Asbjørn Vollmer Jeppesen
Head of Legal
Table of Contents
What is an employer of record (EOR)?
For a company not prepared for the web of local laws and regulations, expanding into a new country can feel like setting foot on alien soil.
Imagine an equipment manufacturer securing a one-off project in Brazil and needing to hire new or deploy their current workforce. Without a presence in Brazil, the manufacturer would face different challenging hurdles: Establishing a local entity, deciphering Brazilian labor laws, setting up payroll and benefits, and ensuring every tax and regulation is satisfied. This process could take months of effort and significant cost, delaying the project and risking non-compliance. This is where an Employer of Record (EOR) can be the solution, allowing the company to hire abroad quickly and compliantly without going through all those hoops. In this blog post, we explore what an EOR is, how it works, and why a combination of technology and human touch makes EOR services so valuable in today’s global economy.
Employer of Record meaning
“Employer of Record” can have different meanings, but it is essentially a third-party organization that formally acts as the legal employer on a company’s behalf when that company wants to engage workers in a new region. In simpler terms, the EOR becomes the “employer” in the eyes of the law and takes on all the administrative and legal employment responsibilities for those workers. Meanwhile, you will still direct the employees’ daily work and projects – the EOR just handles the salary and tax compliance. This arrangement is especially useful when you need to hire in a country where your business has no local entity or subsidiary.
Essentially, the meaning of an employer of record is to serve as your international HR partner, making sure that hiring an employee in Brazil, India or anywhere else is as seamless as hiring one in your home office.
How does an EOR work and what does it cover?
Partnering with an EOR means they become the legal employer for your international hires and take on all employment administration. Key responsibilities include:
- Onboarding & contracts: Issue locally compliant employment agreements and manage all new-hire paperwork.
- Payroll & taxes: Run payroll in local currency, withhold taxes, and file social contributions.
- Benefits & insurance: Arrange mandatory health, pension, and industry-specific insurance (e.g. working at heights).
- Compliance & risk: Ensure adherence to local labor laws—working hours, leave, terminations—and assume legal liability.
- Ongoing HR support if needed: Handle employee inquiries, updates to regulations, and off-boarding, so you stay focused on project delivery.
What are the benefits of using an EOR?
Having covered the core functions of an Employer of Record, here’s a concise look at why employers turn to this model:
- Rapid market entry: Onboard international hires in days instead of months—no need to set up a local entity or navigate foreign bureaucracy.
- Compliance assurance: Your EOR manages payroll, tax filings, social contributions, and local labor-law requirements, taking on the legal risk for you.
- Cost efficiency: Replace the heavy investment in subsidiaries and in-country specialists with a single, transparent service fee.
- Built-in flexibility: A good EOR partner lets you easily adjust contract dates, extend assignments for project delays, or scale down if needed.
It’s no surprise that more companies are adopting the EOR approach. As of reports, 72% of global businesses are pursuing ambitious expansion plans, and many are turning to EOR services to do so efficiently and compliantly (PR Newswire). The EOR market itself is growing steadily – one analysis projects a 6.8% annual growth rate from 2024 to 2031 for the global EOR industry (Valuates Reports), reflecting the rising demand for flexible global hiring solutions. In short, an EOR helps levelling the playing field, letting businesses of all sizes go international without stumbling on regulatory complexities.
Software-based EOR solutions vs. global mobility consultancy
Not all deployment partners operate in the same way. Generally, Employer of Record services come in two flavors today: software-based models and full-service consultancy models (and some hybrids of the two). Understanding the difference can help you choose the right partner for your needs.
Software-driven EOR platforms (SaaS EOR)
- Tool-centric but industry-naive. SaaS EORs often treat every client the same, yet companies like original equipment manufacturers operate in high-risk environments—confined spaces, working at heights, heavy machinery—where standard insurance packages fall short. Many platforms do not offer critical coverages for these exposures, leaving gaps in protection for your people and projects.
