Hiring remote global talent extends beyond just locating the perfect candidate; it involves navigating legal compliance, tax obligations, and country-specific regulations. This is where the Employer of Record (EOR) proves invaluable. An Employer of Record (EOR) is a third-party organization that legally employs the worker in another country, but you can control everything else: what the person does, how the person performs, how to evaluate the person.
This allows companies to hire full-time programmers in Brazil or full-time marketers in Poland or full-time data entry people in the Philippines without opening a formal entity there. On paper, the EOR is the employer, but for all intents and purposes, you are the boss.
The global EOR market has grown from $4.4 billion in 2023 to an estimated $5.5 billion in 2025, and is projected to reach between $8 and $10 billion by 2030. That growth is driven by one clear trend: remote work is no longer an experiment. According to the Pew Research Center, 75% of workers with remote-capable jobs are working remotely at least some of the time, and 46% say they’d likely leave their job if remote work was no longer an option.
For companies that want to access global talent without the legal complexity of international entity setup, an EOR is the most practical solution available today.
This guide covers everything you need to know: how an EOR works in practice, what it costs, who should use one, how it compares to PEOs, staffing agencies, and direct entity setup, and how to choose the right provider.
How Does an Employer of Record Work?
An EOR creates a legal and administrative bridge that allows you to hire employees in countries where your company has no registered entity. Here’s the step-by-step process:
Step 1: You Find and Select the Candidate
As a company, you take full responsibility over the recruiting process. You find the talent, you interview the talent, you make the offer, decide the salary, choose the position, etc. The EOR does not try to control who you hire.
Some EORs, like DistantJob, include recruiting services. They find you the talent, while others, like Deel or Oyster, concentrate on the EOR service alone and depend on you to bring the candidate.
Step 2: The EOR Creates a Locally Compliant Employment Contract
After you’ve made your choice and declared your intention to hire, it becomes the EOR’s responsibility to provide a proper contract and apply all the labor laws of the region. That includes probation laws, notice laws, mandatory benefits, work hours, termination laws and more. Any contract will be signed between the employee and the EOR entity. While on paper the employee works for the employer of record, ultimately the person works for you.
Step 3: The EOR Manages Payroll, Taxes, and Benefits
The EOR puts the employee on its local payroll and handles:
- Statutory bonuses (such as 13th-month pay in countries that require it)
- Monthly salary payments in local currency
- Income tax withholding and remittance to local tax authorities
- Social security contributions (employer and employee portions)
- Mandatory benefits like health insurance, pension, and paid time off
Step 4: You Manage the Day-to-Day Work
Even after the contract is signed, you remain in full control. You are fully in charge of the person’s tasks, performance, evaluation, and the way the person is integrated into your business. When you decide to give a promotion, salary raise, or any type of employee advancement, it’s all on you. The EOR is simply there to update the contract and payroll.
Step 5: The EOR Handles Offboarding if Needed
If the employment relationship ends, the EOR manages termination compliance, including calculating severance (where required by law), processing final payments, and ensuring the offboarding meets local legal requirements.
In short: You focus on building your team. The EOR handles every legal, tax, and HR complication that comes with employing people across borders.
What Services Does an EOR Provide?
EOR providers handle the full spectrum of employment administration. Here’s a breakdown:
| Service | What It Means for Your Company |
|---|---|
| Locally compliant employment contracts | Protects your intellectual property and ensures your hire is classified correctly under local law |
| Monthly payroll processing | Your employee gets paid on time, in local currency, with correct deductions |
| Tax withholding and filing | All income tax, social security, and employer contributions are handled — no risk of penalties |
| Mandatory benefits administration | Health insurance, pension, paid leave, and other statutory benefits are set up according to local requirements |
| Onboarding paperwork | Background checks, work authorization verification, and all new-hire documentation handled |
| Termination and severance management | If you need to end the employment, the EOR calculates severance, manages notice periods, and ensures legal compliance |
| HR records and compliance documentation | Employee records are stored securely to meet local regulations and audit requirements |
How Much Does an Employer of Record Cost?
EOR pricing varies based on the provider, the country, and the services included. Here are the two main pricing models:
Fixed Fee Per Employee
Most EOR providers charge a flat monthly rate per employee, regardless of salary. This is the most common and predictable model.
Typical range: $299–$699 per employee per month for standard EOR services. Premium providers or complex jurisdictions can run $700–$1,500+ per month.
| Provider | Published Starting Price |
|---|---|
| Remote.com | $599/employee/month |
| Deel | $599/employee/month |
| Oyster | $599/employee/month (or lower with annual commitment) |
| Papaya Global | Custom pricing |
| Remofirst | $199/employee/month |
| DistantJob | Custom pricing (bundled with recruitment) |
Percentage of Salary
Some EOR providers charge a percentage of the employee’s gross salary, typically between 10% and 25%. This model can become expensive for senior hires or employees in high-salary markets.
