What Is An Employer Of Record (EOR)?
An employer of record (EOR) is a third-party entity that legally employs workers on behalf of another company, handling payroll, taxes, and compliance. It is often used in nearshoring to simplify hiring: your team directs the work day to day, while the EOR holds the employment contract and runs the paperwork in the worker’s country.
- Also called
- EOR, EOR service
- Legal employer
- The EOR
- Day-to-day manager
- You
- Typical fee
- $199-$699 per employee a month
Who Does What With An EOR
The EOR handles
The legal and administrative side
- Signs a compliant local employment contract with the worker
- Runs payroll and pays the worker on time
- Withholds and files local taxes and social contributions
- Provides statutory benefits and leave
- Handles local labor law and termination paperwork
You handle
The work itself
- Choosing and interviewing the candidate
- Setting goals, tasks, and priorities
- Managing performance day to day
- Providing tools, access, and context
- Paying the EOR’s monthly invoice
How An EOR Works
- 1Choose the hireFind and select the candidate yourself or through a recruiting partner. An EOR does not source talent.
- 2Sign a service agreementAgree on fees, scope, and what happens when the engagement ends.
- 3The EOR issues a local employment contractThe worker becomes a legal employee of the EOR, under local labor law and with statutory benefits.
- 4You manage the workYou set goals, assign tasks, and run day-to-day work like any other team member.
- 5The EOR runs payroll each monthIt pays the worker, withholds and files taxes, and sends you one invoice covering salary, contributions, and its fee.
EOR Vs. Other Ways To Hire
| Option | Legal employer | Local entity needed | Best for |
|---|---|---|---|
| Employer of Record | The EOR | No, the EOR uses its own | Full-time hires without your own entity |
| Contractor of Record | None, the worker is a contractor | No | Fast, flexible hiring with contracts and payments handled for you |
| Independent Contractor | The worker, who is self-employed | No | Short projects and specialist work |
| PEO | You and the PEO, through co-employment | Yes | Companies that already have a local entity |
| Your Own Local Entity | You | Yes, you set it up | Larger, long-term teams in one country |
Contractor rules differ by country, and a worker engaged as a contractor can be reclassified as an employee if the arrangement looks like employment. Confirm the right route with local counsel. This page is not legal advice.
What An EOR Costs
Fee ranges come from published EOR pricing guides and vary by provider and country. They are market ranges, not LatamCent pricing.
Statutory Extras To Budget For
| Country | Mandatory extras on top of base pay |
|---|---|
| Mexico | Aguinaldo, a year-end bonus of at least 15 days’ pay |
| Colombia | Prima de servicios (one month’s salary a year, paid in two halves) and cesantias (one month’s salary a year, deposited to a severance fund) |
| Brazil | 13th salary, plus paid vacation with one-third of monthly salary on top |
| Argentina | Aguinaldo, paid twice a year, each worth half of the highest monthly salary |
These are part of the real cost of an employee in each country whether or not you use an EOR. The EOR administers them and passes them through on your invoice. Rules and rates change, so confirm current figures with a provider or local counsel.
When An EOR Makes Sense
Use an EOR when
It usually fits if
- You are hiring a small number of people in a country
- You want workers to be full employees with statutory benefits
- You have no local entity and do not want to set one up yet
- You are testing a market before committing to it
Look at another route when
Another option may fit better if
- A team in one country has grown large enough that your own entity could cost less
- The work is a short, defined project where a contractor arrangement is legal
- You already have an entity in the country
- You need more control over benefits and HR policy than an EOR’s standard package allows
How LatamCent Fits In
What You Get With LatamCent
LatamCent works as a contractor of record, not an employer of record. Both let you hire in the region without your own local entity, but the legal relationship with the worker is different.
Typical time from kickoff to signed offer. LatamCent delivers 3 to 5 candidate profiles in the first 10 days.
Common EOR Mistakes
Frequently Asked Questions
An employer of record is a third-party entity that legally employs workers on behalf of another company, handling payroll, taxes, and compliance. The company directs the work day to day, and the EOR holds the employment contract in the worker’s country.
An EOR is the sole legal employer of the worker and uses its own local entity, so you do not need one. A PEO co-employs the worker with you and generally requires you to have a local entity or branch already.
With an EOR, the worker is the EOR’s legal employee. With a contractor of record, the worker is engaged as a contractor and the provider manages contracts, payments, and compliance. LatamCent works as a contractor of record.
Published pricing guides put EOR fees at roughly $199 to $699 per employee per month, with a median around $400 to $599. Some providers charge 8% to 20% of gross pay instead. Statutory bonuses, social contributions, and currency conversion add to the total.
No. The EOR employs the worker through its own local entity, which is why companies use one to hire in a country where they have no presence.
No. An EOR employs people you have already chosen. LatamCent sources and vets candidates, delivering 3 to 5 candidate profiles in the first 10 days, with most searches running 21 days from kickoff to a signed offer.
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