Yes, you can legally hire employees abroad without a local entity — but how you do it matters. Let’s break it down.
Options to Hire Employees Abroad Without a Local Entity
1. Employer of Record (EOR) – The Most Common Way
- An Global EOR Services is a third-party company that becomes the legal employer of your worker in their country.
- They handle contracts, payroll, taxes, benefits, and compliance.
- You manage the employee’s work, but legally, they’re employed by the EOR.
👉 This is the fastest, most compliant way to hire abroad without setting up an entity.
Platforms like Deel and Papaya Global specialize in this.
2. Hire as an Independent Contractor
- You can engage the worker as a freelancer/contractor instead of an employee.
- You pay invoices, not payroll, and the contractor handles their own taxes/benefits.
- ⚠️ Risk: If local authorities consider the contractor relationship to be “disguised employment,” you could face penalties for misclassification.
- Works best for short-term, project-based roles — not for long-term employees.
3. Use a Local Partner or PEO (Professional Employer Organization)
- Similar to an EOR, a PEO co-employs the worker with your company.
- However, unlike an EOR, a PEO usually requires you to have a local entity.
- So if you don’t have a local entity, a PEO isn’t a solution — you’ll want an EOR instead.
4. Temporary/Staffing Agencies
- In some countries, staffing agencies can hire employees and “second” them to your company.
- This is essentially a local outsourcing model — but usually more expensive and not scalable long-term.
What You Cannot Do
You generally cannot just put a foreign employee on your home-country payroll and hope it works.
- This creates “permanent establishment risk,” meaning the foreign government may view you as illegally operating a business there.
- The employee won’t get legally required benefits or protections, which can lead to lawsuits or fines.
⚖️ Legal & Compliance Considerations
- Tax & Payroll: Each country has mandatory deductions — income tax, social contributions, health insurance, etc.
- Benefits: Many countries require paid vacation, parental leave, pensions, or 13th-month salary.
- Termination laws: Some jurisdictions (e.g., France, Brazil) require strict notice and severance payments.
- Language & Contracts: Local laws often require contracts in the native language and subject to local jurisdiction.
This is exactly why Global EOR Services platforms exist — they solve all of this for you.
- Yes, you can hire abroad without a local entity, but not by directly employing someone.
- Legally safe options are:
- Global EOR Services (recommended) — full employment compliance.
- Independent contractors — limited use, but riskier.
- If you plan to scale in a country, eventually setting up a local entity may be more cost-effective than relying on an EOR long-term.
Decision Flowchart: How to Hire Employees Abroad Without a Local Entity
Q1: Do you already have a registered legal entity in the target country?
- Yes → Hire via Direct Employment (your entity handles payroll, benefits, compliance).
- No → Go to Q2.
Q2: Is this a short-term or project-based role (freelance-style work)?
- Yes → Hire as an Independent Contractor.
- ✔ Quick setup, cost-efficient.
- ⚠ Risk: Misclassification if the person works like a full-time employee.
- No (long-term employment planned) → Go to Q3.
Q3: Do you need to hire quickly and compliantly without setting up an entity?
- Yes → Use an Employer of Record (EOR).
- The EOR is the legal employer, handles payroll, contracts, compliance.
- You manage the employee’s day-to-day work.
- Example: Deel, Papaya Global.
- No, we’re planning a long-term presence in this market → Go to Q4.
Q4: Do you plan to scale and hire multiple employees in this country?
- Yes → Set up a Local Entity (subsidiary, branch, or representative office).
- ✔ More control, potentially lower cost per employee over time.
- ⚠ Slower setup, higher legal/admin burden.
- No (just one or two employees, low headcount) → Stick with an EOR to keep things simple.
Summary Table
| Situation | Best Hiring Method |
|---|---|
| Already have local entity | Direct Employment |
| Short-term / project role | Independent Contractor |
| Need quick & compliant hire, no entity | Employer of Record (EOR) |
| Scaling in-country long-term | Set up Local Entity |