Example: If you hire a developer at $80,000/year and the EOR charges 15%, that’s $12,000/year ($1,000/month) in EOR fees alone — on top of the salary, benefits, and employer contributions.
Hidden Costs to Watch For
Beyond the base fee, watch for these common additional charges:
Setup/onboarding fees: $200–$500 per employee (one-time)
Offboarding/termination fees: $200–$1,000+ depending on local severance requirements
Currency conversion markup: 1–3% on top of market exchange rates
Deposit requirements: Some EORs require a deposit equal to 1–3 months of the employee’s salary as a compliance buffer
Benefits add-ons: Supplemental health insurance, equipment stipends, and other perks often cost extra
EOR vs. Setting Up Your Own Entity: Cost Comparison
| Cost Factor | EOR | Own Entity |
|---|---|---|
| Setup cost | $0 (included in monthly fee) | $20,000–$100,000+ per country |
| Setup time | Days to weeks | 3–6 months |
| Monthly cost per employee | $299–$699 | Varies (internal HR, legal, accounting costs) |
| Ongoing compliance | Handled by EOR | Your responsibility |
| Scaling | Add employees instantly | Each country requires separate infrastructure |
| Best for | 1–10 employees per country | 10+ employees with long-term commitment |
Rule of thumb: If you have fewer than 10 employees in the same region, it’s unlikely that setting up an entity will be more cost-efficient. If you have more than 10 employees, you should consult an accountant.
Benefits of Using EOR Services
Using an Employer of Record (EOR) provides a host of strategic advantages for companies aiming to quickly expand their workforce, navigate complex regulatory environments, or establish a presence in new geographical markets. Below are the main benefits of employing EOR services:
1. Hire Globally Without a Legal Entity
The most basic and obvious advantage. An EOR gives you the opportunity to hire in other countries without incorporating. Incorporating is a pain that will cost you between $20,000 to $100,000 and 3 to 6 months of governmental bureaucracy. With an EOR, it can be done in a day or two (in some countries, even a couple of hours).
Client Testimonial:
2. Full Compliance with Local Labor Laws
Because the rules in each country differ significantly from each other (when it comes to minimum wage, work hours and overtime, holidays and laws regarding firing employees, mandatory benefits, and confidentiality), an EOR ensures legal compliance in each region without your needing to learn CLT rules in Brazil or Bulgaria.
3. Faster Time-to-Hire
In the staffing industry, it is well known that the competitor who sleeps the most loses a lot of the deals. Once you’ve had an interview and established your need and want for an employee, the faster you close the contract, the faster you gain loyalty and head off the competition.
It’s more important than ever in the software development space where talented individuals usually receive several offers, and the one who hires immediately will have a far greater chance of landing the candidate. If you’re forced to open an entity, you can spend months just dealing with all the regulations and legalities. An EOR will enable you to make an offer within days and sometimes even hours.
4. Reduced Administrative Burden
Calculating payroll for individuals in various countries can be a huge hassle—each country comes with its own rules and currencies, and there is often many mandatory benefits. The EOR takes on all this work, allowing your payroll and human resources to focus on more strategic and human tasks.
5. Access to a Wider Talent Pool
An EOR gives companies the chance to expand beyond their local boundaries, which is crucial for industries such as IT where locally, positions can’t be filled.
Using an EOR provides amazing opportunities to hire great developers in places such as Latin America, Eastern Europe, and South East Asia. These regions have proven to be full of amazing talent but with much more reasonable expectations.
Client Testimonial
6. Risk Mitigation
Not correctly following labor laws can bring significant tax liability, penalties, and even lawsuits. As explained in this section’s intro, if you examine the rules on the IRS webpage, employers can owe employment taxes for all the workers that they misclassified. An EOR ensures that each employee is classified properly.
Checklist: Does Your Company Need EOR Services?
Checklist: Does Your Company Need EOR Services?
Risks and Limitations of Using an EOR
No solution is perfect. Here are the legitimate downsides you should be aware of:
1. Less Direct Control Over HR Functions
Because the EOR is the legal employer, certain HR decisions (benefits packages, contract terms, termination procedures) are constrained by the EOR’s processes and the local legal framework. You can’t always customize everything to match your internal policies.
2. Permanent Establishment Risk
If the employee acts as a representative for the company, the employee’s local tax authority can claim that the employee created a situation called “permanent establishment,” which in short means that you are running a business that will be taxed in the employee’s region. This can be particularly frustrating for your accountant. Good-quality EORs will be upfront about the risk, although you might hear contradicting opinions from different EOR companies.
