{"id":155695,"date":"2025-04-04T12:30:51","date_gmt":"2025-04-04T10:30:51","guid":{"rendered":"https:\/\/factorialhr.com\/blog\/?p=155695"},"modified":"2025-06-16T17:02:02","modified_gmt":"2025-06-16T15:02:02","slug":"eor-guide","status":"publish","type":"post","link":"https:\/\/factorialhr.co.uk\/blog\/eor-guide\/","title":{"rendered":"What is EOR? Definition &#038; Benefits Guide"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">If you are considering expanding your business into a new territory, you may already be familiar with the acronym EOR. It means Employer Of Record and is a practical approach to<strong> help companies manage their workforce in a location where they do not exist as a legal entity.<\/strong> This is particularly useful for businesses looking to scale up their workforce or those looking for additional support. The use of EORs is on the rise, it&#8217;s been reported that about <a href=\"https:\/\/www.saasworthy.com\/blog\/best-employer-of-record-eor-uk-key-statistics-and-benefits\">15% of EOR clients are UK employers<\/a>.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this article, we explore what an EOR does, the benefits of using one and tips for ensuring you find the best EOR to work with. Let&#8217;s dive into it!<\/span><\/p>\n<p><a href=\"https:\/\/factorialhr.co.uk\/get-started\"><img decoding=\"async\" class=\"alignnone wp-image-149560 size-large\" src=\"https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162514\/Blog-banner-general-1024x484.png\" alt=\"All in one HR software Factorial\" width=\"1024\" height=\"484\" srcset=\"https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162514\/Blog-banner-general-1024x484.png 1024w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162514\/Blog-banner-general-300x142.png 300w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162514\/Blog-banner-general-768x363.png 768w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162514\/Blog-banner-general-1536x726.png 1536w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162514\/Blog-banner-general.png 1921w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/p>\n<h2><b>What Does EOR Stand For?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">EOR stands for employer of record. An employer of record is a <strong>third-party organisation that provides the legal framework for employing staff on behalf of a business.<\/strong> EORs can employ workers on behalf of a business either within the same country or in a different country with different employment laws.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The <strong>EOR will handle all employment-related responsibilities<\/strong>, including:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/factorialhr.co.uk\/blog\/payroll-explained\/\"><span style=\"font-weight: 400;\">Payroll<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Taxes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Legal compliance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Management of <a href=\"https:\/\/factorialhr.co.uk\/blog\/fringe-benefits\/\">benefits<\/a><\/span><\/li>\n<li aria-level=\"1\">Onboarding new hires<\/li>\n<li aria-level=\"1\">Completing the <a href=\"https:\/\/factorialhr.co.uk\/blog\/termination-of-employment-uk-employers\/\">termination<\/a> process of employees<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The <strong>business which is employing the EOR will be responsible<\/strong> for:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Day-to-day requirements of the role<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/factorialhr.co.uk\/blog\/tracking-absences-employees\/\"><span style=\"font-weight: 400;\">Tracking leave requests<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monitoring performance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Training or <a href=\"https:\/\/factorialhr.co.uk\/blog\/reskilling-upskilling-definition-differences\/\">upskilling<\/a><\/span><\/li>\n<\/ul>\n<h2><b>Why Use an EOR?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">A typical example of when a company might use an Employer Of Record is when there are <strong>employees in a different country<\/strong>. Working through an EOR means the <strong>business does not need to establish its local presence for employment law purposes<\/strong>. This makes it easy for businesses to find the perfect candidate for a niche position or to expand their presence globally.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A business might use EOR services when they are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Hiring remote workers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Testing a new market.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Expanding <a href=\"https:\/\/factorialhr.co.uk\/blog\/challenges-of-leading-global-teams\/\">internationally<\/a>.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Needing to make cost-efficiencies in the operation they currently have in another market.<\/span><\/li>\n<\/ul>\n<h3><b>What services does an EOR provide?