What is an employer of record (EOR)?

EOR meaning in plain words

EOR stands for employer of record. The “of record” part means the EOR’s name is on the employment contract, the payslips and the government filings. If a tax office or labor court in that country asks who employs the worker, the answer is the EOR’s local company.

An “EOR employee” is a person employed that way: they work full time for your business, but their employer on paper is the EOR. They get the same statutory rights as anyone else employed in that country: paid leave, social security, notice and severance.

Typical EOR fee

$599per employee per month at Deel and Remote

Lowest list price

$199Payoneer WFM (Skuad)

Highest flat list price

$699Oyster

Common deposit

1 monthof salary or service cost, where stated

Two acronyms get mixed up with EOR. IOR usually means importer of record, a customs role for shipping goods, not people. AOR, agent of record, is a model for contractors rather than employees; Atlas sells one at $199 per contractor per month. A PEO is the US cousin of an EOR, covered in PEO vs EOR: co-employment against sole employment.

How an employer of record works, step by step

1. You get a quote for the country. It has three parts: the gross salary, the employer contributions local law adds, and the EOR’s monthly fee. Ask for the deposit amount at the same time.
2. You sign a service agreement with the EOR. Read the term and notice clauses. Remote’s terms run 12 months and renew automatically; Multiplier says there is no minimum term; Pebl’s Employee Term model locks each worker in for 12 months.
3. You pay a deposit. Playroll asks for one month’s salary per employee and Oyster for at least one month of the total cost of services. Others set it case by case or do not publish it.
4. The EOR issues a local employment contract. The worker signs with the EOR’s entity in their country, with the salary, leave, notice and benefits that law requires.
5. The worker starts and you manage them. They join your tools and meetings. The EOR has no say in the work.
6. Each month the EOR invoices you. The invoice covers salary, employer contributions and the fee, usually in one currency. If you pay in a currency other than the contract currency, a conversion fee or margin can apply.
7. The EOR pays the worker and files with the authorities. It withholds income tax and employee contributions and pays the employer share.
8. When the job ends, the EOR runs the termination. You pay the notice, severance and final pay. Then the deposit comes back: Pebl says about 45 days, Oyster about 60 days after the end date and Multiplier within 60 days of the last working day.

What the EOR is liable for, and what stays with you

The EOR carries the employer’s legal duties in that country. You carry the cost of every one of them, plus the business decisions. That split is the whole product.

The EOR also does not settle whether your own company has created a taxable presence abroad by having staff there. That is covered in permanent establishment risk when you hire abroad.

What an employer of record costs

Published EOR fees per employee per month, checked October 16, 2026:

Source: each provider’s pricing page, checked Oct 16, 2026. Rippling, G-P and Omnipresent publish no price on their pricing pages.

A $599 fee is $7,188 a year per employee. On a USD 40,000 salary that adds 18% before any employer contribution. The contributions depend on the country:

Where your money goes, by provider, is broken down in EOR pricing: every published fee, deposit and exit cost, and the full country table is in our employer cost by country index. To price a specific hire, use the international employee cost calculator.

Benefits of an employer of record

• Speed. You can hire in a country without a local company. One founder on Hacker News said in 2021 that a UK subsidiary took about a year to set up and Germany three to six months (an older, anecdotal account).
• A legal employment contract. The worker gets local rights, which matters for hiring people who will not work as contractors.
• One invoice. Salary, contributions and the fee arrive on one bill instead of separate tax accounts in each country.
• Easy exit from a country. When the role ends you stop paying the fee; there is no entity to close.

Employer of record risks

The risks show up in reviews and in the contracts, not on the marketing pages.

• Payroll errors. One Deel client wrote on Trustpilot in October 2026 that it rejects the payroll “at least once every time” because of errors.
• Late wages. Trustpilot reviewers in 2025 and 2026 report late or held pay at Oyster, G-P, Atlas and Rivermate.
• Partner entities. Not every EOR owns its local company. G-P says it owns 100+ entities and covers 180+ countries, so partners run the rest. Papaya Global uses in-country partners by design. When something goes wrong, blame can bounce between the EOR and the partner, as one Oyster reviewer described in July 2025.
• Deposits and FX. No provider we checked publishes an EOR currency markup percentage. Deposits of a month’s salary tie up cash for each hire.
• Contract terms. Auto-renewal with price rises (Remote’s order forms: at least 8% or US CPI if higher), two-year minimum terms on Deel’s promotional order forms (stated for its PEO; its EOR terms would not load) and per-worker minimum terms (Pebl).

We rank providers on these points in the best employer of record services, scored.

When an EOR beats setting up your own entity

An entity replaces the EOR fee with your own running costs: local accounting, a registered office, legal help and a payroll provider. Global payroll for your own entity is published at $12 per employee per month at Papaya Global, $20 at Multiplier and $29 at Remote.

Compare a $599 EOR fee with $29 payroll: the gap is $570 a month, or $6,840 a year per employee. With 10 employees in one country that is $68,400 a year. If your entity’s accounting, legal and admin costs in that country come in below that figure, the entity is cheaper to run. With 2 employees the gap is $13,680, which rarely covers an entity. We did not find verified entity running costs by country, so get a local accountant’s quote before you decide.

Cost is not the only test. An entity takes months to open and is slow to close; an EOR hire needs no entity at all. The trade-off by headcount is laid out in EOR vs your own entity.

EOR compared with global payroll, contractors and a PEO

More detail: global payroll providers and prices, paying international contractors and what a contractor of record covers.

Common mistakes when using an EOR

• Budgeting only the fee. In Brazil the employer contributions on a BRL 203,280 salary are about 50.9%, far more than any EOR fee.
• Skipping the deposit question. Most providers do not publish it. Ask for the amount and the refund timeline in writing.
• Missing the renewal date. Remote’s order forms renew for 12 months unless you give notice 30 days before the term ends.
• Talking to the employee about termination first. Some contracts penalize it, and local law may require a set process.
• Trusting vendor country pages for tax rates. When we reviewed them on October 16, 2026, Remote’s India country page showed employer provident fund as 0.00%, and its Brazil page showed employer INSS and FGTS as 0.0% in its table, while the text on the same page gives FGTS as 8%. Use official figures, like those on our India and Brazil pages.