What is an Employer of Record? Global EOR Guide

What is an Employer of Record?[toc=Employer of Record]

An Employer of Record (EOR) is a third-party organization that legally employs workers on your behalf. The EOR handles payroll, taxes, benefits, and compliance with local labor laws while you manage your team's daily work. This lets you hire employees globally without setting up legal entities in each country.

This guide explains how EOR services work, when to use them, and how to choose the right provider for your business.

What does an Employer of Record do?[toc=What an EOR Does]

An Employer of Record (EOR) handles all legal employer responsibilities so you can hire employees globally without setting up local entities. They manage payroll processing, tax compliance, statutory benefits, and employment contracts while you focus on growing your business.

You keep full control over your team's daily work and performance, the EOR simply takes care of the administrative burdens and compliance risks.

Here's what an EOR handles for you:

• Drafts and maintains locally compliant employment contracts
• Processes payroll and withholds all required taxes
• Pays employees on time in their local currency
• Administers health insurance, retirement plans, and statutory benefits
• Ensures compliance with local labor laws and employment regulations
• Handles onboarding paperwork and legal offboarding procedures

Now that you know what an EOR does, let's look at how the process actually works.

How does an Employer of Record work?[toc=How It Works]

An EOR becomes the sole legal employer of your workers on paper while you manage their daily work and performance.

The Employer of Record process works in four simple steps:

Step 1 - You choose your candidate: Interview and select the talent you want to hire, just like any normal hiring process.

Step 2 - EOR creates legal employment: The EOR becomes the official employer of record, drafts locally compliant employment contracts, and handles all legal requirements.

Step 3 - EOR manages payroll and compliance: They process payroll, withhold tax obligations, administer statutory benefits, and ensure compliance with local employment laws.

Step 4 - You manage the work: You direct day to day operations, assign projects, manage performance, and build your team, the EOR handles the administrative burdens.

Here's a real example: Your US company wants to hire a software developer in Bangalore, India. Wisemonk EOR becomes the legal employer in India, creates the employment contract, processes monthly payroll, and handles EPF contributions. Your developer works for you every day, reports to your team, and builds your product, but Wisemonk ensures everything complies with Indian labor laws.

Relationship Between Employer of Record, Client Company, and Employees

Think of it as a clear division of labor. The EOR handles the legal and administrative side. You handle the work and management side.

The EOR handles: Employment contracts, legal compliance, payroll processing, tax filings, health insurance, statutory benefits, and all onboarding and offboarding paperwork.

Your company handles: Recruiting candidates, daily work assignments, performance goals, team leadership, company culture, promotions, and career development.

The employee: Works for you day-to-day, gets paid by the EOR, contacts the EOR for payroll or benefits questions, and contacts you for everything work-related.

This setup lets you build a global workforce without navigating foreign labor laws or setting up local entities in multiple countries.

This clear division of responsibilities brings several advantages to your business. Here's why companies choose to work with an EOR company.

What are the benefits of using an Employer of Record?[toc=Advantages of Using EOR]

Working with an EOR removes the biggest barriers to hiring globally- speed, cost, and compliance complexity.

Here are the key benefits:

• Hire employees in new countries within days instead of months
• Avoid expensive entity setup and ongoing legal costs in each country
• Transfer compliance liability and legal risks to the EOR provider
• Access global talent pools without geographic or visa restrictions
• Eliminate hours of monthly work on payroll, taxes, and benefits admin
• Test new markets with minimal investment before full expansion
• Manage your entire global team through one unified platform

These benefits make EOR services particularly valuable for companies scaling internationally without the overhead of setting up local entities.

Looking to understand how to hire international employees step-by-step? Our guide to hiring international employees walks you through the entire process

Now that we've seen the benefits, let's explore when using an EOR makes the most sense for your business.

When should you use an Employer of Record?[toc=When Use an EOR]

The decision comes down to your expansion speed, team size, and whether you plan to establish a permanent presence in the country.

Use an EOR when you're:

• Testing new markets with a small team before committing to expensive entity setup and local infrastructure
• Hiring remote workers in countries where you have no registered legal entity or physical office
• Expanding quickly and need employees onboarded within days instead of waiting months for compliance clearance
• Minimizing compliance risks by transferring liability for labor law violations to the EOR provider

If you're planning to hire 50+ people in one location for the long haul, setting up your own entity becomes more cost-effective.

Now let's look at the different types of EOR providers and how they operate.