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">EOR services usually covers:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Employment contracts, including the administration associated with <a href=\"https:\/\/factorialhr.co.uk\/blog\/what-is-onboarding-employees\/\"><strong>onboarding<\/strong><\/a> (such as background checks) and <strong>termination<\/strong><\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Payroll<\/strong> processing<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Tax<\/strong> and<strong> legal compliance,<\/strong> including contributions to government programmes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong><a href=\"https:\/\/factorialhr.co.uk\/blog\/holiday-calculator\/\">Statutory holiday entitlements<\/a><\/strong><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Employee <strong>benefits<\/strong> that comply with local regulations (such as pension plans)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Visa and work permit <strong>sponsorship<\/strong> (where applicable)<\/span><\/li>\n<\/ul>\n<p>These services, particularly global employment of record or global EORs, are well-versed in international employment laws. Which is valuable, especially if you&#8217;re a smaller team that doesn&#8217;t have the resources to hire an expert in global employment regulations to ensure compliance and expand your team internationally. Additionally, it takes the workload off your HR team when it comes to recruiting, onboarding, payroll, and offboarding. This is why EOR services are so great.<\/p>\n<h2><b>What are the Benefits of Using an EOR?<\/b><\/h2>\n<p>If you&#8217;re looking into EORs for your business, here are some benefits your organization could gain. From <strong>avoiding the costs<\/strong> and <strong>burdens of setting up another legal entity<\/strong> to <strong>mitigating the risk of non-compliance with local labor laws.\u00a0<\/strong>Let&#8217;s check out more benefits:<\/p>\n<h3><strong>Temporary Contracts<\/strong><\/h3>\n<p>EORs can hire new team members easily for you. For a short term or temporary based contract which allows your team to achieve big goals during a limited amount of time.<\/p>\n<h3><strong>Saves money &amp; time<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Your team won&#8217;t be occupied with recruiting or going through legal procedures to hire new employees or set up legal entities as EORs take care of that process. In addition, they provide a simplified payroll and benefits management approach, making it easier for you to manage an overseas workforce.\u00a0<\/span><\/p>\n<h3><strong>Legal compliance<\/strong><\/h3>\n<p class=\"\" data-start=\"84\" data-end=\"407\">Understanding how to run payroll and comply with local employment laws can be a frustrating and complex process without expert guidance. EORs handle these responsibilities, reducing the risk of legal consequences. This allows businesses to focus on growth and operations rather than navigating unfamiliar regulations.<\/p>\n<h3 data-start=\"84\" data-end=\"407\"><strong>Large pool talent<\/strong><\/h3>\n<p>If you&#8217;re expanding your business overseas, hiring new team members from a diverse background can enhance your business. With an Employer Of Record, you&#8217;ll be able to hire the perfect candidate without worrying about any legal constraints.<\/p>\n<p><a href=\"https:\/\/factorialhr.co.uk\/get-started\"><img decoding=\"async\" class=\"alignnone wp-image-149561 size-large\" src=\"https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162726\/Whistleblower-1024x484.png\" alt=\"Factorial business management software\" width=\"1024\" height=\"484\" srcset=\"https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162726\/Whistleblower-1024x484.png 1024w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162726\/Whistleblower-300x142.png 300w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162726\/Whistleblower-768x363.png 768w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162726\/Whistleblower-1536x726.png 1536w, https:\/\/factorialhr.co.uk\/wp-content\/uploads\/2025\/01\/20162726\/Whistleblower.png 1921w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/p>\n<h2><b>What is the Difference Between EOR and PEO?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">The difference between an EOR and a PEO lies in the employer-employee relationship. A PEO is a Professional Employer Organisation and acts as a co-employer with the business, whereas an EOR is the sole legal employer of the business\u2019s employees.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As a co-employer, a PEO will share some legal and financial liabilities for employing staff.<\/span><\/p>\n<h2><b>How To Choose the Right EOR Provider<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Spending time to make sure you are choosing the right EOR provider is essential to setting your business up for success in the new market you are entering. The provider you choose has to be able to meet your business requirements, but the relationship they create with both the parent company and the individual employees that they work with on your behalf is also significant.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The following factors are worth considering:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Coverage:<\/strong> does the provider cover the territories that you are looking at?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Scope:<\/strong> what services can they provide, and do they match your needs?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Compliance:<\/strong> what is their track record on tax and legal compliance in different markets? Are they aware of the specific local requirements in the markets you are looking at?