How does an employer of record work?
- The client picks the person; the EOR issues a local employment contract that meets that country's labor law.
- Payroll, income tax, social contributions, statutory leave and termination notice are all run by the EOR.
- The client pays one invoice covering salary, employer costs and a platform fee, often a percentage or a flat monthly amount.
- Day-to-day direction stays with the client, which is why EOR contracts include careful co-employment language.
- It is used to open a market or hire one person abroad without registering a subsidiary.
A worked example
A six-person software company in Austin wanted to keep a Portuguese developer it had worked with, who needed employed status for a mortgage. Setting up a Portuguese entity for one person made no sense. The company used an employer of record: the developer signed a local contract, received statutory holiday and health cover, and kept the same Slack, GitHub and standup. Austin received a single monthly invoice and the local filings were handled by the EOR.
Where does an employer of record show up in your tools?
EOR arrangements show up as a service agreement plus a country-specific employment contract, a data-processing addendum and a monthly invoice. Platforms such as global payroll providers surface it as a dashboard of headcount, leave balances and employer costs by country.
Common mistakes
- Using an EOR as a long-term substitute for an entity in a country where you are clearly operating a business.
- Comparing the EOR invoice to a salary and forgetting employer taxes, statutory leave and severance are inside it.
- Managing the person exactly as you would a direct employee, including discipline, which weakens the structure.
Why does an employer of record matter?
An EOR answers a specific problem: you want one employed person in a country where you have no company. It is the compliant alternative to calling that person a contractor when local law would call them an employee. It is not the same as outsourcing a function, and the two are often confused in staffing proposals.
How does AssistBPO handle an employer of record?
AssistBPO is not an employer of record and does not place staff under your direction as your employees. Assistants are employed and supervised by the group, never freelancers or contractors, and clients never co-employ them. You buy a covered desk with a named assistant, a backup and a team lead rather than a headcount on someone else's payroll.