What are the different types of EOR providers?[toc=Types of EOR Providers]

Not all EOR providers work the same way. There are three main types, and the difference matters for service quality and speed.

1. Partner-dependent EOR: These providers don't own entities in every country. Instead, they contract with local third-party partners to handle employment, payroll, and compliance. This can mean more layers of communication and potential delays.
2. Owned-entity EOR: These providers have their own legal entities in each country where they operate. You get direct service, faster response times, and better consistency since everything is handled in-house.
3. Hybrid EOR: These providers own entities in some countries and use partners in others. It's a mixed approach that balances direct control with broader geographic coverage.

For the best experience, look for providers with owned entities in the countries where you plan to hire most heavily.

With these models in mind, let's compare how EOR services differ from other employment solutions.

What are the alternatives to an Employer of Record (EOR)?[toc=EOR Alternatives]

If an EOR doesn't fit your needs, there are other ways to hire and manage employees internationally.

The right choice depends on your budget, timeline, and how much control you want.

The primary options are:

1. Establishing a Local Legal Entity
2. Professional Employer Organization (PEO)
3. Hiring Independent Contractors
4. Administrative Services Organization (ASO)
5. Staffing Agencies

Let's compare how each option stacks up against an EOR.

EOR vs. Setting Up Your Own Entity

Setting up a local entity gives you complete control but requires significant time and investment.

When to choose own entity: You're hiring 50+ people in one country for the long term and want full control over HR policies.

Read more: Employer of Record vs Own Entity

EOR vs. PEO (Professional Employer Organization)

A PEO shares employer responsibilities with you, but you need an existing entity in the country.

When to choose PEO: You already have a legal entity and want help with HR admin but prefer to share control.

Read more: PEO vs. EOR Guide: Key Differences for Global Hiring

EOR vs. Independent Contractors

Contractors offer flexibility but come with misclassification risks if not managed correctly.

When to choose contractors: Short-term projects where you don't need ongoing employees or control over how work gets done.

Read more: Independent Contractor vs EOR Employee in India 2025

EOR vs. ASO (Administrative Services Organization)

An ASO provides HR support without becoming the legal employer or sharing liability.

When to choose ASO: You have a local entity and want to outsource specific HR functions while keeping full control and responsibility.

Read more: PEO vs. ASO: Which HR Model is Right for U.S. SMBs?

EOR vs. Staffing Agency

Staffing agencies help you find talent but don't handle ongoing employment responsibilities.

When to choose staffing agency: You need temporary coverage or project-based staff and want help finding candidates quickly.

Read more:  Employer of Record vs Staffing Agency: Key Differences

Each option serves different needs. An EOR is ideal when you want to hire internationally fast without entity setup, while alternatives work better when you have existing infrastructure or different employment models.

Now let's look at how to choose the right EOR provider for your specific needs.

How to choose the right global Employer of Record?[toc=How to Choose]

The right EOR should have local expertise, transparent pricing, and a proven track record in the countries where you plan to hire.

Key factors to evaluate:

• Owned legal entities in your target countries, not third-party partners
• Deep knowledge of local employment laws and regulatory compliance
• Transparent pricing with no hidden fees for setup or offboarding
• Platform that integrates seamlessly with your existing HR and payroll tools
• Dedicated support with local expertise in your time zones and languages
• Strong data security certifications like ISO 27001 and SOC 2
• Proven reputation with client reviews and case studies from similar companies
• Scalable solutions that grow with your team across multiple countries

Request demos from multiple providers and ask how they'd handle your specific hiring scenarios before making a decision.

Once you've narrowed down your options, check which countries they actually operate in.

For deeper insights into selecting the right EOR, check out this detailed guide on "How to choose an Employer of Record" & check this guide to know more about the "10 best Employer of Record companies"

Which countries are Employer of Record (EORs) available in?[toc=Global EOR]

Most EOR providers offer global coverage, but the quality and speed vary depending on whether they own entities or use local partners.

Major regions covered:

• North & South America: US, Canada, Mexico, Brazil, Argentina
• Europe: UK, Germany, France, Spain, Poland, Romania
• Asia & Middle East: India, China, Japan, Singapore, UAE
• Australia & Oceania: Australia, New Zealand
• Africa: South Africa, Nigeria, Egypt, Kenya

Explore our country-specific EOR guides to learn more about hiring in:

• Employer of Record in India
• Employer of Record in the UK
• Employer of Record in UAE
• Employer of Record in Canada
• Employer of Record in Germany
• Employer of Record in Australia
• Employer of Record in the Philippines
• Employer of Record in Mexico

The key isn't just coverage, it's whether the provider has owned entities or relies on third-party partners in your target countries.

