Employer of Record (EoR) explained: Hire globally without setting up local entities

Hiring international employees no longer requires setting up a legal entity in every country of operation. An Employer of Record (EOR) model allows organisations to engage global talent quickly and compliantly, handling all employment, legal, and payroll responsibilities on their behalf.

Imagine onboarding a regional HR business partner in Germany, a payroll specialist in the Philippines, and a benefits consultant in the UAE—all within days, without navigating complex local legislation or setting up overseas branches.

This article explains the meaning of EOR, how the model works, what makes it legally sound, and why it presents a flexible alternative to traditional expansion strategies. You’ll learn about the benefits of using an EoR for building a global workforce, the operational and compliance factors HR teams should consider, how it impacts the employee experience, and how technology underpins scalable and compliant HR delivery.

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 company. While the EoR handles all formal employment responsibilities, such as payroll, taxes, benefits, and compliance with local labour laws, the client company directs the employees’ day-to-day activities.

This arrangement allows organisations to engage talent in countries without a legal entity, streamlining the hiring process and ensuring compliance with local regulations.

Image – How an Employer of Record (EoR) model works 

EOR: Understanding legal aspects

Labour laws vary significantly across countries, encompassing aspects like employment contracts, tax obligations, social security contributions, and termination procedures. Navigating these complexities can be challenging for organisations without local expertise or presence.

An EoR assumes the legal responsibilities of employment, ensuring that all practices are in line with local laws. This includes managing employment contracts, adhering to tax regulations, and ensuring compliance with labour standards. By partnering with an EoR, organisations can mitigate legal risks associated with international hiring, improve efficiency and ensure compliance with local laws.

For example, in the UK, employment law requires that written statements of terms and conditions be provided on or before the first day of employment, in accordance with the Employment Rights Act 1996. EORs operating in the UK must also manage PAYE (Pay As You Earn) income tax deductions and National Insurance contributions on behalf of employees.

Within the EU context, labour laws are partially harmonised through directives that set minimum standards for areas like working time, employee safety, and protection from discrimination. However, the implementation of these directives varies by country, meaning that employment contracts, social security obligations, and termination procedures remain largely governed by national law.

EORs operating in the EU must therefore navigate both EU-wide requirements and the specific legal frameworks of each member state to ensure full compliance.

Benefits of the EoR model

Expanding into new markets often brings administrative complexity, legal risk, and delays. An Employer of Record (EoR) streamlines this process, enabling international hiring that is fast, compliant, and cost-effective. Whether the goal is to access talent in new regions, support project-based growth, or simplify onboarding in unfamiliar jurisdictions, EOR services offer clear operational and strategic advantages:

Key challenges and considerations when engaging an Employer of Record

Choosing the right Employer of Record is a strategic decision that can accelerate international growth. While the model offers speed and simplicity, organisations must assess how the EOR will align with internal culture, manage compliance, and maintain service quality across borders. The key considerations to keep in mind include:

Conducting thorough due diligence when selecting an EoR ensures alignment with organisational business needs and values.

Employer of Record: From the employee’s perspective

The EOR model often enhances the employee experience. It offers a clear legal employment status, dependable payroll, and a smoother onboarding journey. When managed well, an EOR relationship gives employees the confidence and stability they need to contribute from day one:

• Legal employment status: Employees receive formal employment status in their country, ensuring access to statutory benefits and protections.
• Consistent payroll and benefits: EORs manage payroll and benefits administration, providing employees with reliable compensation and access to benefits.
• Simplified onboarding: EORs typically have established onboarding processes, facilitating a smoother start for new hires.

However, employees may also experience:

Perceived distance from parent company: Being legally employed by the EOR might create a sense of separation from the parent company’s culture and community.

Variability in benefits: Benefits offered through an EOR may differ from those provided directly by the parent company, potentially leading to discrepancies in employee experience.

These challenges can be mitigated by focusing on open communication, improving the onboarding experience and promoting inclusion.

Real-world use cases for EOR services

EOR services are particularly beneficial in the following scenarios:

• Market testing: Organisations can explore new markets by hiring local employees through an EOR and assess market potential without committing to establishing a legal entity.
• Remote talent acquisition: Companies seeking specific skill sets can hire remote talent in different countries via an EOR, thereby expanding their talent pool.
• Freelancer conversion: Transitioning long-term freelancers to full-time employees in different jurisdictions can be streamlined through an EOR.
• Employee relocation: With EOR support, facilitating employee relocation to countries where the organisation lacks a legal presence becomes feasible.

These use cases demonstrate the flexibility and strategic advantage that EORs provide in global workforce management, especially in light of forecasts showing the global EOR market will nearly double in size by 2033. This growth reflects a broader shift toward flexible, compliant employment models that enable faster market access without the operational burden of entity setup.

From EoR to scalable global HR: A practical case

The EoR model is particularly valuable for high-growth companies that need to act quickly across borders. By legally employing talent on behalf of a business in foreign jurisdictions, EoRs remove the need to establish a legal entity—thereby saving time, reducing costs, and easing administrative burdens.

For example, consider a high-growth technology firm seeking to expand its presence across Europe, Asia, and the Middle East. With the support of an EoR provider, it is able — within days — to onboard a regional HR business partner in Germany, a payroll specialist in the Philippines, and a benefits consultant in the UAE. EoR services enable this speed and cross-border agility while ensuring compliance with local employment regulations from the outset.

As the business scales, however, the need for greater integration and efficiency becomes evident. With support from providers such as Zalaris, companies can transition beyond basic EoR functionality towards a centralised, cloud-based HR model. This shift leverages local HR expertise and integrated payroll systems, allowing organisations to maintain consistent service delivery, ensure cross-border compliance, and gain unified oversight of workforce data.

This model reflects a broader workforce trend: 74% of employers are now prepared to recruit individuals with critical skills regardless of location, and to support fully remote working. The ability to access global talent at speed has become a clear competitive advantage. When paired with scalable HR platforms, EoR services can serve not just as a tool for market entry, but as a foundation for global workforce resilience.

Conclusion: EOR as an effective approach for global HR strategies

Considering the global nature of the modern business environment, the ability to hire and manage international talent efficiently is paramount. The Employer of Record model offers a practical solution, enabling organisations to expand their workforce across borders without the complexities of establishing local entities.

By partnering with a reputable EoR provider such as Zalaris, organisations can ensure compliance with local laws, reduce administrative burdens, and focus on their core business objectives. These services not only accelerate market entry but also enhance the organisation’s overall agility and competitiveness.

Whether you’re entering new markets or onboarding international remote talent, our expert team is here to make the process seamless. Get in touch with us today to learn how we can support your global expansion.