Last updated · By ApTask Editorial Team
Definition
Employer of record(EOR) — An employer of record (EOR) is the legal employer that hires, pays and handles employment taxes and compliance for a worker who does the job for another company.
EORs let companies hire where they have no legal entity. It is distinct from an IRS-certified professional employer organization, a co-employment arrangement (IRS CPEO (external source)). See Payroll Solutions.
What does an employer of record do?
The EOR issues the locally compliant offer, runs payroll, withholds and deposits employment taxes, administers statutory contributions and benefits, and manages termination to local standards, while the client directs the day-to-day work. ApTask’s Payroll Solutions does this under one master agreement across every jurisdiction it covers, with onboarding usually under 5 business days.
The client receives one consolidated invoice; the employee receives a local-language, locally compliant payslip (Payroll Solutions).
How is an EOR different from a staffing agency?
A staffing agency recruits, screens and submits candidates and then employs or contracts the one you choose; an EOR employs a person you already found. The difference shows in the fee: a recruited placement carries the agency’s margin, while ApTask’s EOR and payrolling services bill a published waterfall or a flat margin.
| Dimension | Employer of record (Payroll Solutions) | Payrolling (Pass-Through Services) | Staffing agency (Strategic Workforce Staffing) |
|---|---|---|---|
| Who finds the worker | You | You | ApTask |
| Who is the legal employer | ApTask | ApTask | ApTask (W-2) or the contractor’s entity (1099 / C2C); you, for a direct hire |
| Typical use | Hiring where you have no legal entity | A contractor you already sourced | Contract, contract-to-hire and direct hire roles |
| Fee basis | A bill-rate waterfall disclosed before signing | A flat 10–20% of the bill rate; no recruitment fee | A fully loaded hourly bill rate with the margin disclosed, or a one-time direct-hire fee |
| Published timing | Onboarding usually under 5 business days | On payroll within 3 business days for most US engagements | Shortlist within 48 hours (contract) or 5 business days (direct hire) |
What is the difference between an EOR and a PEO?
A PEO co-employs workers alongside your existing legal entity. An EOR is the sole legal employer where you have no entity of your own, which is why companies entering a new country use an EOR first. The IRS runs a separate certification program for professional employer organizations, so the two are also distinct in tax law.
See the IRS’s certified professional employer organization program (external source) for the co-employment arrangement, and ApTask’s Payroll Solutions FAQ for when an EOR fits.
When should you use an employer of record?
Use an EOR when standing up a legal entity would take longer than the hire can wait: entering a new market with one or two hires, legally employing a team you acquired abroad, or consolidating country-by-country employment into one invoice. Most clients later move the employees onto their own entity, typically over six to twelve months.
- Hiring in a country where incorporating would take longer than the hire can wait.
- Testing a new market with one or two hires before committing to a subsidiary.
- Legally employing a team acquired abroad, fast.
- Replacing jurisdiction-by-jurisdiction employment law with one consolidated invoice.