Introduction: How an Employer of Record (EOR) Works
Hiring employees in another country is often complex. You must follow local labor laws, run payroll correctly, and handle taxes. An Employer of Record (EOR) makes this much easier. It manages all legal and compliance tasks so you can focus on your business. This article breaks down how an EOR works, step by step.
Read our Complete Guide to What an EOR Is?
Learn more about global employment rules from the International Labour Organization
What an Employer of Record (EOR) Does
An EOR becomes the legal employer of your international workers. However, you remain responsible for their daily tasks, goals, and performance. Because the EOR handles the legal responsibilities, you avoid the cost and risk of setting up a local entity.
Key Functions of an EOR
- Hiring and onboarding
- Payroll processing
- Tax payments
- Employment contracts
- Compliance monitoring
- Termination support
These services ensure your global team stays compliant and supported at all times.
How an EOR Works: The Complete Workflow
You Select the Candidate
You choose the person you want to hire. Once selected, the EOR starts preparing the employment documents. This step is quick and usually takes one or two days.
Learn how to Hire Globally in 2026
Contract Creation
The EOR drafts a compliant employment contract. It includes details such as:
- Job title
- Salary
- Working hours
- Local benefits
- Notice period
Because labor laws vary by country, this step helps avoid legal mistakes.
Why This Matters
Local contracts must follow national labor rules. For example, some countries require:
- Mandatory bonuses
- Paid annual leave
- Social contributions
- Specific termination terms
The EOR handles all of this for you.
Employee Onboarding
Next, the EOR collects documents and sets up your employee in the local payroll system. This includes identification, bank details, tax forms, and benefits enrollment. Onboarding is usually complete in 3–7 days.
Onboarding Tasks Include:
- Document verification
- Country-specific tax registration
- Access to tools and systems
- Benefits enrollment
Because the EOR is familiar with local rules, onboarding is smooth and accurate.
Payroll and Compliance
Payroll is one of the biggest responsibilities of an EOR. Each month, the EOR:
- Calculates salary
- Deducts taxes
- Pays social contributions
- Issues payslips
- Files required tax reports
Why This Step Is Essential
Every country has unique payroll laws. For example:
- Some require 13th-month salary
- Some require housing funds
- Some require mandatory health insurance
The EOR ensures full compliance and avoids penalties.
Explore global pay requirements via OECD Tax Database:
Invoicing and Payment
You receive a simple monthly invoice that includes:
- Employee salary
- Employer taxes
- Employee benefits
- EOR service fees
Because all expenses are combined into one invoice, your financial reporting becomes easier.
Ongoing Legal Compliance
Laws change often, especially in global employment. The EOR keeps track of changes and updates policies as needed. This protects your company from fines and legal risk.
Compliance Areas Covered:
- Tax changes
- Labor law updates
- Social security rules
- Mandatory benefit changes
With the EOR managing this, your team remains protected and compliant.
Handling Changes and Amendments
If your employee receives a promotion, salary change, or new role, the EOR updates the contract. All changes follow local legal requirements. This step ensures accuracy across all legal documents.
Offboarding and Termination
If employment ends, the EOR manages the termination process. This is crucial because termination laws vary widely and can be strict in many countries.
EOR Offboarding Tasks:
- Calculates final pay
- Manages notice period
- Issues required documents
- Ensures the process follows local law
Read our guide on Termination Laws Around the World
Why Understanding the EOR Workflow Matters
Knowing how an EOR works helps you:
- Plan global hiring
- Understand costs
- Reduce legal risk
- Improve employee experience
- Scale quickly
Because the process is simple and predictable, you can expand into new countries with confidence.
Benefits of Using an EOR Workflow
Faster Hiring
EORs allow you to hire in days instead of months.
Lower Legal Risk
The EOR ensures full compliance with local laws.
Easy Global Payroll
You manage only one invoice each month.
Better Employee Experience
Employees receive timely payroll, benefits, and support.
Scalable Global Growth
You can expand to many countries without setting up entities.
When the EOR Workflow Is Most Useful
The EOR process is ideal when:
- You want to test a new market
- You need to hire quickly
- You do not want to create a legal entity
- You want to convert contractors to employees
- You want to reduce compliance risk
An Employer of Record (EOR) provides a simple, safe, and fast way to hire employees anywhere in the world. By managing contracts, payroll, taxes, and compliance, an EOR removes the complexity of global employment. Understanding how the EOR workflow operates will help you make smarter hiring decisions and grow internationally with confidence.
Explore more about our Global EOR Services
Frequently Asked Questions
How long does onboarding take with an EOR?
Onboarding usually takes 3–10 days.
Who manages daily work tasks?
You do. The EOR only handles legal and HR responsibilities.
Does the EOR ensure compliance?
Yes. The EOR stays updated with local employment laws and manages all compliance tasks.
Can an EOR handle payroll in multiple countries?
Yes. That is one of the main benefits of using an EOR.