- Rigid workflows. Automated payroll and contract modules assume fixed timelines. When a project is delayed, or you need to extend an assignment, the system may force you to stick to the original start/end dates, potentially processing salary too early or too late. This inflexibility can lead to overpayment, compliance headaches, or unhappy employees.
- Limited real-time support. You get a self-service portal and FAQs, but little on-demand expert advice. If a local labor inspector raises a question about a technical role, or if an employee needs urgent guidance on permits, you’re left navigating help-tickets rather than speaking to someone who truly “gets” heavy-industry nuances.
Consultancy EOR/global mobility partners
- Deep industry expertise: A dedicated team brings deep knowledge across industries, whether you’re deploying marketing staff or technical engineers, so they can tailor policies (e.g., insurance, benefits) to any on-site reality.
- Flexible project support: Your EOR manager smoothly adjusts contracts, payroll schedules, and local entitlements without you having to fight a rigid platform.
- Dedicated account management: You get a single point of contact who understands both legal nuances and technical project demands, from drafting bespoke local agreements for senior engineers to coordinating emergency evacuation plans.
- 24/7 on-demand advice: Whether an employee needs clarifications on tax residency or a local labor authority raises a compliance query at midnight, you can reach a knowledgeable specialist instantly—no help-ticket queues.
- Proactive compliance monitoring: Beyond reacting to issues, a human-led employer of record continuously tracks evolving labor laws, social contribution changes, and health & safety regulations, alerting you to risks before they become problems.
Conclusion
An Employer of Record removes the red tape of global hiring, letting you focus on project delivery instead of payroll, taxes, and compliance. While software-based platforms can handle basic tasks, a human-led consultancy team with deep heavy-industry expertise ensures your complex, high-risk deployments—from working at heights to confined-space operations—are properly insured, compliant, and flexible when projects shift.
When you need more than a portal—when you need real advice, rapid adjustments, and a partner who truly understands your technical challenges—a specialist EOR is often the best fit.
Learn more about our human-centric global mobility/EOR services:
FAQ
An Employer of Record is a third-party organization that legally employs workers on your behalf in a target country. It issues locally compliant employment contracts, runs payroll, withholds taxes, and manages benefits and compliance—while you retain control over day-to-day work assignments.
The EOR becomes the “legal employer” in each jurisdiction. A good EOR partner onboards your employees under local law, processes payroll and social contributions, provides statutory insurance, and assumes liability for labor-law compliance—all through an Employer of Record agreement with your company.
Companies use an EOR to accelerate global expansion, minimize legal risk, and avoid the time and cost of setting up a local entity. EOR services ensure payroll, benefits, and labor-law obligations are handled correctly—so you can focus on delivering your projects.
Pricing varies by country, headcount, and scope of services. Most EORs charge a monthly service fee per employee—typically ranging from a few hundred to a few thousand euros—covering payroll, taxes, and HR administration. Always confirm whether insurance and local registrations are included in that fee.
A PEO (Professional Employer Organization) enters a “co-employment” arrangement, sharing employer responsibilities with you. By contrast, an EOR fully becomes the legal employer in the host country, assuming all compliance and liability, while you manage only the work itself.
If you have the time and competencies in-house, a general EUR might suffice. If not, we urge you to look for an EOR with proven expertise in your target markets and your industry’s unique needs (e.g., heavy-industry insurance for high-risk sites). Ask:
- Do they insure work in confined spaces or at heights?
- Can they flex contract dates for project delays?
- What level of on-demand support do they offer?
These questions help you select an EOR partner who truly understands technical deployments.
While EORs mitigate most compliance risks, you may face:
- Coverage gaps if the EOR’s insurance isn’t tailored for heavy-industry hazards.
- Service rigidity when standard SaaS-only EOR platforms can’t adapt to project changes.
- Limited industry insight if the EOR lacks industry-specific specialists.
Mitigate these by choosing a human-led EOR with deep heavy-industry experience.
Most global EORs operate in 100+ countries, often spanning multiple industries, from engineering to accounting. This allows OEMs in heavy and technical industries to deploy supervisors, engineers, and technicians almost anywhere without setting up local entities.
