Comparison
Employer of record vs contractor: which way to hire abroad?
Contractors are simpler and cheaper on paper, but full-time contractors who work like employees can create misclassification risk in some countries. An employer of record (EOR) legally employs the person for you, handling payroll, contracts and local labor law, for a monthly fee.
| Employer of record (EOR) | Independent contractor | |
|---|---|---|
| Who's the legal employer | The EOR, in the worker's country | No employer; a business-to-business contract |
| Payroll and taxes | Handled by the EOR under local law | The contractor invoices and handles their own taxes |
| Benefits and protections | Local statutory benefits included | Usually none |
| Compliance risk | Lower: the EOR follows local labor law | Higher if the person works full-time like an employee |
| Cost | Salary plus a monthly EOR fee | Their rate only |
| Best for | Full-time, long-term team members | Project work and genuinely independent freelancers |
Choose Independent contractor when
- The work is project-based or part-time
- The person runs their own business with several clients
Choose Employer of record (EOR) when
- The person works full-time for you only
- You want to keep them long-term and offer stability
- You don't want to learn another country's labor law
Common questions
What does an EOR cost?
It varies by provider. Our "We employ them" option is a one-time Recruitment & Activation Fee from $2,500, then $700 a month on top of salary, with recruiting included.
Can I switch a contractor to an EOR later?
Usually yes. Many companies start with a contractor and move the person to an EOR once the role becomes full-time and long-term.
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