Employer of record (EOR) software allows businesses to hire employees in other countries without having to establish a legal entity in that country. EOR platforms enable users to source, screen, and hire employees across country borders. Employers can run payroll, assign benefits, track compliance, and more. Employees use the software to request time off, go through onboarding, check pay stubs, or do other self-service HR tasks.
While the original hiring company looking for employees is the de facto employer, giving out assignments and managing performance, the employer of record serves as the legal employer, taking on the risk and liability for a worker hired in another country. The employer of record typically manages HR tasks like benefits, taxes, payroll, and compliance with local labor laws. This arrangement is ideal for companies looking to hire quickly and compliantly in new regions or countries.
EOR software sellers may also provide services, such as payroll services, benefits administration, or immigration assistance, but companies that exclusively provide those services without a SaaS platform are categorized as HR services. EORs differ from professional employer organizations (PEO) providers, an outsourcing arrangement in which the hiring company acts as a co-employer and performs administrative HR tasks.
An EOR platform may integrate with other core HR software, onboarding software, or performance management software. EOR software is one type of global employment platform (GEP), a wider category that includes multiple legal entities for hiring. GEPs have a software-centric approach to global hiring that may involve a number of legal arrangements, such as an employer of record, professional employer organization, or agent of record.
To qualify for inclusion in the Employer of Record (EOR) category, a product must:
- Facilitate hiring of international workers through an employer of record legal arrangement
- Streamline and track onboarding for global employees
- Provide access to compliance and benefits information for both employers and employees
- Take on risk and mitigation when dealing with compliance and local hiring laws