What is an Employer of Record (EOR)?
Employer of Record meaning and definition: an Employer of Record (EOR) is a company that legally employs workers on behalf of another business. The EOR signs the employment contract, runs payroll, files taxes, administers benefits and follows local labor law. The client directs the daily work. This lets a business hire in a country without setting up its own legal entity there.
Hiring in India? Our Employer of Record in India service starts from $49 per employee per month. The full breakdown is in the cost of Employer of Record services in India.
What EOR Stands For and What It Does
EOR stands for Employer of Record. The EOR is the official employer on paper: it appears on the contract, payslips and tax filings. The client company chooses the person, sets the tasks and manages performance. The worker works only for the client, even though the EOR is the legal employer.
| Responsibility | Employer of Record | Client company |
| Employment contract | Issues and holds it | Approves role and pay |
| Payroll and tax | Runs payroll, deducts and files | Funds the cost |
| Benefits and statutory schemes | Registers and administers | Chooses any extras |
| Local labor law compliance | Carries the legal duty as employer | Follows the EOR’s guidance |
| Daily work and performance | No role | Full control |
| Recruitment | Not included | Finds the candidate or uses a recruiter |
EOR, PEO and Global PEO Compared
| Factor | EOR | PEO |
| Employment model | EOR is the sole legal employer | Co-employment with the client |
| Client needs a local entity | No | Yes, in the country of employment |
| Main use | Hiring abroad without an entity | Outsourcing HR for a company already employing locally |
| Liability | Mostly with the EOR for employment compliance | Shared with the client |
A PEO requires the client to have its own registered entity in the country. A Global EOR is an EOR that operates across several countries, usually through local partners or entities.
When a Company Uses an EOR
- Entering a new country before deciding to set up an entity
- Hiring a few remote employees in places where the company has no presence
- Moving contractors onto compliant employment contracts
- Testing a market with a small team before committing to infrastructure
How an EOR Works in India
In India the EOR registers the employee for Provident Fund and, where applicable, Employee State Insurance, deducts tax at source, issues payslips and handles exits under the new labour codes that took effect on 21 November 2025 (DLA Piper). For a full guide, see hiring employees in India with an employer of record, and for answers to common questions see the hiring in India FAQ.
Questions About Employer of Record
What does EOR stand for?
EOR stands for Employer of Record. It is a service provided by a third party organization that acts as the official employer for workers on behalf of another company.
How does an EOR differ from a PEO?
With an EOR, the EOR is the legal employer of the worker. A PEO works on a co-employment basis, where the client and the PEO share employment responsibilities, and the client needs its own entity in the country.
Why choose an EOR over opening a local entity?
An EOR avoids the registrations, legal and accounting costs and in house HR set up that an entity needs, so hiring can start sooner.
What does it cost to use an EOR?
Providers charge a per employee fee that depends on the country and services. In India the fee starts from $49 per employee per month, with salary and statutory contributions extra.
Does an EOR recruit employees?
No. The EOR employs the person the client selects. Recruitment is a separate service.
How quickly can a company hire with an EOR?
Since the EOR already has a legal presence in the country, hiring can start without the months needed for entity set up.
EOR Services India, a division of Spectrum Talent Management, has over 18 years of experience, 13 offices and 550+ clients.