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Employer of Record Last modified: June 23, 2026

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E - Employer of Record (EOR)

SECTION GUIDE

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party organisation that legally employs workers on behalf of another business. The Employer of Record (EOR) takes responsibility for employment-related obligations such as payroll, tax, contracts, benefits, and local employment law compliance, while the client company manages the employee’s day-today work and performance.

Employer of Record (EOR) services are commonly used by businesses hiring employees in countries where they do not have a legal entity or local presence.

EOR

What does Employer of Record (EOR) mean in HR?

In HR, an Employer of Record (EOR) arrangement allows organisations to employ staff quickly and compliantly across different regions without needing to establish a local company.

  • An EOR typically manages:

    • Employment contracts and onboarding
    • Payroll processing and tax deductions
    • Pension contributions and statutory benefits
    • Local employment law compliance
    • Right to work and employment documentation
    • Holiday, sick pay, and statutory leave administration
    • Employment termination processes in line with local regulations

  • The client company retains responsibility for:

    • Daily management of the employee
    • Performance management and objectives
    • Work allocation and company culture
    • Training and development

  • EOR services are often used for:

    • International expansion
    • Remote and global hiring
    • Short-term projects or market testing
    • Hiring specialist talent overseas

  • Why does an Employer of Record (EOR) matter for your business?

    Using an Employer of Record can help businesses:

    • Hire internationally without setting up a foreign entity
    • Reduce compliance risks when employing overseas workers
    • Speed up recruitment and onboarding processes
    • Access wider talent pools and remote employees
    • Simplify global payroll and employment administration
    • Support business growth into new markets

    Without proper international employment support, businesses may face:

    • Breaches of local employment laws
    • Tax and payroll compliance issues
    • Permanent establishment risks
    • Worker misclassification claims
    • Fines, penalties, or reputational damage

  • Employer of Record – Best Practices

    Employers should:

    • Choose an experienced and compliant EOR provider
    • Understand which responsibilities remain with the business
    • Review employment laws in each country of hire
    • Ensure clear communication between the employee, EOR, and business
    • Protect employee data and confidentiality
    • Regularly review contracts, costs, and compliance arrangements

Our Approach impact HR can support businesses with global workforce planning, HR compliance guidance, and advice with specialist partners around international employment solutions.

Your Questions Answered

Everything you need to know about Employer of Record

  • What is the difference between an Employer of Record and a recruitment agency?Reveal

    A recruitment agency helps source candidates, while an Employer of Record legally employs workers on behalf of another business.

  • Is an Employer of Record legal in the UK?Reveal

    Yes. EOR arrangements are legal when managed correctly and in line with UK employment and tax legislation.

  • Do employees work for the EOR or the client company?Reveal

    Legally, the employee is employed by the EOR, but they work day-to-day for the client company.

  • When should a business use an Employer of Record?Reveal

    Businesses often use EOR services when hiring internationally, testing new markets, or employing remote workers overseas.

  • What are the risks of using an Employer of Record?Reveal

    Potential risks include choosing a non-compliant provider, unclear responsibilities, or misunderstanding local employment laws.

  • Is an Employer of Record the same as a Professional Employer Organisation (PEO)?Reveal

    No. A PEO typically requires the client company to already have a legal entity in the country, whereas an EOR acts as the legal employer.

Where to find out more A collection of hand-picked useful resources for [ITEM HERE] from impact HR and beyond

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