The short answer is yes, but doing so either requires you to open your own legal entity in the country or employ the workers as contractors. Both strategies have their pros and cons.

If you open your own legal entity, you will be responsible for managing your entire presence in the new country. That means hiring lawyers, payroll specialists, benefits administrators, and other professionals. Doing so may make sense if you plan to hire hundreds of people in a new country, but if you only plan to employ a handful (or even a few dozen), an EOR is more cost effective.

Hiring workers as contractors requires you to be diligent. International contractor misclassification is a serious issue and can lead to hefty fines and penalties. Going through an EOR insulates your business from potential compliance risks by making workers fully fledged employees.

An Employer of Record, or EOR, is a company that legally employs workers on behalf of another business.

It is important to note not all Employers or Record operate the same way, and there can be important differences in how EOR services are provided. Some EORs (like Remote) own their own legal entities in each country they operate in, while others act as intermediaries and do not own any entities. Still other EORs may use a mix of their own entities and partner entities. It is important that the EOR you select matches your needs for employment compliance in the countries you want to hire in.

An employer of record (EOR) can hire employees on your behalf in other countries, while a professional employer organisation (PEO) may not. Some companies call themselves “international PEOs” and provide EOR services. Others using the term “international PEO” only provide services for companies that already own legal entities in other countries.

Think of it this way: if you want to hire a person in a country where you do not own a legal entity, you need an EOR. If you want help managing HR functions, like payroll and benefits administration, in a country or region where you already own your own entity, you need a PEO. Basically, a PEO offers most of the same services as an EOR, but does not handle the legal employment of your employees in other countries.

Learn more about the differences between an EOR and a PEO in our helpful guide.

Employer of record costs typically break down into either a flat fee or a percentage pricing model. Flat fees are charged per-employee without regard to level or pay. Percentage models charge a percentage of the pay; fees will vary with the level and compensation of the specific employee.

Be cautious of employer of record pricing model that uses percentage. Global employment costs can be highly variable, but a good EOR accounts for these costs and can tell you what your bill will be up front. Percentage-based fee structures encourage companies to keep worker salaries low while funnelling more money to third-party providers.

Remote’s employer of record pricing is $599 per month (paid annually) or $699 (paid monthly). No hidden fees, minimums, contract lengths, or exclusivity agreements. Choose the plan that works for your team. View our pricing page to see how easy, quick, and affordable growing your global team can be.

The primary responsibility of any employer of record is acting as the legal local employer for your employees in other countries. Your EOR shields your company from liability and compliance risks by employing workers legally on your behalf.

A EOR also handles complicated HR work that goes with hiring workers in other countries. Different places have different rules for things; how often employees should be paid, which currencies are allowed, how much paid time off employees must receive, and many more. EORs manage all of these complexities on your behalf, so you can spend less time on administrative work and more time on hiring staff to grow your business.

Importantly, an EOR is not involved in the management of the employee’s tasks or performance. You work with employees employed through an EOR the same way you work with any of your other employees. The only difference between an employee in your office and an employee under an EOR in another country is in who handles the paperwork.

An Employer of Record is a third-party provider that is legally responsible for another organisations employees. An EOR manages, among other things, the administration of employee payroll for employees in other countries. When you employ someone in another country through an EOR, you provide funds to the EOR, and the EOR handles pay distribution, including any necessary tax deductions, social security contributions, and retirement accounts.

Working with an EOR allows you to confidently handle international payroll complexities in compliance with the laws of countries beyond your own. An EOR allows you to hire workers in other countries without becoming an expert in the payroll laws and customs of those countries. You simply find the right person for the job, then let your EOR take care of the details.

When comparing employer of record services, consider number of countries where they offer first hand services, the breadth of global HR solutions offered like payroll, benefits administration, onboarding, and local taxes, as well as the thoroughness of local compliance in each country they service. In addition the quality of the user interface should be considered.

Only work with an EOR that owns its own local entity in the country where you want to hire. Otherwise, you may end up with your own workers employed by an unknown third party in a country where you have limited oversight or control over the quality of their experience.

In addition, your EOR should be able to provide exemplary protections for your intellectual property.

Without those protections, you could be drawn into uncomfortable situations and lengthy court battles related to ownership of your IP in different countries — a nightmare scenario for any business.

Here are a few questions you may want to ask:

An employer of record can perform a number of HR and legal functions, including:

• Do you own an entity in this country, or do you outsource the employment and compliance to a third party?

• How do you protect intellectual property and invention rights in this country?

• Do you share employee data with any third parties?

• Do you keep all employee documentation for employees in all countries in one easy-to-access hub?

Remote owns all our own entities, provides the strongest IP protections and data security in the industry, and offers best-in-class global employment software to meet your needs.

Yes, using an Employer of Record is completely legal in most countries However, the maximum level of legal compliance is only provided by EORs that have their own business entities in the countries you want to hire.

Before you begin working with an EOR, make sure they EOR own a local entity and have sufficient knowledge to properly handle localised payroll, health benefits, taxes, and any other benefits or compensation you might offer, such as stock options.

If you are unsure when to use an employer of record, learn more about why an EOR is often the most straightforward approach to international employment.