3. Provider Dependency
Let’s be clear: You are putting your employee’s livelihood in someone else’s hands. If the EOR is not functioning well or disappears, your people could face major problems because the EOR is responsible for your employee’s contract, salary, and benefits. This is why choosing your provider is so important.
4. Potentially Higher Cost at Scale
There is one last con. It’s almost insignificant for companies with fewer than 10 employees, but once you have more than 10 employees in the same region, paying an EOR every month can cost more than opening your own entity. It’s a good idea to calculate that cost in the region where you are hiring.
5. Employee Experience Considerations
One more disadvantage to consider is the relationship between your employee and your company. For some employees, receiving an employee contract, pay slips, and benefits from a company that’s not the one they work for every day can be confusing.
Top EOR companies have learned to manage the situation very well, but it’s still something to consider.
How to Choose the Right EOR Partner?
Not all EOR services offer the same benefits. The best way to ensure you’re selecting the right partner is to first understand what you need and what you’re looking for, and then see if they match those requirements.
Generally, these are some of the relevant aspects to look for in EOR providers:
1. The Cost
Look for an Employer of Record (EOR) that offers transparency in its pricing structure. While some EORs may not list their prices directly on their website, this presents an opportunity for you to reach out directly. During your communication, ensure that they provide a clear breakdown of their fees to avoid any unexpected charges in the future.
2. Consider the Locations
Does the EOR provider operate in the countries where you intend to hire? It’s crucial to verify that the EOR has a presence in the specific regions you’re targeting for your recruitment efforts. If not, you might find yourself needing to engage with multiple EOR providers, which can be both costly and inefficient.
3. Customer Support
Partner with organizations that prioritize attentive responses to both your team’s and your employees’ needs. Your EOR partner plays a fundamental role in engaging with your current employees and integrating new hires on your behalf. To evaluate this, make sure to check out the company’s case studies, reviews, and what others have to say about their services.
4. Precision in Employer Burden Costs
Look for a provider that offers precise calculations of employer burden costs. Accurate payroll computation extends beyond basic salaries to include various social contributions like health insurance, social security, and paid time off. These costs vary significantly across different markets, and it’s the responsibility of your EOR partner to present you with precise estimations of these expenses.
Top EOR Providers to Consider
1. DistantJob
DistantJob is a Canadian remote headhunting agency that combines recruitment with full EOR services. Unlike pure-play EOR platforms, DistantJob recruits, screens, and vets global tech talent in addition to handling legal employment. This makes DistantJob a strong fit for companies that need both the talent and the employment infrastructure. With over 15 years in remote placement, DistantJob specializes in hiring developers and tech professionals worldwide.
Best for: Companies that want a single provider for both recruitment and EOR, especially for technical roles.
2. Deel
Deel is one of the largest EOR platforms, supporting hiring in 150+ countries with a modern self-service platform. They offer fixed pricing starting at $599/employee/month and provide contractor management alongside EOR services.
Best for: Companies that need a scalable, tech-forward platform for managing a distributed workforce across many countries.
3. Oyster
Oyster is a global employment platform focused on EOR and contractor management in 180+ countries. They position themselves around the mission of distributed work and offer strong compliance tools and a user-friendly interface.
Best for: Mission-driven companies building distributed teams who want a polished platform experience.
4. Papaya Global
Papaya Global operates as an all-in-one payments, payroll, and EOR platform. With coverage in 160+ countries and their own payment rails (through the acquisition of Azimo), they offer deeper financial infrastructure than most competitors.
Best for: Enterprise-scale companies managing large, multi-country workforces who need integrated payroll and payments.
5. Remote.com
Remote focuses on EOR and contractor management with owned entities (not third-party partners) in their coverage countries. Their pricing is transparent at $599/employee/month, and they emphasize IP protection and data security.
Best for: Companies that prioritize owned-entity infrastructure and IP security.
Conclusion
An employer of record can handle all legal and compliance issues associated with working internationally. It takes a process that would require months of waiting and tens of thousands of dollars and turns it into something that takes a day to accomplish.
The EOR market is growing because the math makes sense: for most companies hiring globally, especially those with distributed teams of fewer than 10 people per country, an EOR is faster, cheaper, and lower-risk than the alternative.
But not all EOR services are the same. A standalone EOR handles compliance after you’ve found your candidate. A provider like DistantJob handles both, we find, vet, and hire the best remote tech talent worldwide, and then manage the legal employment so you don’t have to.
If you’re looking to hire remote developers or tech professionals and need a partner who handles everything from recruitment to EOR, let’s talk. No upfront fees. You only pay when you hire.
