EOR
Also known as: Employer of Record, Global employment platform
An EOR (Employer of Record) is a third-party company that legally employs workers on behalf of a client company in jurisdictions where the client has no local entity. The EOR handles payroll, taxes, benefits, statutory contributions, and compliance; the client manages the work day-to-day. Used heavily for cross-border hiring without setting up subsidiaries.
EOR services solved a real problem in the 2020s remote-work shift: companies wanted to hire in countries where they had no legal entity, and contractor arrangements created misclassification risk. An EOR is the local employer of record — on paper — while the client retains operational control. The model is dominant for companies hiring globally without scaling subsidiaries, and is the core business of Deel, Remote, Oyster, Velocity Global, and Multiplier.
How an EOR arrangement works
The client signs a services agreement with the EOR. The EOR signs a local employment contract with the worker, complying with all local labor laws (working hours, leave, severance, statutory benefits). Payroll runs through the EOR; the client pays the EOR a markup over the gross salary (typically $400–$700 per employee per month). The worker reports day-to-day to the client manager but is formally employed by the EOR's local entity.
EOR vs PEO vs subsidiary
- EOR: third party is the legal employer in jurisdictions where you have no entity. Used for cross-border hiring without subsidiaries
- PEO: co-employment, typically domestic. You and the PEO share employer responsibilities; the PEO handles HR admin, payroll, benefits
- Subsidiary: you set up a local legal entity and employ workers directly. Higher cost upfront, lower per-employee cost at scale
When EORs make sense
1–10 employees in a country: EOR is almost always the right answer — entity setup costs 6–18 months and $30K+ before you ship one paycheck. 10–25 employees: EOR still usually wins on TCO. 25+ employees in one country: subsidiary often pays back within 18 months, especially in higher-cost-of-employment countries.
Frequently asked questions
- What does EOR stand for?
- EOR stands for Employer of Record — a third-party company that legally employs workers on behalf of a client company in jurisdictions where the client has no local entity.
- How is an EOR different from a PEO?
- EOR is sole-employer in jurisdictions where you have no entity (typically used for cross-border hiring). PEO is co-employer typically within one country, sharing HR admin with you. EORs are for global expansion; PEOs are domestic HR outsourcing.
- How much does an EOR cost?
- $400–$700 per employee per month markup over gross salary is typical, varying by country and provider. Higher-cost-of-employment countries (Switzerland, Germany) cost more. Some providers charge a percentage (10–15% of gross) instead of a flat markup.
- When should I set up a subsidiary instead of using an EOR?
- Typical break-even is 10–25 employees in a single country. Below that, EOR usually wins on total cost. Above 25, subsidiary setup costs (legal, accounting, ongoing compliance) pay back within 12–18 months.
- Can I use an EOR to hire in Georgia?
- Yes — both global EORs (Deel, Remote, Oyster) and local Georgian providers offer EOR services. Costs are competitive with entity setup for teams under 10, and the worker receives full Georgian Labor Code protections (20% income tax, 2% pension, statutory leave and severance).