These responsibilities typically include processing payroll, withholding and remitting taxes, managing benefits, and ensuring compliance with local labor regulations.
[1] Employer of Record services are commonly used by organizations that need to hire employees in foreign markets or in regions where they lack a legal presence.
The PEO typically manages payroll, benefits, and other human resources functions, while the client company directs the employees' daily work activities.
In contrast, an EOR acts as the sole legal employer of the workers, taking full responsibility for compliance with labor laws, tax filings, and the provision of benefits.
An Employer of Record (EOR) assumes responsibility for compliance with these regulations, helping companies that may lack expertise in local labor laws or resources for managing these obligations.
Similarly, healthcare providers may use EORs to manage employment in regions with regulatory environments they lack knowledge of, while maintaining focus on their core operations.
Additionally, outsourcing employment tasks to an EOR may limit the client company’s involvement in some human resources functions, such as selecting benefits or managing compliance.
According to the Global Employer of Record Study 2024, the EOR market has grown as companies seek to hire employees internationally while adhering to varying labor regulations.