What is an EMPLOYER OF RECORD? Over the past two years, employment has become an international business. Employees are moving and employers are looking for talent from all over the world. While this trend has a geographic impact, it also has an impact on how employment is organized. Companies that want to continue to employ their remote consultants in a compliant manner have two options: one is to create an entity and register as an employer in the jurisdiction where the professional lives. The other is to use the services of an Employer of Record (EOR). What is the Employer of Record / EOR model? What can you expect from such a service provider? We explain in detail what you need to know about the « Employer of Record ».



An Employer of Record focuses on employment management rather than employee performance management. It is common to confuse these two aspects, but they are distinct because one is about a legal relationship, while the other is about the employment relationship itself. Giving someone the wrong assignment does not have the same consequences as assigning a false legal obligation. Employment is a legal status that carries with it a legal responsibility to ensure that an individual is entitled to all employment rights in a given jurisdiction, governed by the relevant local law. Performance management, on the other hand, is a working relationship around the nature of work itself.


Employment as a legal relationship

When the employer and employees are based in the same jurisdiction, the company generally assumes the legal and performance management responsibilities. Geographic separation changes this, as a new jurisdiction requires the registration of a separate employer. To solve this problem, a company can either take on the daunting task of registering directly as an employer, which involves setting up an international payroll system, or it can use the services of an EOR.


What is an employer of record / EOR?

An EOR is the legal employer of a consultant in a given country. As such, it handles all aspects of employment compliance, including payroll, taxes, benefits, employment contracts and more.

The EOR model is not new. It originated in the United States in the 1960s as an attempt to address the problem of employing people across state lines. In the United States, individuals are tax residents of the state in which they live. Their employer is legally required to register for taxes in that same state and file a tax return on their behalf each year. If a small business employs multiple people in multiple states, it can quickly find itself in a reporting and compliance nightmare. An Employer of Record comes to the rescue.


Why hire through an EOR / employer of record?

Hiring through an EOR facilitates international expansion in several ways. The main benefits of outsourcing employment services to an EOR are:

● Save time and money when hiring international employees.
● Reduce compliance risks when hiring in foreign countries and avoid non-compliance penalties.
● Increase access to the best candidates by recruiting from the global talent pool.
● Human Resources reduces repetitive, labor-intensive manual tasks.
● Improve employee data security by working with a trusted partner.
● Enhance the employee experience with diversified and localized benefits.
● Adapt to the future of work and recruitment trends.

When using an Employer of Record, a company enters into a three-way co-employment contract, signed by the company, the employee and the EOR:

● The company has a direct relationship with the employee, assigning tasks and managing their performance.
● As the legal employment manager, the EOR handles the operational side of things, such as payroll, taxes, benefits, etc., ensuring that both the employee and the client comply with all legal employment regulations.
● The third party to the agreement, the employee, fulfills all obligations as a worker for the company.

Today, businesses transcend borders. Increasingly, employers are hiring professionals from all over the world, often in locations where registering a tax identification number and filing annual returns is not enough to comply with the laws of that country.

The Employer of Record model offers an effective solution to the compliance issues and the stress and uncertainty of employing people in more complex or higher risk jurisdictions.


What are the benefits of working with an Employer of Record like SKALIS?

An EOR is the legal employer of your employees. Therefore, it will handle a range of compliance aspects that you do not have to worry about, such as:


● Drafting the employment contract.
● Processing the payroll.
● Employer payroll tax reporting.
● Employee tax filing.
● Handling workers’ compensation or other similar insurance.
● Providing health benefits (mandatory in many countries).
● Providing retirement plans and pension plans.
● Assist with regulatory compliance.
● Provide advice on local employment regulations and practices.
● In addition to drafting employment contracts and ensuring that they contain all mandatory legal provisions for the relevant jurisdiction, an EOR also ensures that employees receive any required notices or documents.

Once the employee is operational, the EOR is the official record keeper and point of contact for all matters relating to employment regulations and human resources compliance.

The employer of record handles payroll each month, ensures that the proper taxes are reported, that taxing authorities are notified, and that payments are made. It also ensures that all other legal obligations are met. This means that you are not exposed to compliance risks and can be confident that your workers are taken care of. A significant time and energy saving! SKALIS can provide all these services to develop your business in another country in Europe