What Is An Employer Of Record? A Plain Answer For Small Business Owners

The Definition

An employer of record, or EOR, is a company with a legal entity in the worker's country. It hires the person as its employee, runs payroll and benefits, and handles local labor rules. You manage the work day to day and pay the EOR one invoice.

When You Need One

• The role is full-time, exclusive, and open-ended.

• The worker's country treats long-term contractors as employees.

• You want to offer local benefits to attract better candidates.

• You plan to hire several people in the same country.

When You Do Not

Part-time or defined-scope assistants usually fit a contractor agreement through a payment platform. That costs less and is simpler. Our compliance guide walks through the trade-offs.

What It Costs

A monthly fee per employee, plus the worker's pay and any local employer taxes. Compare providers in our directory under EOR Platform; coverage and fees differ by country.

Employer Of Record Versus Contractor Platform

Both are often sold by the same companies. The contractor product generates agreements, collects tax forms, and pays out; the worker stays a contractor. The employer-of-record product makes the worker an employee of the platform's local entity with local benefits and protections. Most assistant roles start on the contractor product and move to employer of record only if they become full-time and permanent.

Questions To Ask A Provider

Do you have your own entity in this country, or a partner? What is the total monthly cost including employer taxes? What notice and severance rules apply locally? How long does onboarding take? Can I convert an existing contractor?

What This Looks Like In Practice

A company hires a full-time assistant in the Philippines and wants to offer health benefits. An employer of record employs her locally, adds benefits, and bills the company monthly. Classification worries disappear.

A Quick Checklist Before You Start

• Role is full-time and long-term.

• Country rules reviewed.

• Provider coverage confirmed for that country.

• Total monthly cost understood.

Questions Owners Ask

Can an EOR also find the assistant?

Most do not recruit. A few offer recruiting add-ons.

Can I switch from contractor to EOR later?

Yes. Many owners start as contractor and convert when the role becomes permanent.