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Costs:<\/strong> are the fees transparent? What are the set-up and termination arrangements?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Data security:<\/strong> how does the EOR protect individuals\u2019 data and ensure they adhere to the specific regulations in the countries they work in?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Employee experience:<\/strong> do they answer queries quickly? What sort of local support do they offer? Is it easy for employees to access their information, such as payslips, holiday details, and benefits?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Technology:<\/strong> what platforms do they use, and are they accessible to all?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Reputation:<\/strong> do similar-sized businesses recommend them? How long have they been in business?\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Before signing a contract, it pays to look at:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How the EOR handles challenging issues such as a payroll query, a tax dispute or a legal query over working hours.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Service Level Agreement (SLA) sets out what support you will receive from the EOR.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A sample employment contract and how the software used by the EOR supports the employee experience.<\/span><\/li>\n<\/ul>\n<h2><b>FAQs about EORs<\/b><\/h2>\n<h3><b>When would you not use an EOR?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Using an EOR may not be the right approach when a company:<\/span><\/p>\n<ul>\n<li data-start=\"129\" data-end=\"195\">Needs complete <strong>legal and operational control over its employees<\/strong>.<\/li>\n<li data-start=\"198\" data-end=\"384\">Operates in a <strong>highly regulated sector<\/strong> or industry with specific requirements for how employees are contracted and supported\u2014for example, <strong>government contracts<\/strong> or<strong> financial institutions.<\/strong><\/li>\n<li data-start=\"568\" data-end=\"735\">Is investing in a <strong>long-term approach <\/strong>and<strong> intends to scale rapidly<\/strong>, making an EOR less cost-effective over time as the company plans to invest directly in the target country.<\/li>\n<\/ul>\n<p data-start=\"568\" data-end=\"735\">If you&#8217;re scaling your company, but feel like using an Employer of Record isn&#8217;t the right fit, <strong><a href=\"https:\/\/factorialhr.co.uk\/\">Factorial\u2019s all-in-one business management software<\/a><\/strong> can support you in managing many of the administrative aspects of employing a workforce in a new location.<\/p>\n<h3><b>Does EOR manage payroll?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Yes. An EOR would typically manage payroll as this involves dealing with the tax and legal requirements of the country in which the employees are paid.<\/span><\/p>\n<h3><b>Is Factorial an EOR?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Factorial software can help with many of the processes involved in the work done by an EOR, but Factorial itself is not an EOR. The software can help manage <a href=\"https:\/\/factorialhr.co.uk\/performance-management\">employee documentation<\/a>, payroll preparation and review, <a href=\"https:\/\/factorialhr.co.uk\/time-attendance-signing\">time tracking<\/a>, performance, and goal-setting.<\/span><\/p>\n<h3><b>Is using an EOR legal?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Yes. An EOR is a fully legal and compliant way to hire employees in a country where the business does not exist as its own entity. However, the EOR needs to adhere to local employment laws to ensure it is working in a legally compliant manner.<\/span><\/p>\n<h3><b>How much does an EOR service cost?<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">How much an EOR service costs varies depending on the provider. The fee is usually a monthly amount per employee, or it can be a percentage of the employee\u2019s salary. The complexity of the arrangement, the number of employees and the country involved can all impact the fee.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you are considering expanding your business into a new territory, you may already be familiar with the acronym EOR. It means Employer Of Record and is a practical approach to help companies manage their workforce in a location where they do not exist as a legal entity. This is particularly useful for businesses looking<a href=\"https:\/\/factorialhr.co.uk\/blog\/eor-guide\/\" class=\"read-more\"> [&#8230;]<\/a><\/p>\n","protected":false},"author":193,"featured_media":155696,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[108,343],"tags":[],"class_list":["post-155695","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hr-tips-en-gb","category-hr-trends"],"acf":{"topics":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.5 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is EOR? Definition &amp; Benefits Guide | Factorial<\/title>\n<meta name=\"description\" content=\"Learn what an EOR is, why you might need one and what to think about if you are going to use one to expand your business.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/factorialhr.co.uk\/blog\/eor-guide\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is EOR? 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