the employment laws and regulations that apply to hiring in another country, using an EOR can help ensure that you are compliant with all applicable laws and regulations. This can provide peace of mind and protect your business from potential legal and financial liabilities.
If your business lacks in-house HR expertise or support, using an EOR can provide access to a team of HR experts who can provide support and guidance on a range of HR-related issues, and can help you make informed decisions about hiring and employing remote workers.
If your business’s HR processes and systems are outdated or inefficient, using an EOR can provide access to advanced HR tools and systems, which can help automate and streamline HR processes, improve data accuracy and security, and provide a better user experience for your employees.
Who uses EORs?
Employer of record (EOR) services are used by businesses of all sizes and industries. Here are some different use cases for EORs for different types of businesses:
Small businesses: Small businesses often have limited time and resources to handle the administrative and legal aspects of employing workers. Using an EOR can save small businesses time and money, and can provide access to global talent and advanced HR tools and systems.
Medium-sized businesses: Medium-sized businesses may have the resources to handle some HR tasks in-house, but may still benefit from using an EOR for certain tasks or for hiring workers in different countries.
Large businesses: Large businesses may have in-house HR departments and resources, but may still use EOR services for specific tasks or for hiring workers in different countries.
Startups: Startups often have limited time and resources to handle HR tasks, and may use EOR services to ensure compliance and manage the risks associated with employing workers.
Remote teams: If your business has a remote team or is planning to hire remote workers, using an EOR can provide access to global talent, and can help ensure compliance with employment laws and regulations in different countries.
Frequently asked questions about employers of record
Some employers of record can sponsor work visas in certain countries, but availability depends on the provider’s local capabilities and the destination country’s immigration laws. Not every EOR offers visa sponsorship, and in some countries the process requires a sponsoring entity with a physical office. See our detailed guide on whether an EOR can sponsor visas for country-by-country coverage.
Yes. An employer of record is a fully legal employment arrangement in most countries, provided the EOR holds the proper licenses and registrations. The EOR operates as a registered business entity and handles all tax filings, employment contracts, and statutory benefits on your behalf. For specifics, see our analysis of EOR legality and regulatory requirements.
An employer of record acts as the legal employer for workers you select — it handles payroll, taxes, and compliance. A staffing agency recruits and places workers in temporary roles and controls the assignment. With an EOR, you choose the worker and manage their work; with a staffing agency, the agency sources and assigns the worker.
Most employer of record providers can onboard a new hire within 2 to 5 business days for countries where they already have an entity. The timeline extends to 4 to 8 weeks in countries requiring additional registration, background checks, or visa processing.
Yes. Benefits administration is a core employer of record service. The EOR provides statutory benefits required by local law — health insurance, pension contributions, paid leave — and many also offer supplemental benefits packages. Your company specifies benefit levels, and the EOR manages enrollment, contributions, and claims.
Yes. Many companies use an employer of record as a bridge while establishing their own legal entity. Once your entity is registered and operational, employees transition from the EOR’s payroll to yours. Most EOR contracts include a transition clause, and the process typically takes 1 to 3 months depending on the country’s regulatory requirements.
EOR platforms to check out
Remote is a robust and modern platform for remote-first teams. EOR, contractor management, payroll, benefits, and more.
Oyster is an intuitive platform that allows you to hire, pay, and care for a global team in more than 180 countries. EOR, contractor management, payroll, benefits, and more.
TFY has features for applicant tracking, freelance management, payroll, and more in a single platform. The platform supports diversity hiring and Corporate Social Responsibility (CSR) initiatives.
Lano is both a B2B & B2C platform. Businesses can use it to process global payroll, hire remote talent and manage contractors, while employees and freelancers can benefit from its payslip service, invoicing app, multi-currency wallet, and more.
See also: Peo vs eor
For more on this topic, see our guide on tasks an employer of record takes on.
