What Is an Employer of Record (EOR): Everything You Need to Know
- SGF Global
- May 9
- 3 min read
Updated: 3 days ago
An Employer of Record (EOR) is an organization that hires and compensates one or more full-time employees on behalf of another company. Learn all about its services, responsibilities, and how it differs from PEOs or staffing agencies.
Hiring the right person for a job has always been one of the most complex challenges for any company. That’s especially true now, when you can recruit talent from anywhere in the world. Not only must you focus on finding the best-qualified candidate, but you also have to comply with all local labor laws and regulations. There’s a lot to manage—and it can easily exceed what your HR or operations teams can handle. In these situations, you should consider partnering with an Employer of Record.
At SGF Global, we have the expertise and resources to streamline and secure your entire international hiring process—reach out to learn more!
What Is an Employer of Record?
An Employer of Record, or EOR for short, is an organization that legally employs, pays, and administers one or more full-time workers on behalf of another company. This arrangement lets you hire employees in a foreign country without setting up a local legal entity. In short, relying on an EOR means you can onboard talent anywhere in the world, compliantly and effortlessly.
Note: EOR services aren’t designed for independent contractors. If you’re looking to hire freelancers, refer to our detailed guide on engaging independent professionals.
How Does an EOR Work?
An Employer of Record can manage all of the following HR and administrative tasks for you:
Payroll processing
Tax withholding and filings
Timesheet collection and approvals
Drafting, maintaining, and terminating employment contracts
Onboarding new hires
Managing statutory benefits and insurance
Conducting background and compliance checks
Administering health coverage and other employee benefits
EOR vs. Professional Employer Organization (PEO)
At first glance, EORs and PEOs can seem similar—but they’re quite different. In the U.S., PEOs offer a co-employment model, where both your company and the PEO share legal and administrative responsibilities for your workforce. PEOs must register in each state where they operate.
When you need to hire internationally, you may hear the term “global PEO,” but the service you actually need is an EOR. An EOR:
Acts as the sole legal employer of record
Requires no co-employment arrangement
Doesn’t need to register a local subsidiary for you
Your company retains day-to-day managerial control, while the EOR handles all compliance, payroll, and HR administration.
EOR vs. Staffing Agency
A staffing agency sources and screens candidates on your behalf, presenting you with qualified talent. Depending on the agency, they may post job ads, collect resumes, and run basic background checks.
An EOR, by contrast, steps in after you’ve selected the candidate. Their sole focus is on legally employing, paying, and administering that worker—not on talent sourcing.
When to Use an EOR
Consider an Employer of Record if you:
Are expanding into new global markets and need local hires
Want to guarantee full compliance with foreign labor laws
Need to minimize misclassification and compliance risks
Lack internal capacity for extensive local HR operations
Prefer to hire indefinite-term employees without forming a local entity
Why Choose an EOR? Key Benefits
As remote work and global teams become the norm, new markets and opportunities open up—along with legal and administrative hurdles. An EOR helps you overcome these challenges. By partnering with an EOR, you can:
Save significant time and resourcesEORs have dedicated experts who handle every aspect of hiring and payroll, freeing you to focus on your core business.
Reduce compliance risksStaying abreast of local employment and tax laws is complex. EORs ensure you meet all requirements—no need to learn each country’s regulations yourself.
Streamline employee onboardingFrom contracts to benefits enrollment, EORs manage the entire onboarding process, ensuring a smooth, professional experience for your new hires.
