What is Employer of Record?

Employer of Record

EOR

An Employer of Record is a company that legally employs a worker in their own country on behalf of another, foreign company. It takes on payroll, social contributions and local labour compliance, while day-to-day work is directed by the client company. It allows hiring in a country without opening a subsidiary there.

This is the structure that unlocked international remote hiring for mid-sized companies. Without an EOR, employing someone abroad means incorporating a local entity, which is disproportionate for one or two people. With an EOR the worker gets a local contract with full rights, and the company avoids accidentally creating a permanent establishment.

Also called: EOR, registered employer, global employment organisation

Related terms

International contractorAn international contractor is a self-employed professional who provides services to a company in another country and invoices for them, with no employment relationship. They handle their own taxes, contributions and time off, and in exchange usually command higher rates and more flexibility than an equivalent employee.
Permanent establishmentA permanent establishment is a stable presence of a company in a country other than its own that triggers an obligation to pay tax there on the profits attributable to that presence. It can arise without an office: it is enough for an employee to habitually conclude contracts from another country on the company's behalf.
International payrollInternational payroll is the periodic payment of salaries to people employed in countries other than the company's, with each jurisdiction's withholdings and contributions. It requires a local entity or an Employer of Record acting as the legal employer in the worker's country.