Now let's look at what EOR services typically cost.

How much does an EOR typically cost?[toc=Global EOR Pricing]

EOR pricing varies by provider, but most charge either a flat monthly fee per employee or a percentage of each employee's salary.

Two main pricing models:

Flat fee model: You pay a fixed monthly rate per employee regardless of their salary. This gives you predictable costs and easier budget planning. Rates typically range from a few hundred to over a thousand dollars per employee per month depending on the country and services included.

Percentage model: You pay a percentage of each employee's gross salary, usually 10-15%. This can be cheaper for junior staff but gets expensive as salaries increase, making long-term costs harder to predict.

What affects EOR pricing:

• Country location and local regulations
• Services included (basic payroll vs full benefits packages)
• Number of employees (volume discounts often available)
• Contract length and commitment terms
• Additional services like visa support or equipment management

Most providers are moving toward flat fee pricing for transparency. Always ask for a complete breakdown including setup fees, offboarding costs, and any hidden charges for currency conversion or amendments.

See our complete EOR pricing breakdown for detailed EOR cost breakdown.

In our experience helping global companies scale quickly, understanding these pricing structures helps you make better decisions about which model fits your business needs and budget.

Now let's look at how Wisemonk's EOR services help companies build teams in India.

Wisemonk: Your Trusted EOR Partner for Global Hiring[toc=Wisemonk EOR]

Wisemonk is a leading Employer of Record (EOR) helping global companies hire, pay, and manage employees, without the hassle of setting up a local entity. With our deep understanding of local employment laws, tax compliance, and cross-border workforce management, we enable businesses to expand quickly while staying compliant and efficient.

Here's how we help global companies scale their teams:

• Hire without the wait: We get your first hire onboarded with a compliant contract in days. No entity setup, no months of paperwork just fast, legal hiring wherever you need talent.
• Payroll runs itself: We handle the entire payroll cycle, calculating salaries, deducting taxes, managing statutory contributions, and paying your team on time in local currency every month.
• Benefits that actually compete: Your employees get health insurance, paid time off, retirement plans, and perks that match what leading companies offer in their local markets.
• HR support that solves problems: When your team has questions about leave policies or needs help with documentation, our HR specialists handle it so you don't have to.
• Compliance you can trust: Labor laws change constantly. We track every update, adjust your contracts and policies automatically, and keep you penalty-free.

While India is our core strength, we’re expanding rapidly into key global markets such as the United States, the United Kingdom, and beyond. With Wisemonk, you get a reliable partner for your India operations and your broader global hiring journey.‍

Ready to scale your global team fast, compliant, and without the headaches? Talk to our team today!

What our clients say

Companies from the US, UK, and Europe trust us to build their teams compliantly and fast. Here's what our clients say:

"I'm very happy that I discovered Wisemonk. They have been a pure pleasure to work with, and their attention to detail is impressive. They helped us understand their pricing model, find top-qualified individuals, interview them, and then onboard them. I gave them criteria for the type of people we sought, and they delivered. The individuals they were able to find have been some of the best engineers I have ever worked with. I recommend Wisemonk to anyone who is in need of staffing assistance."
- Dan Sampson, Head of Engineering at Cobu

"Working with the Wisemonk team in India has been a genuinely positive experience from day one. They've been consistently accessible and are building fantastic relationships with our local team. As someone based in the UK, I value the quality of compliance Wisemonk brings — I have full confidence when it comes to financial, legal, and HR matters. They've ensured our team is managed in line with local employment law and have also been flexible when we've wanted to go beyond statutory requirements. Whether it's increasing annual leave or tailoring health insurance, they've offered clear guidance to help us enhance the benefits we provide. It's been a great partnership."
- Lisa Jones, Chief People Officer at Couch Health

"Wisemonk is a key partner for EOM-Energy O&M Services, playing an essential role in supporting our operations. Their seamless payment solutions make transactions not only simple and fast but also reliable. The team’s responsiveness, professionalism, and proactive approach give us complete confidence in every interaction. We look forward to strengthening our collaboration, using Wisemonk both for Employer of Record services and for recruitment support, to help us expand our team in India in the short and medium term."
- José Enrique Montero Pérez, CEO at Couch Health