Employer of record (EOR) software allows businesses to hire employees in other countries without establishing their own legal entity in those countries. EOR platforms enable users to source, screen, and hire employees in other countries. Employers can run payroll, assign benefits, track compliance, and more. Employees use the software to request time off, go through onboarding, and perform other tasks. While the original 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 such as benefits, taxes, compliance with local labor laws, and payroll. This arrangement is ideal for companies looking to hire globally without setting up a legal entity in foreign countries and allows them to hire quickly and compliantly.
EOR software sellers may also provide services, such as payroll services, benefits administration, or immigration assistance. EORs differ from PEO providers, an outsourcing arrangement in which a 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 the 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
