What Is an EOR and How Does It Work?
Expanding internationally brings exciting opportunities, but also a lot of responsibility. That’s where an Employer of Record (EOR) comes in.
An EOR is a third-party partner that legally employs your international team on your behalf. While you manage the daily work and direction of your employees, the EOR takes care of all the local legal, administrative, and compliance requirements.
In short: you focus on growing your business, and the EOR ensures everything on the employment side runs smoothly and compliantly.
How Does an EOR Work?
Working with an EOR is straightforward and flexible, exactly what you need when growing internationally. Here’s how it works, step by step:
1. You identify the talent
You’ve found the perfect candidate abroad. Whether you’re exploring a new market or hiring a remote team member outside your home country, this is where it begins.
2. The EOR onboards the employee
Once you’ve made the hire, the EOR becomes the legal employer. This means they handle:
- Drafting compliant employment contracts
- Registering the employee with local authorities
- Managing social security contributions and taxes
3. You manage the day-to-day
From onboarding into your team to managing tasks and performance—you stay in control of the employee’s daily work and integration into your company culture.
4. The EOR takes care of payroll & compliance
Behind the scenes, the EOR ensures everything is legally covered:
- Monthly payroll and payslips
- Tax withholdings and reporting
- Benefits administration
- Employment law compliance
5. Seamless offboarding (if needed)
Should the working relationship end, the EOR manages the offboarding process in full compliance with local laws, minimizing legal risks and ensuring a respectful, compliant exit.
Why Use EOR Services?
Partnering with an EOR brings several strategic advantages, especially for companies expanding into new countries:
- Faster Market Entry: No need to set up a legal entity, which can take months. With an EOR, you can start operating within days.
- Reduced Legal Risk: Every country has its own employment laws. An EOR ensures full local compliance, so you don’t have to worry about missing a detail.
- Cost-Effective Expansion: Skip the high costs of opening a foreign subsidiary. EORs let you test new markets without major upfront investment.
- Stay Focused: Instead of dealing with local bureaucracy, your HR team can focus on strategy and supporting your people.
Who Should Consider an EOR?
An EOR is the ideal solution for companies that want to move fast, stay compliant, and avoid unnecessary overhead. It’s especially useful for:
- Startups or scale-ups expanding into new countries
- Businesses hiring remote employees abroad
- Companies testing a market before establishing a local entity
- Teams without in-house legal or HR capacity in the country of hire
Grow you businesss with Parakar
At Parakar, we help companies grow internationally by providing local HR expertise and tailored EOR solutions across Europe. Whether you’re hiring one person in Spain or building a team in Germany, our experts guide you every step of the way.
We make international employment simple, compliant, and efficient, so you can scale without borders.
Ready to take the next step?
Our team of local experts is available for you and discover how Parakar’s EOR services can support your global growth journey!
